27 Mar Succession: The Prequel / Pregame for your Endgame
As the final season of the hit series “Succession” unfolds, fans of the Roy family’s power struggles will be glued to their sets. While the show may be an overly dramatic portrayal of a family enterprise, it serves as a reminder that the critical process of succession can be fraught with tensions and challenges. As the Roy family fights for control of their empire this season, real-life families in business can extract some valuable lessons about how to ensure the long-term success of the business without sacrificing relationships or their sanity. The first lesson is to start preparing sooner than you think, to be well positioned when the time comes.
Educate Early
Families who own businesses and aim for a smooth transition prioritize education for the next generation. It often starts informally when parents bring their children to work by design or of necessity. This early exposure allows younger generations to experience the excitement of entrepreneurship and the pride of ownership, which leaves a lasting impression. Family education can continue through stories told during drives or over meals together. High schoolers are ready to learn more about the business and can be invited to participate in family councils, board meetings and corporate events.
Establish Governance
Family business governance refers to the policies and practices that are put in place to manage the relationships between family members and the business. It involves establishing clear guiding principles, sometimes through a family constitution, for issues like family member employment, ownership transfer, inheritance plans, financial support, and decision-making. Governance also involves the creation of structures such as a board of directors, advisory board or family council to ensure that the business is run in a professional and transparent manner and to instill accountability.
Integrate Strategy
Strategic planning is an important tool for ensuring a smooth succession process. It identifies strengths to build on and threats to be neutralized, builds consensus among key stakeholders, and provides a roadmap for the future. Without a strategic plan, succession can become reactive and short-sighted, focusing only on who will become CEO or how shares will transfer, rather than aligning family, business and owner goals. Not only that, but succession carries with it an imperative for growth to remain relevant and competitive and create continued economic benefit for a growing family.
Enhance Communication
Succession involves difficult discussions and decisions. Success or failure often depends on family members’ ability to engage in productive dialogue with each other. Learning to communicate in healthy ways within a family takes time and effort, but several strategies can help including practicing self-regulation, setting clear boundaries, addressing conflicts in a timely manner and seeking outside support. These steps promote trust, enhance the well-being of all family members, and get you in better shape for succession discussions.
Preparing a family business for succession is a complex and sensitive process that requires careful planning and execution. Focus on laying the groundwork for success before you tackle the more difficult aspects of succession. The Roy family can certainly be riveting to watch on screen. But when it comes to succession, early education, effective governance, strategic planning and healthy communication are the real power plays.
Most leaders accept that at some time in the future, their time at the helm will end and the business will be given into the care of the next leader. However, just thinking about the transition can be daunting and overwhelming for the senior leader. If that weren’t enough, most owners experience their own succession just once. Tandem Partners provides the experience and professional guidance needed to move through the strategic, operational and interpersonal issues that are all a part of transition.
For families in business, success is not just measured in fiscal years, but over generations. Yet often, leaders are so focused on the day-to-day that they aren’t able to step back and focus on the issues that impact long-term sustainability. We help leadership teams assess where they are now, where they’re trying to go and how they’re going to get there. Our expertise in the areas of organizational strategy, structure, process and performance is a unique feature of our work, and integral to our transition management approach.
