Once the successor has aquired some basic business skills, he or she can move on to developing the capabilities and qualities associated with leadership. The successor’s focus at this stage stretches beyond the present – to when he or she will be ultimately responsible for business operations.
Our experience is that effective family business leaders have insight: to business, to family, and to self. Many of the prior steps to succession planning will serve to nurture and develop successors through various operational roles build insight to business and self.
Engaging with the family, especially if the family business has also embraced governance that involves both business and family governance, will serve to develop the necessary insights to family. If the family governance processes involve education and communication over time then those ultimately selected for leadership will be those that know how to manage the dynamics of both family and business. Securing the commitment of family as owners, successors need to be able to articulate strategic visions for the family enterprise driven from the family’s values and shared by all.
However in family businesses, the functions of leadership may be shared among owners and/or family members who run the business (these may or may not be the same people). Thus, transitions in leadership can be complex in that it may not be one leader passing the baton to a single successor. The presence of an effective board of directors working in conjunction with a family council can however alleviate much of the difficulty. The Board of Directors and the CEO can share the leadership function. The Board, when informed of family expectations conveyed through family governance mechanisms can help create the vision and formulate the strategic plan business. The CEO is typically responsible for implementing the agreed strategy.