If there is a topic which family businesses like leaving on the back burner, that is succession planning. A research article just published a few days ago explains why. This research article (click HERE to read it) concludes as follows “While the need for succession planning and plan preparation is clearly expressed, no steps are taken due to the underestimation of its importance, the lack of both experience and relevant knowledge, often accompanied by emotional burdens that discourage planning.”
In my experience, family businesses that leave succession planning issues on the back burner, never end up well. However the most common pitfall I see in family businesses is just that. As you might recall, on the 1st February, 2023, the family business committee within the Malta Chamber published the results of an extensive research done amongst more than 100 different family businesses and the result was that the vast majority of family business interviewed are leaving the matter of succession planning on the back burner.
One of the sure ways for a family business to build RESILIENCE is through succession planning. But are family businesses really giving this the importance it deserves? Succession planning is a journey not an event. What do we mean by this? It is a journey as a succession planning journey gives 3 things. First of all that succession planning can really held family business nourish and build on one of their strongest ASSETS – THE FAMILY BOND! Secondly, proper succession planning process also gives peace of mind. It allows to prepare and scale up processes and governance structures to make sure that there are enough checks and balances within which future generations can work within successfully. Finally, a succession planning journey ensures sustainability, thus making sure that the future of the family business is well planned, beyond the lifespan of the present family leaders.
Many times the lack of importance to succession planning finds its routes in two main core issues.
The first is that the family business has no planning mindset. Most family businesses are engulfed in dealing with daily operational issues and just have no energy to deal with anything else. They are constantly like running on the spot- they get very tired but they remain stuck in their present position.
The second route cause is – I am quoiting from the research article I mentioned earlier on –According to Lansberg (1988), an important factor that deters incumbents from succession planning is unpreparedness or unwillingness to confront their own mortality. This is a very difficult and challenging psychological decision (Sharma et al., 2001) since, in most cases, incumbents find it difficult to imagine their lives without a significant leadership role in the family business (De Alwis, 2016; Kets de Vries, 1985). Many incumbents prefer to live in doubt despite the benefits and advantages that the planning and implementing of succession bring. Many of them avoid, dodge or even resist planning, because it entails premature re-ecting on the expiration of one’s life (Aronoff et al.,2011).
In essence my message is simple. There are great advantages to start the succession planning EARLY. It is NEVER too early. Postponing succession planning is likely to then give rise to conflict as a result of many unresolved issues. Then if you are try to solve issues and deal with any succession when the fighting is entrenched, you are just fighting a losing battle!
You may want to revisit the training session we had issued in 2022 on succession planning by clicking HERE.