In sharp contrast, when owners of family businesses are surveyed about succession plans, from 65 percent to 80 percent admit they have no plan. In other words, Fortune 500 companies are already prepared to replace a CEO who has a fatal heart attack, goes down in a plane crash, is incapacitated by a stroke or severe accident, or simply retires. But the owners of tens of thousands of family enterprises show no evident regard for what happens to their companies, their employees, and their families if catastrophe strikes or retirement occurs. Nonetheless, succession planning is both a business duty and a family responsibility. Succession planning is a detailed process that should begin several years before an owner retires to start a new phase of life, finally fulfilling the dreams he and his spouse have worked so hard to achieve.
Succession is only an event when the owner is incapacitated or dies suddenly and no plan exists.
In family companies where this process is followed, succession succeeds more often than in companies that blunder or muddle through. Effective succession planning requires not only serious thought, but difficult emotional decisions, open communications, a willingness to listen to information and ideas from one's adult children, and the wisdom to take the initiative in creating and supporting the plan. In the next issue we will elaborate on developing an effective succession plan. Leonard Zweig is president of the Seattle-based Evergreen Center for Family Enterprise and founder of Family Business magazine.