Actually, what most family business owners overlook are the many other changes that often take place when handing over the reins to the next generation. For example, there may be a change in the business’ direction, operations and staff, or how decisions are made, work is allocated, or people are managed. Your business may have grown to a point where it is too large for one person to direct, meaning the new leader will look to delegate. These changes may mean that the structure of the business and the skills required to successfully operate it going forward should also be adjusted.
A change in leadership is an excellent opportunity to take stock of how your company has grown, how it will grow, and assess the skills and organizational structure it needs for the future.
Start by reviewing your business strategy to determine the most important focus for your organization going forward. This will influence the types of skills – and therefore the people – your business will need. For example, if products will be your focus, your business will need people who are able to create new products faster than competitors, build expertise in R&D and produce leading-edge goods. If the future of your company will rely on efficient operations, you’ll require people who can lower production costs through innovative processes and increase efficiency. If being the best at customer service is the key to future competitive advantage, you’ll need people who can build long-term relationships and consistently exceed customer expectations.
Next ask yourself, “When I leave, will the business have enough of the skills that are essential to continue, and to grow?” One effective and cost-efficient way to answer that question is to consult your managers for their thoughts. If they say no, develop a plan to acquire or train for the skills that will be needed. For example, if you have been the driving force behind new product design, assess whether the engineering, creative or innovation skills of your current employees match yours. If not, plan to fill the gaps you identify through training or recruitment.
Once you determine the focus and skills your business requires, think about how those capabilities should be organized to meet your corporate goals. Often, a company’s organizational structure is something that evolves, instead of being consciously designed, making you, the owner, the only person with clear management authority. This structure worked in the past because you have grown with the business and know it better than anyone. You command respect based on your experience, allowing you to mobilize your team to work toward a common direction. Your successor will not have the same foundation of experience or knowledge when taking over your role. So you need to support them and the company by clarifying the chain of direction and accountability, and the way in which work is clustered or organized, when you hand over your business.
Although there is no magic formula for determining the best structure for your organization there are two essentials to consider - the nature of the work your business does and the nature of decisions that need to be made. In companies where the work is complex, and requires a high degree of judgment, managers will have relatively fewer staff reporting to them. By contrast, if the work is straightforward, and easily guided by rules or defined processes, managers can effectively provide oversight and direction to a larger number of staff.
Regardless of the size or nature of your business, remember that you will take essential skills and organizational clarity with you when you leave. Take time to consider what is left behind and give the business the strength and structure it needs to ensure that your entrepreneurial legacy lives on.
Anna Stuart and Joe Moore are both Partners at Knightsbridge Robertson Surrette, Atlantic Canada’s leading integrated human capital solutions provider. Anna has provided recruitment, strategic and operational advisory services to governments, industries and family businesses throughout Atlantic Canada. Joe has been providing career guidance, financial counselling and retirement planning advice to Knightsbridge Robertson Surrette clients for over a decade.