The Challenge We Identified
Succession planning in family businesses can be fraught with challenges and emotion. This is particularly true when there are multiple children with varying skill sets and interest levels for running the company. Such was the situation when the second-generation owner of a large construction company turned to Decision Associates for help.
Our succession team discovered that this owner had survived a less than desirable experience when he succeeded his own father-in-law in the company. What’s more, of his three sons, only one expressed interest in joining the business. The owner and his wife wanted to determine which of the children truly had the capabilities to assume a role in the company and eventually lead it.
Our Approach To The Problem
Key to any succession plan is a deep understanding of each stakeholder’s needs and objectives. To that end, Decision Associates:
- Conducted interviews of the owner and his wife as well as each of the three sons
- Elicited objective appraisals of each of the sons’ capabilities from the parents and long-standing employees
- Assessed whether the one son who had expressed interest in the business could contribute immediately and purse a pathway to eventual earned-in ownership
Based on what we learned, Decision Associates shared the following recommendations:
- A successful plan truly requires a three-to-five year window
- The interested son did, in fact, have the skills and potential to make an impact in the business
- The company was missing a key role that was being addressed via third-party relationships; the son was a strong candidate to fill this role internally
- The business had several operational weaknesses that would need to be addressed as part of a successful succession
What Has Happened Since
One of the desired outcomes in succession planning is to enable the owner to visualize their exit from the business. Typically, an owner’s vision of their succession only occurs about 30 percent of the time. As Decision Associates wrapped the initial phase of this succession, we saw evidence of the following:
- The process provided the staff with the confidence that the company had a future they could depend on
- The son was underway in a newly defined role and providing quarterly updates of his progress to the owner, including:
- Performance against objectives
- Pace of progress agreed upon by owner and son
- Identification of critical projects to prepare the son for eventual ownership
