Perhaps probably the most robust illustration of succession’s significance throughout the family company is the remarkable collection of family businesses that plan to hand over control to the following generation in the short-term. For instance, within the US alone, 40% of family business CEO’s are making plans to transfer power to the next generation inside the next 5 years. When seen in combination with the criteria surrounding succession, this statistic represents the importance of the succession process not only throughout the firm, but also on a macroeconomic level–family-owned businesses have served as the spine of society since the times of the traditional Greeks.
To add complication, many researchers have stated that the succession process may also be traumatic, in all probability clouding the objective of the firm and its members. For instance, because owner-managers in small companies have fewer organizational constraints to reduce their power, their choices can have proportionately higher outcomes for the firm. Also, from a mental perspective, owner-managers’ ideological zeal has a large impact on shaping an organizations function and direction. In this way, one can take into account that the absence of this passion post-succession will have an overly adverse effect on a firm. Finally, on a more glaring level, succession is one of the only occasions that a firm is sure to experience at some point in its lifecycle. Another strategy to indirectly discern the subject’s importance is by means of inspecting the amount of academic research dedicated to succession. During the twenty-year period between 1970 and 1990, the collection of educational articles on the matter jumped by 250%, and today, one third of all family business literature deals with succession subject matter.
While it may appear glaring that family companies must prepare for a succession event, it’s not always the case. In fact, until recently, most family companies did not have any succession plans in place. As you’ll be able to understand, planning for the switch of power is terribly important. Although this can be a lengthy procedure that involves creating talent around the workforce, an effective way to kick off the succession planning process is to study the key functional spaces in one’s company and create a fundamental succession plan for those areas. Using a succession planning template can a great deal help in this endeavor. Not only does it enable frank communication about succession plan, a succession planning template is helping to visualize what can also be an overwhelming subject.
All in all, it is very important that family businesses address the issue of succession in all areas of the trade and utilize templates that make working out the method more uncomplicated for all parties.
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