Succession Planning

A set of planning activities which are carried out to define transfer of roles and responsibilities. Corporate Businesses with functional HR plans for alternates authorities for all key positions. Rather the successors are groomed to taken on those high profile positions as part of their career plan.

SME companies fail to understand importance of Succession Planning. In these companies the key positions are with the owners themselves. As a rule of the thumb, the son of founder owner is deemed / nominated successor of the business. However there is no plan for inducting the next generation into business in proper way. By coincidence, if next generation performs better in academics, there are lots of opportunities in the outside world. These opportunities seem to be more lucrative than entering family business.

Succession Challenges usually faced are

ü  Next Generation is not interested in continuing to work for family business

ü  Next Generation is not as competent as the founder is in the particular market, product or technology which happens to be core strength of the business so far.

(A founder director who has done PHD in Chemistry makes R&D as core strength of the company.  Unfortunately if son is not interested in subject chemistry, the core strength gets weakened over period of time if this issue is not attended properly)

ü  When and how to handover the control of business to next generation.

In many family businesses the older generation still tries to dominate or take full control of business even at age of 60-65 when next generation is experienced enough and matured reliably to take on responsibilities.

ü  Mix of generations from founders, either forum of cousins or sons of founder friends. These pose serious questions of control over various businesses or business functions.

ü  The two brothers or two friends who have started the business may never had misunderstandings or disputes over who will control what function of business and how much reward will he take. But the same understanding weakens when next generations get into the family business.