EDUCATION IS THE KEY TO SUCCESSION PREPAREDNESS
Updated: Jul 7, 2022
For too many families, succession planning seems too treacherous a journey to undertake, so they simply opt not to set off on it. As a result, they forgo a critical opportunity to shape their future for the better.
Imagine that you have to go on a five-year trip with your family to an unknown destination where very little of your previous knowledge and experience will be of any use. Imagine, furthermore, that your family’s material wealth, emotional well-being, and stature in the community will all depend on the successful completion of this trip. Wouldn’t you go out of your way to prepare your family for such a journey? Wouldn’t you, at a minimum, want to give them the basic survival skills necessary to complete the passage successfully?
Of course, you would. And yet there are many agribusiness families that are alarmingly ill-prepared for succession and continuity planning. Needless to say, the consequences are often unfortunate. For many families, the journey appears so daunting and so full of potential problems that they won’t even consider taking it. And in so doing, they lose a vital chance to structure the company and its finances to their advantage. In reality, of course, you don’t have much choice about whether or not to embark on the journey. The process of generational change in a family business is driven by the biological clock and can’t be stopped. Your only choice is whether you prepare for the journey and manage it accordingly, or let the outcome be determined by luck and happenstance.
CONSIDER THE INTANGIBLES
Some families rush into succession planning before they fully understand what is involved or have psychologically prepared themselves for it. They also sometimes get nudged into it by advisers, who may have the best intentions. Advisers are often eager to show their clients that they charge them only for concrete, tangible work, such as the planning process itself. Preparing for dramatic change, however, involves many intangibles.
Readiness is imperative, and the key to readiness is education. This may mean going beyond attending seminars and reading books and articles on succession. Some successful multi-generational family businesses make a concerted effort to learn about generational change in other family companies. When traveling, for example, they take the trouble to visit other families that have been in business successfully over generations and question them on how they do it.
In fact, there is no better predictor of how well families will fare during the stress of succession planning than the time, energy, and resources they invest in educating themselves about issues they are likely to encounter along the way. US-based family business consultant and author Dr. John L Ward put it this way: “Families that are committed to the continuity of their businesses into future generations are among the most likely to respect the need to educate themselves about what it takes to meet their goals.”
Education is important because it adds perspective. The more informed you are about the generic issues associated with what you are experiencing, the better you’ll be able to understand their manifestation in your particular case. Moreover, perspective can help you develop the traits encapsulated in Reinhold Niebuhr’s “serenity prayer”: “God grant me the serenity to accept the things I cannot change, courage to change the things I can, and the wisdom to know the difference”.
YOU’RE NOT ALONE
Education also provides validation. By knowing that other family businesses are dealing with many of the same issues as yours, you realize that what you are experiencing is not extraordinary. In fact, it may even be normal. One of the most frequent comments I hear from family-owned business clients is: “Thank you. Now I know that at least I’m not crazy!” Such a sense of normality can be comforting when you’re trying to sort out difficult and often emotionally loaded dilemmas. More importantly, the validation that comes from hearing the experiences of others can help your family anticipate what lies just over the hill ahead.
The phases of a generational transition are predictable, and being able to anticipate them greatly enhances our sense of mastery and control over the process of change. Knowing, for instance, that every transition evokes emotional resistance can help validate the fact that people throughout the system may be ambivalent about embarking on the journey. Education helps by legitimizing this resistance as a topic of discussion. And of course, the only way that family members can constructively work through and overcome their hesitancy to change is to discuss their feelings about it.
Education also gives families a language with which to solve problems. One of the biggest impediments to the management of generational transitions is that families simply don’t know how to talk about the issues. They don’t have concepts and labels with which to frame the issues they face and discuss them constructively. For example, the simple notion that different perspectives in a family business can be represented as three interlocking circles, depicting family, business, and ownership, can help stakeholders discuss and make sense of their experience.
More importantly, through acquiring a common language, agribusiness families can learn to communicate and,
ultimately act upon their circumstances. Finally, education nurtures hope. When families realize that others like them have taken the journey and come out stronger, they are better able to embrace the process of change and plan for it. This is one reason it’s so important to disseminate information about families that are models for managing generational transitions.
Published in the May 2022 Edition of Famer's Weekly
Family Legacies www.family-legacies.com is a multidisciplinary family business consulting company. Our consultants are leaders in their respective fields including; Family Business Consulting, Strategic Planning, Financial Planning, Wealth & Risk Management, Corporate Finance, Business Transitions & Exit Planning - Buy, Improve, Grow & Sell Businesses, Commercial & Family Law, Executive Coaching, Leadership Development & Facilitation, providing our clients with a professional and integrated multi-disciplinary service.