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Guidelines for Succession

Changes in management are often met with a number of obstacles. In order for the transition to be successful, it is important that your family business knows how to adapt. A change in management isn’t just inevitable—it’s essential for the success and continuity of a family-owned business. This is why succession planning is so important. It may be an extremely challenging phase for the business, but it is also the most critical to the longevity of the business.

Bottom line: if the family business isn’t capable of adjusting to change, it will not survive.

So how should a family business adjust to a change in management? Is there a definitive path each family business should follow to achieve effective succession? Well, not necessarily. Each family business has their own history, culture, and way of doing things, so trying to undergo succession through a cookie-cutter method might not achieve the best results. However, there are a set of universal guidelines that would be helpful to any family business facing succession. Here are a few:

  • The main thing to remember in the midst of succession: don’t expect successors or new management to be a replica of the previous management. Each individual has their own leadership style. Business owners need to appreciate their successor’s strengths and opinions and start building the business strategies around them.
  • Everyone’s opinion matters. Differing opinions should be discussed openly and accepted between both generations, rather than hoping they will conform to one another’s’ views. A system of shared values should be established between the two generations. Success will come from fairness and a high degree of trust among one another.
  • Senior management should be closely involved with the successor to mentor them and guide them through the transition phase. Consistent collaboration is key, as communication plays a big role in facilitating the growth and success of the business. Schedule frequent meetings to openly discuss any issues or challenges.
  • Invest time and energy in strong governance.  Research shows that regular family meetings, maintaining a board of directors, and strategic planning all support a successful succession.
  • Don’t hesitate to seek outside advice, such as a family business consultant. An outside advisor will provide an unbiased, third party perspective- a valuable asset to have during times of change.

Do you have any helpful succession tips that you’ve learned within your own family business?

For more content on succession, check out my latest book, Myths & Mortals on insights and strategies for successors of family businesses.

 

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