Separate Family, Business Concerns for Succession Plan to Work

TEC Worldwide is an international organization of more than 7,000 business owners, company presidents and chief executives. TEC members meet in small peer groups to share their business experiences and help one another solve problems. The following questions and answers are based on recent TEC meetings in Southern California.

Question: After 30 plus years of running my company, the time has come for me to move on. I want to leave the business to my three sons, but I'm not sure who should run it after I'm gone. Two have worked in the business a long time and are equally capable of taking over the reins. The third, however, is a bit of a prima donna and has a tendency to overrate his own skills and importance to the business. How do I choose a successor without wrecking my family or the business?

Answer: Succession planning needs to start long before you exit the business, so hopefully you're not too eager to ride off into the sunset.

According to Mike Kiley, president of the Chamberlain Group in Irvine, you must first define the relationship between the family and the business by establishing a clear-cut policy for family members working in it. This includes a policy that covers key issues like who works in the business, what qualifications they need and how they can move up through the ranks. (This kind of policy not only sets the ground rules for family members, but it also lets non-family employees know what to expect.)

Getting a head start on your succession planning also gives you time to work out any conflicts that might arise. Like the parent business owner, the children can have a large part of their self-esteem and self-image tied up in the company. Many have a difficult time accepting their roles in the new order, especially when those roles don't meet their expectations.

When making the decision about your successor, separate family issues from business issues. Ask yourself, "From a purely business standpoint, who is best qualified to run this company after I'm gone?" To get an objective viewpoint, consider using an independent advisory board made up of a mixture of experienced professionals and family members.

In addition to helping identify a successor, this kind of board also can help to resolve other complex family business issues.

Finally, recognize that "fair" is not the same as "equal." You don't want to play favorites among your children, but at the same time you have to consider what makes sense for the business.

For example, it might be equal to install the two capable sons as co-presidents, but would it be fair to the business and everyone who works in it? Such a structure could easily end up creating the power struggles you hoped to avoid in the first place.

In most family businesses, there are no "right" answers. But by understanding all the issues, you have a much better chance of making the best decision for your family and the business.

Question: Our problem solving and brainstorming sessions always start out with a lot of energy and enthusiasm, but they never really go anywhere and we rarely get many good ideas. Often, as soon as someone puts an idea on the table someone else jumps in and immediately kills it. What can I do to spark more creative thinking and generate some positive results?

Answer: Many people think of brainstorming as a kind of wild, undisciplined process. In reality, the best brainstorming sessions rely on a firm structure and format to guide the creative thinking. You want to bring out the best ideas from everyone in the room, but you don't want to lose control of the process.

To stay focused on the problem at hand and get better results:

* Clearly define the problem. Whenever possible, give the problem statement a quantitative value, such as, "We need to come up with three workable ideas to solve our current distribution problems."

This will give your team some clear criteria to work with and a goal to shoot for.

* Break out of the box. Encourage outlandish ideas. Think in terms of possibilities, not solutions.

* Strive for quantity, not quality. Have people call out their ideas in rapid-fire succession. The more ideas you come up with, the better.

* Combine and improve. Ideas tend to spark each other. When someone comes up with an idea, build on and add to it. Don't hold back just because an idea might seem similar.

* Avoid criticism. Do not permit any criticism, judgment or nay-saying until you have collected all the ideas and narrowed the list down to a few legitimate possibilities. There is no such thing as a bad idea in a brainstorming session.

* Set a time limit. Having a deadline raises the energy level and encourages people to throw out ideas as quickly as possible.

Finally, make sure everyone around the table contributes at least one idea. And never settle for the first idea, no matter how good it seems. That shuts down the creative process and prevents even better ideas from coming out.

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If there is a business issue you would like addressed in this column, contact TEC at (800) 274-2367, Ext. 3177. To learn more about TEC, visit http://www.teconline.com.

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