An Unusual Succession Plan is Better Than Nothing

Succession planning private companies

I recently read an article written by Margaret Steen that described a very unusual approach to succession planning, which if nothing else, demonstrates that there can be many different paths to achieving a successful succession.

Ms. Steen describes a second generation family business being run by a father, Bill, who had five children and a nephew in the family business. Bill had recently had some health issues, and he recognized that he needed to consider who would succeed him and begin to get some kind of plan in place. He settled on three potential candidates: an older son, Peter, the youngest son, Paul, and his nephew, Jeff.

Bill began the process by asking each of the three candidates to write up a business plan of how they would run the company if they were in charge. After some time, Jeff and Peter each came back with plans that were about 20 pages long. Paul came back with a plan that was a 300 page detailed plan of what he would do with each segment of the business. Bill continued to struggle with making a decision and finally decided to form an executive committee of the three candidates, and have them decide among themselves who would replace Bill as CEO.

It took the executive committee two years and many discussions and deliberations to arrive at a decision, but ultimately they decided that Paul, the youngest of the family, should be made CEO.

I think most would agree that this approach would not be considered a “best practice” in succession planning and I do not put the account forward as a model to follow. But there are a couple of interesting results from this account. First, because the executive committee was able to push through the process and come to agreement on who should be the successor, there were no hard feelings between them that Dad had chosen one over the other two. Plus, by establishing the executive committee, Bill empowered his strongest family members to work to a succession solution that would be agreeable to the whole family.

Now, I think the reality is that the process could have just as easily gone in another direction with hard feelings and infighting and with no decision forthcoming. And I say, again, that this is not a best practice approach. But the point is that unlike many companies, Bill did something. While the approach was unconventional, it did produce what turned out to be a successful result. So if you are stuck on this issue of succession planning, recognize that there are many different approaches you might take, and doing at least something is likely far better than doing nothing at all.

Contact us at 215.441.4600 or Email if you have questions or would like to discuss how this topic may impact your business.

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