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Every entrepreneur is ultimately confronted with the question of succession planning – who can and wants to take on the business? When faced with this process, the entrepreneur is vulnerable to crisis and conflict, and in the worst case scenario, the family business peace can suffer considerably. Here, a professional mediator can be of great assistance.
The handing over of one’s business to the daughter or son is a fundamentally normal process in family businesses. But often times, the parent generation places great hope in its offspring while the child has his own ideas about how he wants to run the company in the future. The transition process is as a result quickly overshadowed by discrepancies and disagreements. In order to prevent a conflict or to deescalate the situation, it can be sensible to ask a neutral third person for help. This third party can be either a coach or a professional mediator, and his goal is to improve understanding among the involved parties – to understand the emotions and to make sense of actions accordingly.
As a prerequisite, all parties must agree on the involvement of the coach or mediator. Once everyone gives their consent, they can move on to the first phase.
In the first phase, the current boss and future boss both present their views on the situation independently, making clear what they expect from the other party and the transition process. The views can then be combined in a list that captures the specific goals of the two sides. The predecessor could perhaps declare that he still wants to keep a decision power to some extent. His successor on the other hand could express that he wants to decide more for himself.
Revealing true interests
Once the list of expectations are drafted, the second phase is all about uncovering the interests and motives behind the official positions. The mediator must help the parties uncover why they act in the way they do, and what is behind their actions. In order to do so, he can formulate clever questions that push both parties toward self-reflection.
This process can uncover a whole range of emotions; the predecessor might admit that he fears not being happy with his new post-work freedom. The successor in turn might admit that he longs for more appreciation for himself from his predecessor. It is all about developing a sense of understanding for the other party, and the mediator can help enrich this process greatly.
Jointly working out a transition strategy
When the interests of each party are clear, the mediator can move to the third phase, in which he helps form a transition strategy that encompasses the mutual consensus of the parties. This process includes the structuring of a clear procedure and activity flow, and it is an opportunity for joint decisions to be recorded in the form of binding contracts.
Throughout this process, communication must be open and constructive even when the mediator is not around. It is important that all parties express their expectations honestly, which can lead to a succession strategy based on trust.
Ultimately, the likelihood of a fluid transition hinges on how well a succession strategy has been worked out by its stakeholders. As such, entrepreneurs would do well to remember that involving a mediator in their business succession planning is a recipe for success.
6 tips for a successful succession
- Talk at an early stage: Jointly work out the key points of the transition at an early stage. This not only involves making rules for the concrete transfer of shares, but also for agreeing on the adaption of management structure and strategic alignment of the company. Set these rules in a confidential manner.
- Celebrate: Set a date and time for the handover of the keys and celebrate it with a symbolic act. Such acts can include giving the successor the head position at the conference table, the No. 1 office, the golden pocket watch, or perhaps a special celebration with all employees.
- Develop a leadership development plan: The successor must have proven leadership skills and profit responsibility. To ensure that they are ready, it is best to develop a leadership development plan that defines what needs to be done and when, how, and for what reason. It is important to involve a coach that accompanies the successor during this time.
- Think about the future: As a predecessor, you shouldn’t focus on the things that you lose, but rather think about what you will win as a result of handing over the business. Think about how you can make use of your newly won freedom, such as hobbies, family or philanthropic work.
- Define communication rules: Speak out about your concerns and expectations, and set goals and rules based on these discussions. Everyone should make clear who gets which information at what times, who takes on new projects, and who answers to employees, customers, suppliers, and the press.
- Involve a mediator: Regardless of whether there are conflicts or not, a mediator can structure the succession and help take into account the different interests of everyone involved. A mediator can help avoid the costs of potential conflicts – even those that threaten the continued existence of the family business.