Succession Planning & Corporate Governance
The next three decades will see the biggest intergenerational wealth transfer in history because of successions in family businesses. Within the dynamic MENA business environment, proper succession planning is crucial to the continuity and sustainability of all large family businesses and multinational institutions.
Succession in family businesses necessitates a long-term plan to build strong leadership that can execute the company’s current and cross-generational goals. LAU Consult has helped family businesses make it to the fourth and fifth generation while maintaining their standing among the biggest and most successful companies in the world. The continuity and growth of any family business demands the implementation of a multidimensional succession plan.
Today’s successful family succession implementations include some key steps, such as:
- Structuring and leading family retreats
- Institutionalizing a family council
- Developing a family constitution
- Formulating decision-making mechanisms across succession, governance and business functions
- Forming a board of directors, while defining forms of family involvement in the business, whether at the board-governance or management levels
- Discussing and rationalizing within the family council the need for succession, determining the positions requiring succession and the duties involved, and shortlisting candidates for the positions (if any)
- Meeting with top managers of the family business, and assessing the impact of succession per candidate, while gathering input to avoid resistance
- Forming a committee at the board level to oversee the process of succession both at the board and operational levels • Grooming family members selected for succession on the tasks each will handle
- Integrating management accounting and control systems to solidify a transparent culture between family members and management
- Instilling a process for conflict management between family members, board members and management.
Succession planning involves non-family members as well. Following from the notion of talent retention and its cost-saving benefits, succession planning enables organizations to promote from within, thus increasing the potential of a positive impact on performance management. Such succession of key positions is a multidimensional task, involving:
- Soft skills
- Technical knowledge of the position at hand, including job description and competencies, direct reports per position, etc.
- A high level of emotional intelligence to manage the succession and its operational and performance ramifications.
Moreover, key to any successful C-suite succession is a system of corporate governance, in particular, a board of directors along with a compensation and benefits committee, an audit and finance committee, and, for key positions, a succession committee to oversee the process and its potential impact on the business as a whole.
Irrespective of your organization’s ownership structure, LAU Consult will help you establish the necessary governance configurations to ensure that your organization adapts to the changing environment.