A Guide for Family Business Succession Planning
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  • 1. SUCCESSION PLANNING   Presented  by:   Wm.  (Chip)  Valu9s,  PhD   www.pcg-services.com
  • 2. The  final  test  of  greatness  in  a  CEO  is   how  well  he  chooses  a  successor  and   whether  he  can  step  aside  and  let  his   successor  run  the  company                              Peter  Drucker   www.dill.com.br
  • 3. SUCCESSION    The  phrase  implies:     •  An  Event  —  occurs  the  day  the  boss  quits   •  An  End  —  seen  as  a  des9na9on  or  date  in  9me   •  Nega:vity  —  being  pushed  out  the  door  or  placed   on  a  shelf;  influence  stops   •  A  Barrier  —  something  that  must  be  overcome  or   removed  
  • 4. Succession  is…   A  new  beginning     A  process     A  racetrack  (con:nuous)   psdcollector.blogspot.com en.paperblog.com www.123rf.com
  • 5. A  journey   Most  of  all,  succession  is…   fineartamerica.com
  • 6. ADEQUATE  PREPARATION  IS  THE  KEY    This  includes:   •  An  agreement  or  willingness  to  go  on   the  trip   •  A  common  des9na9on  and/or  general   direc9on   •  Milestones  for  monitoring  progress   •  Fuel  to  sustain  your  journey   •  Fundamental  skills  for  dealing  with  trouble  
  • 7. CRITICAL  MILESTONES   1.  Entry  of  the  next  genera9on   2.  Agreement  to  perpetuate  the  business   3.  Comple9on  of  strategic  plans   4.  Comple9on  of  estate  and  financial  plans   5.  Iden9fica9on  of  a  successor   6.  Transi9on  of  power  and  control   7.  Competence  and  sa9sfac9on  in  new  roles   www.theolympian.com
  • 8. Guide  to  Obstacles:   A  Checklist  for  Failure  
  • 9. •  Secre9ve  environment;  liRle  communica9on  or  candor   •  Triangula9on:  Communica9ng  concerns  to  anybody  but  the  source   •  Conflict  which  has  remained  ac9ve  and  unresolved  for  years   •  Mystery  guests:  impact  of  spouses  and  others  not  directly  involved  in  the   business   •  Families  who   stuff  their  feelings  un9l  periodic  explosions  occur   •  Family  dynamics  and  issues  
  • 10. TIPS  FOR  SUCCESS   The  Business   •  Clear  responsibili9es  and  appropriate   authority   •  Accountability  and  consequences  for   performance   •  Construc9ve  conten9on   •  Sound  decision  making  and  problem  solving   •  Clear  boundaries   www.pwkoffice.com
  • 11. TIPS  FOR  SUCCESS    The  Family   •  Support  and  encouragement   •  Non-­‐family  mentoring   •  Appropriate  educa9on  and   outside  experience   •  Freedom  to  risk   •  Conflict  management  and   communica9on  skills   www.upwardonward.com
  • 12. TIPS  FOR  SUCCESS   The  Advisors   •  Clarify  roles  and  boundaries   with  the  owner/family/ business   •  Challenge  clients/deliver  bad   news   •  Facilitate  understanding   instead  of  agreements   •  Encourage  mul9-­‐discipline   interac9on   www.actioncoach.com
  • 13. TOOLS  TO  PREVENT  PROBLEMS   •  Guidelines  for  entry  into  the  business   •  Formal  developmental  plans   •  Family  councils,  mee9ngs  and/or  retreats   •  Codes  of  Conduct   •  Mission  Statements  or  Family  Creeds   •  Advisory  Boards  or  outside  mentors  
  • 14. QUESTIONS  PARENTS  MUST   ASK  THEMSELVES   •  Do  I  listen  openly  to  my  son/daughter  about  his/her  plans  for   the  business?  Do  I  encourage  such  dialogue?   •  Am  I  able  to  encourage  autonomy  and  hand  over  areas  of   responsibility  to  my  successor?   •  Do  I  feel  confident  about  his/her  leadership  abili9es?   •  Am  I  able  to  take  9me  away  from  the  office  without  worrying   and  constantly  checking  in?  
  • 15. QUESTIONS  _____  MUST  ASK  THEMSELVES   •  Have  I  aRempted  to  impart  all  I   know  about  running  the   business  to  my  successor?   •  Do  I  trust  my  successor s   judgment  when  it  comes  to   handling,  spending  and   alloca9ng  company  money?   •  Have  I  openly  championed  the   talents  of  my  successor  to  our   clients?  Allowed  him/her  room   to  deal  with  them  without   interference?   www.bjgoldreflections.com
  • 16. QUESTIONS  SUCCESSORS  MUST   ASK  THEMSELVES   •  Do  I  feel  capable  of  managing  this  business?   •  Do  I  have  enough  experience  to  run  this  business?   •  Do  I  have  a  clear  plan  for  how  I  would  run  the  business?   •  Am  I  willing  to  take  on  as  much  responsibility  for  the  business   as  my  parents  do?   •  Do  I  understand  and  respect  my  parents  way  of  managing   the  business?  
  • 17. QUESTIONS  SUCCESSORS  MUST   ASK  THEMSELVES   • Whatever  my  role,  do  I  willingly  offer  to  take  on  more  of   the  business  and  try  to  master  it?   • Do  I  seek  out  and  ini9ate  projects  of  my  own  and  follow   through  on  them?   • Am  I  able  to  seek  out  and  listen  to  my  parents  advice  and   comments  on  my  performance?   • If  cri9cized,  can  I  accept  and  objec9vely  evaluate  the   feedback?   • Do  my  siblings/family  and  I  share  a  common  vision  for  the   business?  
  • 18. Ques:ons  Advisors  Can  Ask   prometheism.net apinke.com ashtarcommandcrew.net plus.google.com
  • 19. •  Are  you  fully  commiRed  to  family  succession?    Is  it  a  dream   you  deeply  feel?   •  Will  your  spouse  and  you  be  financially  secure  a]er   re9rement?   •  Will  you  choose  a  successor  and  set  a  firm  date  to  pass  the   baton?   •  Do  you  truly  believe  there  is  life  a]er  re9rement?   •  Does  an  absorbing  new  challenge  or  interest  await  you  a]er   you  leave?   •  Are  you  able  to  delegate  decisions  and  authority?   •  Are  you  willing  to  let  others  take  new  business  risks?   •  Do  you  trust  key  people  with  financial  informa9on?  
  • 20. While  the  journey  can  be  difficult,  those  that  succeed   enjoy  many  benefits.    Be  deliberate;  be  courageous.     Work  the  issue  with  sincerity  and  expect  the  best   from  each  other.    The  rewards  are  many.     Good  luck!!