With the recent announcement of Jim Shaw stepping down as CEO of cable giant Shaw Communications and handing the reigns over to his brother Bradley, succession planning seems to be in the spotlight these days.
Jim Shaw led the company that his father JR Shaw founded for the past 12 years, but with the recent $2 billion acquisition of Canwest/Global TV it was apparent that Bradley’s more strategic style and vision would best lead Shaw into the future.
Business Succession Planning
Business succession planning is critical for the future success of your company, especially if you run a family business. It is a well known fact that family business succession planning fails by the third generation. In fact, more than 70 percent of family owned businesses do not survive the transition from founder to second generation. Perhaps this failure from successive generations comes from a lack of communication and vision from the company founder.
Follow these tips to ensure a smoother transition from one generation to another:
- Start Early – The more time you spend on business succession planning, the more successful you are likely to be. Five to ten years is a good time frame to build an exit strategy into your business plan
- Talk To Your Family – Just having a vision in your head of how the company will survive after you move on is probably not the best strategy for a successful transition. You need to talk to your family and ensure that your plan in tune with the goals and ambitions of everyone concerned
- Plan Accordingly – You may want your first born to run the business, but does he have the business skills or even the interest to do it? Perhaps there is another family member more capable, or someone outside the family better suited for the job.
- Train Your Successor – Don’t just appoint your successor and walk away. You need to choose your heir apparent and then work with them on the nuances of the business before you hand over the keys.
- Get Outside Help – Accountants, Lawyers, Financial Planners can all help shape what your business succession plan will look like. Sometimes it is best to get an outside perspective to avoid a myopic view on the future of your company.
One of the most inspiring business leaders of all time was Jack Welch, Chairman and CEO of General Electric. In 1994, years before he retired from GE, Jack Welch had started the succession planning process. He developed a list of qualities, skills and characteristics a CEO should essentially have. So, GE was ready for its next CEO, years before it finally had to make the decision in 1999.
GE had three candidates – Jeff Immelt, James McNerney and Robert Nardelli. All three were ideal candidates and aspirants for the top job. All three exceeded every expectation required. Finally, the youngest of the three, Immelt was chosen. McNerney and Nardelli, moved on as the CEOs of 3M and Home Depot, respectively.
While this isn’t an example of a family business succession plan, all leaders and companies can take inspiration and should devise succession plans, the Jack Welch style.