3 Mistakes family businesses make in succession planning

Dice that spell successful, flipping to succession.

In this post, Yvonne Kinney, PhD, a Business Psychologist who studies human behavior in the workplace, provides a human-centered perspective on family succession planning.

We’ve all witnessed the chaos and dysfunction of family business succession play out in the news. What are contributing factors? Yvonne says, “many family businesses approach succession planning in a non-traditional way than corporations or other non-family businesses do.” She said there are three mistakes family businesses make when succession planning:

1. Approaching Succession Planning using Informal Practices and Processes

Whether using an arbitrary DIY method or abdicating the responsibility to the next generation, lack of intentional planning can lead to failures in the business. In addition, Yvonne can help you address a common concern of how you take a professional approach to family succession planning without losing your family spirit and values.

2. No Clear Path to Identifying Successors

Asking family members who may be interested to take over the family business without conducting a thorough recruitment and vetting process contributes to many misdirected transitions. The process you use doesn’t need to be rigid and formal, but it’s a good idea to match position requirements to the knowledge, skills and abilities of a next gen family member whose strengths align with what is needed in the role for the business to be successful. If a family member is not the right person, recruiting an outside leader is most beneficial for the company at this time.

3. Failing to Effectively Evaluate Successor Performance and Develop for Leadership Role

Family business leaders can also minimize the importance of evaluating and developing the performance and potential for leading and running the business of family employees. Feedback regarding performance is often delivered in an indirect and ambiguous manner to family members, leading to miscommunication and mediocre results. Who should conduct performance evaluations? Regardless of the situation, a non-family member is most suited to provide direct, non-emotional and purposeful feedback. However, even before evaluating performance, a family business can benefit from conducting leadership potential assessments, beginning development, assigning stretch goals and evaluating the individual’s potential for continued growth and development.

Whether your business transition is imminent or several years in the future, Yvonne can help you develop a succession plan that works for your business, help identify qualified next gen leaders albeit family or non-family members, create a baseline of performance and support developing them for success in a leadership role.

Contact Yvonne Kinney, PhD of Consulting Solutions LLC at 320.766.7788 or yvonne@consultingsolutions-llc.com today!