Businesses that have grown over generations successfully have a unique dilemma in front of them: Business continuity dilemma. This should not be misunderstood with the current stress on businesses due to COVID 19. It is more about the worry of how the business will continue further with the same intensity, scale, and values.

Generations have finite time, and the going concern concept of business means the show must go on, but the big question is how will it transit further. In this article of mine, I will articulate the views on successor planning or succession planning. In any case, the mantle is passed on, but the how is important to reflect.

A business entity will continue beyond individual life; this reality though well known is still not being considered well in time. 

 

The key critical components of the going concern concept of business:

1. Hesitation to discuss the going concern issues

A business entity will continue beyond individual life; this reality well known is still not being considered well in time. The topic attracts sensitivity, emotion, and is often misunderstood as an agenda with more vested interests than a practical objective discussion of proven reality. Organisations need to discuss this topic well in time without any offence to anyone.

2. Preferences and biases

The ability to stay out of personal comforts, preferences, and biases is crucial for the leaders. One of the biggest challenges is to remain objective.

3. Company interest first

The vital question at the Board level is, are we giving the discussion a succession planning flavour where the meritorious takes the seat or successor planning where the privileged and entitled who will take the seat needs to be made ready?

4. Talent management framework

How does talent come up in the system? Is there any framework? Has the company been creating leaders in the system?

5. Succession planning framework

Does the business have a succession planning framework? If yes, how robust is it? Does it have scope and space for merit and talent?

6. Rights or right

A big trick situation where things are complicated in succession planning is the rights of a family member to be the shortlisted candidate for succession planning or the right talent to be the essential choice for succession planning. The conundrum of successor planning or succession planning?

7. Stakeholders management

Key stakeholders have to be kept in mind while doing succession planning besides business goals. Long associations, relationships can get washed away in a jiffy the moment a new face emerges who has no perspective to the correct and productive legacies of the business.

8. Transition plan

How are the transition plans made? Are they made much earlier keeping the business requirements and transitions done proactively or forced changes when the scenario demands it? Mid-sized businesses may claim that it is not needed until it is a situation, but then it is a significant risk to the business. Careful planning must be done much before time to ensure that the transition happens by plan and not by accident.

9. Founder's dilemma 

The founder's dilemma is always the thought of the preferred or the deserving. A founder may wish to see his/ her replica in the transition, but that may not necessarily be the best for business.

10. Managing the change

The most vital component in the scheme is the element who will manage the transition and bring wisdom, governance, diligence, transparency and governance in the entire activity. Business must rely on the correct handholding on the matter.

In today’s business context, when some businesses are at the verge of questioning the existence due to lack of transition management. As the family line is either not interested or wants to express themselves differently the question to ponder by businesses, both small and large is to look only at successor planning or look at succession planning. A successor may fit in the strategy of succession planning, but the vision and thought must be explored well in time and much before the situation is staring at the face of business. History has enough evidence of great businesses not able to exist due to the issue of transition effectively due to the dichotomy of successor planning or succession planning.

Also read: Profitable organisation or Valuable organisation?

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