Owners of family businesses often operate and manage their companies on instinct and personal experience, which may leave their management team and stakeholders guessing about the future direction of the business. When implementing a succession plan without the necessary goals and objectives it can hold dire consequences for the business, and may very well lead to disagreements, low staff morale and a decline in productivity and profitability.
A succession plan with effective goals and objectives that are aligned to the business strategy and thus the business objectives and business goals, will focus all activities on achieving well-defined targets and will provide a foundation for measurement and evaluation of future business’ activities.
Why is it important to define goals when setting a family business succession plan?
Before setting out on the preparation of a succession plan, the family business owner should have a clear understanding of his or her role in the future of the company. These decisions should be communicated to the stakeholders and the goals and objectives should be aligned as such.
Stakeholders take great comfort from knowing the direction the business is heading and understanding that eventualities have been catered for during the formulation of the succession plan. Starting the process of defining goals and objectives for a family business succession plan helps to push key issues to the forefront. Defining the future involvement of family members in the business is just one of the critical questions that should be answered before goals and objectives, which will guide the future of the company, can be decided.
Establishing goals and objectives for a family business succession plan
Although the establishment of succession planning goals holds intrinsic challenges, family businesses should implement this process to ensure that all parties are knowledgeable and aware of the future of the business, thus making every effort to avoid conflicts that might harm the business’ future.
Grant Thornton indicates that as preparation starts for the succession plan, the business should engage with the wider group of stakeholders, including family members, employees, suppliers and customers. Engagement and involvement of stakeholders in the development of the future of the company will ultimately result in their approval of the succession plan’s goals and objectives and therefore foster greater business stability.
Aligning the goals and objectives of the succession strategy to the family business’ overall strategic business plan
A succession plan can only successful if it is aligned to the strategic business plan of the business, linking the succession goals and objectives with the overall strategic business plan. The development of an overview of key competencies for each position in the business is the roadmap or template for the succession plan.
Of vital importance is the development of specific benchmarks for each position in the business. The benchmark should be developed by skilled and qualified personnel that understands the overall strategic goals and objectives of the business, and can align the expectations and demands of the position with the business strategy and potential candidates, with the assistance of a human resources specialist. These detailed requirements can help ensure seamless changeovers of people into new positions, when required.
Research done by Dobson & Associates indicates that more than 67% of American corporations do not have a succession plan based on competency. However, the small percentage of businesses that follows a succession plan that is aligned with the overall strategic business plan is able to show quantifiable results.
In conclusion, the most successful succession plans for family businesses, are the ones that have been aligned to the overall goals and objectives of the business that are clearly defined and that provides for development of future business leaders from within.