The following article originally appeared in the August newsletter to clients of Kiley Advisors, LLC. Reprinted with permission.
In this final article on Succession Planning, which we reiterate is THE hallmark of all successful organizations, we want to discuss two things: the critical steps that must occur when there is a change in the CEO role and ownership structure; and the critical relationship between the successor and the succeeded – this is key especially in a CEO change, but also important at all levels. Space and unequivocal support are the right approaches for the succeeded.
Change of control in the CEO position impacts all major constituencies – employees, clients, building partners and professional partners. In privately-held and family-held companies, this is almost always a three part process: Succession (selection of the person); Business Continuity (transferring the bonding and banking responsibilities); and Ownership Transfer (sale and purchase of stock, which also can lead to changes in the board structure). Specialized legal counsel should be involved as many legal documents must be properly executed. Hopefully, especially at this level, the transition has been well planned, the successor well-mentored and coached, and everyone impacted well-prepared in advance. The actual occurrence is seamless. However, sometimes tragedy necessitates this action occurring rapidly. Hopefully, there is a succession plan in motion, even if not refined or public.
The role and relationship at all levels between the successor and the succeeded is often the most important key to successful transitions. The best of all worlds is when the succeeded becomes the successor’s best supporter; the worst picture is when the succeeded becomes a public second guesser. Transitions are particularly difficult for founders “giving up their baby” – no longer in charge of the entity they built from scratch. Father-Son hand-offs are often the most subject to this tension point. The son will rarely do it just like the father. But he will, if he is the right successor, preserve the values and principles that generated the company’s growth and prosperity. Space is a great ally for both. It is an ideal time for the succeeded to take that long-awaited, often postponed “real vacation.” Both parties will benefit from breathing room.
Succession planning, like strategy, is a phrase many companies pay only lip service to. But in those companies that do approach it thoughtfully, with outside guidance as necessary, it is a major differentiator.
