Succession: Planning & Ensuring the Future of a Business

Every CEO has a respon­si­bil­i­ty to ensure the suc­cess and longevi­ty of a business.

This is espe­cial­ly true for fam­i­ly enter­pris­es. And this can be a com­plex and emo­tion­al process because this is about mor­tal­i­ty. Most peo­ple are not ready for it and don’t like it – even when the founder is well into their 80s.

I recent­ly sat down with Francine Car­lin, of the Busi­ness Har­mo­niz­er Group, to dis­cuss the intri­ca­cies of nav­i­gat­ing suc­ces­sion plan­ning in fam­i­ly business.

No-one lives for­ev­er – or will stay in a job for­ev­er – so plan­ning for suc­ces­sion is a real­is­tic and crit­i­cal part of business.

Here is the full inter­view with Francine:

Fam­i­ly Busi­ness is Big Business

• Glob­al­ly, the largest 500 fam­i­ly enter­pris­es gen­er­ate US$8.02 tril­lion in rev­enue – up 10% from 2021.
  • 2023 EY & Uni­ver­si­ty of St. Gallen Fam­i­ly Busi­ness Index, E&Y Glob­al Ltd.
• The U.S. econ­o­my is large­ly made up of fam­i­ly-owned or ‑con­trolled com­pa­nies, total­ing 87% of Amer­i­can busi­ness­es. They account for more than 82 mil­lion jobs, or 62% of the country’s work­force, and rep­re­sent 64% of U.S. gross domes­tic prod­uct (GDP) – total­ing $5.9 trillion.
  • First Bank Cen­tre for Fam­i­ly-Owned Busi­ness­es, 2024
• Fam­i­ly-owned busi­ness­es account for 63.1% of all pri­vate sec­tor firms in the Cana­di­an econ­o­my and gen­er­at­ed 48.9% of Canada’s real GDP in the pri­vate sec­tor, at $574.6 bil­lion. They also employ 6.9 mil­lion peo­ple across the coun­try, equiv­a­lent to 46.9% of pri­vate sec­tor employment.
  • Fam­i­ly Enter­prise Canada

Where to Start

Suc­ces­sion, says Francine, is a strate­gic deci­sion. It’s a jour­ney and a process nec­es­sary to ensure the on-going via­bil­i­ty of a busi­ness, and to sus­tain har­mo­ny with­in the fam­i­ly com­mu­ni­ty. Before get­ting down to the legal­i­ties, here are the first steps we recommend:

• Hire an Expert Facilitator

A neu­tral, trust­ed mas­ter­ful facil­i­ta­tor is crit­i­cal to estab­lish a safe envi­ron­ment, fos­ter col­lab­o­ra­tion and ensure everyone’s needs and con­cerns are heard. While it’s not ther­a­py, Francine calls it ​“facil­i­ta­tion with heart” that requires being open, vul­ner­a­ble and will­ing to hear oth­er peo­ple’s perspectives.

• Start the Con­ver­sa­tion Early

Every fam­i­ly mem­ber – whether they work in the busi­ness or not – needs to be at the table.

Nec­es­sary con­ver­sa­tions include talk­ing about retire­ment, choos­ing and groom­ing a suc­ces­sor, time­lines, fair own­er­ship agree­ments and pro­tect­ing fam­i­ly wealth, which are dif­fi­cult and influ­enced by fam­i­ly dynam­ics and his­to­ry. Each fam­i­ly member’s expe­ri­ence of the busi­ness and the own­er will be dif­fer­ent, depend­ing on their birth order and the life cycle of the busi­ness, over time.

These emo­tion­al, legal and tech­ni­cal con­ver­sa­tions take time – often years. With­out them, signed-off, fair agree­ments are unlikely.

“Some­times the jour­ney is a lit­tle more windy, more iter­a­tive and not prescriptive.

You have to meet peo­ple where they are.”

-Francine Car­lin

• Estab­lish codes of conduct

Com­pe­ti­tion, gos­sip and feel­ings can make for explo­sive and unpro­duc­tive con­ver­sa­tions, so get­ting agree­ment on codes of con­duct with­in and out­side meet­ings is critical.

Talk about the val­ues that are impor­tant to guide con­ver­sa­tions and deci­sions before you talk about strat­e­gy and governance.

Peo­ple need to see them­selves in their agree­ments going for­ward and to see that they helped shape the direc­tion forward.

• Cre­ate Emo­tion­al Assets

A sto­ry approach can be effec­tive to estab­lish everyone’s unique and col­lec­tive community’s con­nec­tion to the business.

Ask peo­ple to tell sto­ries – and share pho­tos or memen­toes — of their his­to­ry and expe­ri­ence with the fam­i­ly business.

• Cre­ate a Doc­u­ment of Agreement

While not a legal, tech­ni­cal doc­u­ment, an ​‘ever­green port­fo­lio’ is a char­ter that cap­tures the agree­ments made and stand as a reminder for codes of con­duct when ingrained habits and emo­tions take over. This can include:

• Com­mon val­ues ground­ed in respect and truth
• Prin­ci­ples of how you’re going to work together
• Def­i­n­i­tions of roles and lev­els of involve­ment. e.g. inter­est as an active employ­ee or to dis­tance themselves.

These agree­ments can, ide­al­ly, help the fam­i­ly to work bet­ter togeth­er, grow their gen­er­a­tional wealth, and be good cus­to­di­ans of the company.

The Chal­lenge

• If you run a fam­i­ly enter­prise, have you start­ed your suc­ces­sion planning?
• If not, what step can you take to begin?

Oth­er Blogs

• Have You Fig­ured Out Your SMaC Recipe for Success?
• Team Meet­ings, Debates, and the Pow­er of Bowl­ing Balls
• Get Your Ego Out of the Way to Align Around the Most Impor­tant Things

Old­er Podcasts

• Jim Collins’ Three Rules of Engage­ment for Healthy Teams
• What To Do When Your Team is Resist­ing Change

Fam­i­ly Enter­prise Resources

• Fam­i­ly Busi­ness magazine
• Saud­er’s Busi­ness Fam­i­lies Cen­tre, UBC