3 reasons we get succession wrong

Family businesses face a set of challenges others don't, says board advisor Anna Zanardi Cappon.

by Anna Zanardi Cappon
Last Updated: 28 Aug 2019

When a company finds itself looking for a new leader to steer its business, a disciplined decision-making process is crucial. Stable leadership is at the core of every business, and rash decisions must be avoided during its temporary absence.

A well-prepared organisation has a back-up plan, and a designated deputy CEO should be ready to step in when the unexpected happens.

However, many companies fail to recognise the essential steps to ensure that the organisation is ready to move forward and avoid costly mistakes in such a scenario, especially when it comes to family businesses. Here are the key steps for an effective succession plan:

1. Facing your mortality

Last November, even Jeff Bezos told his employees that "one day Amazon will fail". One of the reasons why we get succession wrong is because CEOs often avoid facing their mortality. In Steve Jobs’ commencement address at Stanford University in 2005, he said, "Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life".

Facing your mortality and thinking about transition periods can be sensitive, which is why planning is often postponed until it is too late. For family businesses it is vital to plan family assemblies and prioritise your relationship with your other family members.

2. Letting go

Not letting go can be detrimental to a smooth transition period, and this can be difficult for entrepreneurs who view their businesses as their legacy. For example, Luciano Benetton returned to Benetton Group at 82 years old after he left the company in 2008.

In an interview with Italian newspaper La Repubblica, he described the decline of Benetton as "intolerable pain". Many CEOs are controlling, and this is one of the reasons behind their success but also their downfall. The founder of the business must be ready to entrust the company to people who can take over the reins and implement an innovative strategy.

3. Governance

In many cases, governance is not taken into consideration as the crucial part of a succession plan. Governance structure needs to be questioned and constantly reviewed. The organisation also needs to make difficult decisions about who should succeed the CEO and the C-suite.

Italian billionaire Leonardo Del Vecchio has struggled to find an heir to his eyewear empire Luxottica, and since it merged with Essilor in 2017, the company has been plagued with governance issues.

There are unique challenges which are faced by family businesses when it comes to governance. This is because family dynamics can be trickier to navigate, especially when family members have a different ambition for the future of the company.

These conversations are also more difficult as it can affect family relationships, especially when there are family members who are not well suited to succeed in a role. A clear governance strategy will help improve business performance and manage the expectations of family members.

Anna Zanardi Cappon is a board advisor.

Image credit: Jeshoots.com/Pexels


Anna Zanardi Cappon recommends

The secret of a harmonious family business

Read more

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Where are the opportunities for growth in 2022?

MT Asks: The Metaverse, good customer service and regional investment could all be fertile areas...

Groupthink the cause of Partygate, argues workplace psychologist

Partygate happened because the 10 Downing Street team didn’t feel comfortable standing up to its...

Should a rule-breaking boss always step down?

As Credit Suisse’s António Horta-Osório steps down for breaking covid quarantine rules, Bojo has apologised...

How to know if it’s time for fight or flight

Here’s what leaders should consider if they find themselves in ethical hot water, by leadership...

“Hedging your bets is one of the worst things you can do as ...

Tharsus CEO Brian Palmer has just stepped back after years of bringing robotics into the...

A new way of leading: use a shadow board

How do leaders avoid becoming 'out of touch'? BAE Systems’ director Jo Massey, who runs...