Why succession plan is healthy for your firm

The chairman of this family owned group of companies has a very interesting management strategy. He had employed his children and hired managers to assist his children in their roles. PHOTO | FILE

What you need to know:

  • The chairman of this group of companies has a very interesting management strategy. He had employed his children and hired managers to assist his children in their roles.
  • He too had a list of informers in his payroll. Many of his informers were either old men who he had natured a special relationship with or women many of whom would end up being in his list of wives.
  • Do you have a will?. Be sure to ask yourself all these questions and perhaps even more. Seek the answers too.

I was once employed in a family owned business. It was an interesting job.

The family firm had interest in hospitality, real estate, farming and also clearing and forwarding.

The chairman of this group of companies has a very interesting management strategy. He had employed his children and hired managers to assist his children in their roles.

He too had a list of informers in his payroll. Many of his informers were either old men who he had natured a special relationship with or women many of whom would end up being in his list of wives.

Some were well known as formal wives others were providing handy information to gain trust and perhaps, become wives one day.

I have been closely observing family owned businesses and realised that many of the founders depend on informers or close associates to gather business intelligence.

Sometimes, the informers are so trusted that even family members may struggle to get things going because of constant consultation with the intelligence agents.

I must say that some businessmen have been very successful with this strategy and grown multi-billion businesses with this governance plan.

IDENTIFY POTENTIAL

Just like any strategy, it works well when all the people involved are alive and are trustful. This strategy, however, comes tumbling down with the death of the founder.

I know of many business empires in Kenya that are in “wait and see” situations. I was recently engaging some business support consultants who expressed shock at how some businesses transacted billions of shillings but there was little or nothing to show for sound governance structures.

Indeed, these business consultants could not understand how these entities succeeded.

However, when trust is good and relationships are strong, people can go far together.

But the trouble strikes when the nucleus of the business dies. This is an eventuality that must happen one day.

And when it does, many businesses begin to falter. Rivalry may erupt in family owned firms and the informers may wonder what would become of them. This situation turns into the many fights we see hurting once-thriving business empires.

It is very important to strategise on succession planning for your business.

If the cases you may have seen on the press touching on other family businesses sadden you, do not sit and console yourself with the thought that it will not happen to you.

Be proactive and start succession planning. Identify and mould people with the potential to fill key leadership positions in the business. In short, in a family business, it is a plan put in place to transition from the founder to the next.

Succession planning is often critical in family owned businesses where one individual has become not only the face of the company but also has an immense amount of business knowledge and contacts that are critical to the entity’s future survival.

SENSE OF ENTITLEMENT

Ask yourself; Do you have a plan or strategy in place should you as the business patriarch or matriarch be unable to return to work for a long period of time perhaps due to illness or death?

If you have the plan, is it well documented and has it been communicated to key business stakeholders?

From your family and the informers circle, do you have a process in place to ensure that well-trained people take over competently?

Will you have some family members or informers with a sense of entitlement bring down your business empire in months due to a feeling of entitlement for example?

Have you effectively communicated the vision of your business to all key people?

Do you have a will?

Be sure to ask yourself all these questions and perhaps even more. Seek the answers too.

Tragedy, be it death or disease does not come knocking. Be prepared so that your business empire does not go with you but instead provides prosperity for your future generations.