SUCCESSION PLANNING  

Presented  by:  Wm.  (Chip)  Valu9s,  PhD  

www.pcg-services.com

“The  final  test  of  greatness  in  a  CEO  is  how  well  he  chooses  a  successor  and  whether  he  can  step  aside  and  let  his  

successor  run  the  company”                              Peter  Drucker  

www.dill.com.br

SUCCESSION  

 The  phrase  implies:    

•  An  Event  —  occurs  the  day  the  boss  quits  •  An  End  —  seen  as  a  des9na9on  or  date  in  9me  •  Nega:vity  —  being  pushed  out  the  door  or  placed  on  a  shelf;  influence  stops  

•  A  Barrier  —  something  that  must  be  overcome  or  removed  

Succession  is…  

A  new  beginning     A  process     A  racetrack  (con:nuous)  

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A  journey  

Most  of  all,  succession  is…  

fineartamerica.com

ADEQUATE  PREPARATION  IS  THE  KEY  

 This  includes:  •  An  agreement  or  willingness  to  go  on  the  trip  

•  A  common  des9na9on  and/or  general  direc9on  

•  Milestones  for  monitoring  progress  •  Fuel  to  sustain  your  journey  •  Fundamental  skills  for  dealing  with  trouble  

CRITICAL  MILESTONES  

1.  Entry  of  the  next  genera9on  

2.  Agreement  to  perpetuate  the  business  

3.  Comple9on  of  strategic  plans  

4.  Comple9on  of  estate  and  financial  plans  

5.  Iden9fica9on  of  a  successor  

6.  Transi9on  of  power  and  control  

7.  Competence  and  sa9sfac9on  in  new  roles  

www.theolympian.com

Guide  to  Obstacles:  A  Checklist  for  Failure  

•  Secre9ve  environment;  liRle  communica9on  or  candor  

•  Triangula9on:  Communica9ng  concerns  to  anybody  but  the  source  

•  Conflict  which  has  remained  ac9ve  and  unresolved  for  years  

•  Mystery  guests:  impact  of  spouses  and  others  not  directly  involved  in  the  business  

•  Families  who  “stuff”  their  feelings  un9l  periodic  explosions  occur  

•  Family  dynamics  and  issues  

TIPS  FOR  SUCCESS  

The  Business  •  Clear  responsibili9es  and  appropriate  authority  

•  Accountability  and  consequences  for  performance  

•  Construc9ve  conten9on  •  Sound  decision  making  and  problem  solving  

•  Clear  boundaries  

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TIPS  FOR  SUCCESS  

 The  Family  

•  Support  and  encouragement  

•  Non-­‐family  mentoring  

•  Appropriate  educa9on  and  outside  experience  

•  Freedom  to  risk  

•  Conflict  management  and  communica9on  skills  

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TIPS  FOR  SUCCESS  

The  Advisors  •  Clarify  roles  and  boundaries  

with  the  owner/family/business  

•  Challenge  clients/deliver  bad  news  

•  Facilitate  understanding  instead  of  agreements  

•  Encourage  mul9-­‐discipline  interac9on  

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TOOLS  TO  PREVENT  PROBLEMS  

•  Guidelines  for  entry  into  the  business  

•  Formal  developmental  plans  

•  Family  councils,  mee9ngs  and/or  retreats  

•  Codes  of  Conduct  

•  Mission  Statements  or  Family  Creeds  

•  Advisory  Boards  or  outside  mentors  

QUESTIONS  PARENTS  MUST  ASK  THEMSELVES  

•  Do  I  listen  openly  to  my  son/daughter  about  his/her  plans  for  the  business?  Do  I  encourage  such  dialogue?  

•  Am  I  able  to  encourage  autonomy  and  hand  over  areas  of  responsibility  to  my  successor?  

•  Do  I  feel  confident  about  his/her  leadership  abili9es?  •  Am  I  able  to  take  9me  away  from  the  office  without  worrying  

and  constantly  checking  in?  

QUESTIONS  _____  MUST  ASK  THEMSELVES  

•  Have  I  aRempted  to  impart  all  I  know  about  running  the  business  to  my  successor?  •  Do  I  trust  my  successor’s  judgment  when  it  comes  to  handling,  spending  and  alloca9ng  company  money?  •  Have  I  openly  championed  the  talents  of  my  successor  to  our  clients?  Allowed  him/her  room  to  deal  with  them  without  interference?  

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QUESTIONS  SUCCESSORS  MUST  ASK  THEMSELVES  

•  Do  I  feel  capable  of  managing  this  business?  •  Do  I  have  enough  experience  to  run  this  business?  •  Do  I  have  a  clear  plan  for  how  I  would  run  the  business?  •  Am  I  willing  to  take  on  as  much  responsibility  for  the  business  as  my  parents  do?  •  Do  I  understand  and  respect  my  parents’  way  of  managing  the  business?  

QUESTIONS  SUCCESSORS  MUST  ASK  THEMSELVES  

• Whatever  my  role,  do  I  willingly  offer  to  take  on  more  of  the  business  and  try  to  master  it?  • Do  I  seek  out  and  ini9ate  projects  of  my  own  and  follow  through  on  them?  • Am  I  able  to  seek  out  and  listen  to  my  parents’  advice  and  comments  on  my  performance?  •  If  cri9cized,  can  I  accept  and  objec9vely  evaluate  the  feedback?  • Do  my  siblings/family  and  I  share  a  common  vision  for  the  business?  

Ques:ons  Advisors  Can  Ask  

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•  Are  you  fully  commiRed  to  family  succession?    Is  it  a  dream  you  deeply  feel?  

•  Will  your  spouse  and  you  be  financially  secure  a]er  re9rement?  

•  Will  you  choose  a  successor  and  set  a  firm  date  to  pass  the  baton?  

•  Do  you  truly  believe  there  is  life  a]er  re9rement?  •  Does  an  absorbing  new  challenge  or  interest  await  you  a]er  

you  leave?  •  Are  you  able  to  delegate  decisions  and  authority?  •  Are  you  willing  to  let  others  take  new  business  risks?  •  Do  you  trust  key  people  with  financial  informa9on?  

While  the  journey  can  be  difficult,  those  that  succeed  enjoy  many  benefits.    Be  deliberate;  be  courageous.  

 Work  the  issue  with  sincerity  and  expect  the  best  

from  each  other.    The  rewards  are  many.    

Good  luck!!