In the corporate world, it’s common, expected, and sometimes required to have a succession plan for key leaders. It’s a prudent risk management strategy, for all of the reasons. Companies must disclose their plans to their boards and in certain public filings. Family-owned companies are sometimes beloved enough that it can even be newsworthy, such as The great boomer business handover comes to Stew Leonard's by Business Insider.
And yet, we tend to fall short on succession planning within our families and for our family wealth. If we are to run the Business of the Family like a business, how can we improve and evolve here? Obviously, the situations are slightly different but parallel, so many of the corporate best practices can apply. Asking Gemini for a quick summation yields:
- Start early and plan continuously: Begin the succession planning process well before it is needed to prevent rushed decisions, allow sufficient time for talent development, and ensure smooth transitions
- Identify critical roles: Focus planning efforts on pivotal leadership positions and key roles that have the highest strategic and operational impact on the organization
- Assess current talent and gaps: Evaluate current leadership capabilities and bench strength to pinpoint readiness gaps and tailor talent development programs effectively
- Align with business strategy: Ensure that the succession pipeline directly supports the organization's long-term objectives, growth, and future vision
- Foster development and mentorship: Provide high-potential employees with hands-on opportunities, stretch assignments, and structured mentoring to accelerate leadership readiness
This seems like a reasonable place to start. What could that look like in practice? Maybe something like:
- Start early and plan continuously: We can share age-appropriate information, legal documents, asset balances, and long-term goals during Family Board Meetings
- Identify critical roles: Is the Next Generation more interested in the financial details or the family’s healthspan or the operations of the Business of the Family? This informs the POAs
- Assess current talent and gaps: We were all taught and mentored by elders in industry, let’s be honest about current skills, role needs, and how to coach up the Next Generation as needed
- Align with business strategy: Do we have one? What are the 1-3-5-10-25-50 year goals of the family? This is another way to map out and align the Estate Plan, increasing transparency
- Foster development and mentorship: The best way to learn how to hike mountains is to start hiking mountains, so we need to let the Next Generation grow
What is presupposed in the above? That we are actually running the Business of the Family like a business. We’ve organized the Operating Agreements of the family (wills, trusts, insurance policies, etc). We’ve accounted for the assets. We’ve done the goal setting. We’re running Family Board Meetings. Estate planning is part of the rhythm of life.
Does this sound like too much? Fret not, as the FAM and Stewards are here to help. We’re all in this together, and we can do this. Mom and Dad are worth it. The Next Generation is worth it. Our family legacy is worth it. Let’s move our families forward…