Succession Planning Tactics

Start Early - Work Smart
Managing the Succession Process

succession planning tactics

These succession planning tactics show you the way to a successful transition in your family business. Consider all of them - they're tested and proven to help you.

"If the succession process has stalled in your family business, hiring an experienced family business succession coach could be the solution," according to leading family business expert Don Schwerzler. Schwerzler has been studying and advising family businesses for more than 40 years and he is the founder of the Family Business Institute. Here are some tips, some advice on how to avoid problems that can stall the succession management process.

  1. The sooner the succession planning process is started the better, and you will have more options. Another advantage: options, such as buying life insurance to fund the stock ownership transfer, tend to be less expensive when the owner is 45 versus 65.
  2. A child may have the right to inherit the business, but the right to manage the business must be earned. Urge your children to work at least two years outside the family business so they can learn different skills and experience making mistakes.
  3. Establishing an outside Advisory Board to help manage the transition allows family business professionals (from outside of the family and from outside of the business) to help deal with the tough issues. This advisory board is constructed differently than a board of directors and can be a very cost effective vehicle for bringing good advice and experience from outside.
  4. Conducting formal family meetings can help solve problems while they are small. Having an experienced Family Business Meeting Facilitator lead the first few family meetings can help establish and keep the family focused on the rules, goals and objectives.
  5. Develop non business interests.
  6. Develop financial resources that are independent of the business.
  7. The best succession plan might Cashing In rather than transferring the business to a family member.

    Sometimes, with family businesses, the focus is so much on succession that the most logical alternative is completely overlooked.

    If the family strategic plan and the business strategic plan have been done, we see two situations where selling is the best alternative.

    1. The business can't evolve with the changing conditions or environment. This inability to evolve might occur because it can't find the right people or; because technology or environmental factors necessitate capital investment or expenditure beyond the ability of the family / business to raise capital.
    2. The business has not been able to find and develop a competent successor.
    It is not easy for a family in business together to objectively face reality in either of these situations and there is the stigma of "defeat" or "quitting" that is often associated with a decision to abandon a goal. But the harsh reality is that in either of these situations, failure is almost certain and will happen even if the family decides to ignore reality and try to continue with the business / transfer. So, failure becomes a matter of when not if.

    In either case, early and realistic recognition will let the family sell the business rather than lose its investment and at least have the proceeds to carry on their goals in other forms.

  8. Evaluate a competent successor
    • This starts with the key elements in the succession planning process where the family and the business identify the culture, mission and strategy, and who they need to lead them to fulfill the mission. This process will naturally identify skills and competencies and these should have been built into job descriptions and development plans for the successors. The successor's progress in meeting and developing skills and competencies should therefore be extensively measured and documented by many people throughout the organization on a regular and continuous basis.
    • Less objective and more difficult to measure, but critically important, is to evaluate how the potential successor handles leadership and power. In a nutshell, can s/he take over the reigns of power and provide leadership that will be accepted by the organization and by the family. This is tricky to test and evaluate.

      If the outgoing CEO shelters the potential successor, and decrees the authority, the successor isn't tested against the "yes men" who are passive and accommodating - until after the outgoing authority is gone - then they rise in opposition to thwart and block the previously sheltered successor.

    • At the other extreme, the "shark tank" approach turns two or more potential successors loose in the business and lets them fight it out.

      Either approach can be devastating to the business and neither offers any realistic prospect that a suitable successor will survive. [The sheltered successor might well not toughen up under pressure; sharks don't necessarily make good leaders.]

    • A realistic outgoing CEO and family often seek the help of outside advisors or an Advisory Board to ensure that the job rotation and/or special assignments for the successor include situations where s/he will have to seize or assert some authority to be successful. Over time, the successor will have built a solid power base from within rather than just being handed power.
    • Perhaps even more difficult to measure, but critically important, is motivation. Does the potential successor really want to assume control? S/he might want the job, even really want it passionately, but for reasons such as being the eldest, for the power or prestige it might bring them... or for any number of other reasons... but is it really what they want to do?

  9. "Fairness versus equal" performance expectations
  10. In the obstacles to succession, we noted that parents often felt that fairness meant giving each child an equal share of the business when they might not have contributed equally to developing that business.

    Another aspect of fairness is in the area of performance expectation. Unless children earn their position on the basis of merit, unless they are expected to be accountable for their performance in the business just like any other employee, it will not be possible for them to effectively assume leadership after a succession / transition. So we have found that a key to success is to set the standard for performance and accountability from the earliest involvement.

    Less frequently, a parent sets the standard much higher for family members rather than lower and we have found this to be just as much of a problem.

  11. Set a standard for the business - family members must leave family behaviors at home and act like an employee. [Work outside the family business for part of one's career really helps here to show the standards of behavior that other organizations set.]
  12. Graduated retirement... but set and stick to a final date!
As the time for succession approaches, take longer and longer absences - both for the outgoing CEO to get used to being away, for the opportunity they offer to evaluate the potential successors, and for the organization and its customers and suppliers to get used to the fact that it can operate under the planned new leadership. But announce and stick to a date of withdrawal / succession.

As for the "outgoing" person having a continuing role, we have seen this happen admirably - and we have seen it fail spectacularly! The key to success is clarity and self discipline. If an ongoing role is agreeable, define its role, responsibilities, authority and accountability like any other job. Stick to those parameters and make sure that everyone knows that is all you are there for!

Use some [or maybe even all!] of these hints for succession planning tactics to help your family business prepare for and successfully make it through a transition of leadership.

Do you have questions about your Family Business?
Don't have the answers - don't know who to ask?
It's FREE to

Contact the


Reply within 48 hours.

Chaos Busters - The Management Guide

Identifies 160 Key Business Questions

  • 160 Key Business Questions will stimulate creativity and innovation for your entire management team!

  • 160 Key Business Questions are the keys to unlock the hidden potential of your organization!

  • 160 Key Business Questions will save you time and make your work more effective!

  • 160 Key Business Questions is a Multi-purpose tool with unlimited applications!

How Well Organized is YOUR Organization?

Your Business Will Succeed...


You have The Roadmap for Success

That's What

The Practitioner's Guide for Organizing an Organization
Is All About

  • PGOO shows how to identify the most pressing problems to solve
  • PGOO introduces the ODS-OL (Organizational Diagnostic Survey –Online) - an electronic assessment tool that is highly effective, easy to use, systematic and data-based
  • PGOO explains how to produce a better-organized organization

succession planning tactics Family Business Experts Understands
Family Values and Business Systems

Return from Succession Planning Tactics to
Family Business Articles