Succession Planning and Succession Planning Template Significance in Family Businesses

Perhaps the most powerful illustration of succession's importance inside the family firm is the staggering number of family businesses that plan to hand over control to the next generation in the short-term. For instance, in the US alone, 40% of family business CEO's are planning to transfer power to the next generation within the next 5 years. When viewed in combination with the factors surrounding succession, this statistic truly represents the importance of the succession process not only within the firm, but also on a macroeconomic level-family-owned businesses have served as the backbone of society since the times of the ancient Greeks.

To add complication, many researchers have noted that the succession process can be traumatic, possibly clouding the vision or purpose of the firm and its members. For instance, because owner-managers in small businesses have fewer organizational constraints to curb their power, their decisions can have proportionately higher consequences for the firm. Also, from a psychological perspective, owner-managers' ideological zeal has a great effect on shaping an organizations purpose and direction. In this way, one can understand that the absence of this passion post-succession can have a very detrimental impact on a firm. Finally, on a more obvious level, succession is one of the only events that firm is bound to face at some point during its lifecycle. Another way to indirectly discern the subject's importance is by examining the amount of academic research dedicated to succession. During the twenty-year period between 1970 and 1990, the number of academic articles on the topic jumped by 250% and today, one third of all family business literature deals with succession subject matter.

While it may seem obvious that family businesses should prepare for a succession event, it's not always the case. In fact, until recently, most family businesses did not have any succession plans in place. As one can understand, planning for the transfer of power is extremely important. Although this is a long process that involves developing talent across the workforce, a good way to kick off the succession planning process is to review the key functional areas in one's company and create a basic succession plan for those areas. Using a succession planning template can greatly aid in this endeavor. Not only does it enable frank communication about succession plan, a succession planning template helps to visualize what can be an overwhelming subject. All in all, it is essential that family businesses address the issue of succession in all areas of the business and utilize templates that make understanding the process easier for all parties.