Succession Planning and Management

Succession planning is the process of pinpointing key needs for leadership and intellectual talent throughout the business over time and preparing individuals for present and future work responsibilities.

Succession planning, when done effectively, it provides a pathway for future stability and ease the transition of next generation leaders.It also helps preserving Family Values and Traditions. Engaging the next generation in business transition planning promotes greater alignment, collaboration, and perhaps most importantly, trust in each other and a shared vision for the future.

Scotland has a saying that goes, “The father buys, the son builds, the grandchild sells, and his son begs.” This shows the importance of having a succession plan in place for family-owned business. According to research done, 70% of family businesses lose their wealth by the second generation, while 90% lose it by the third generation. It is also interesting to note that 45 % of family businesses in Kenya have no succession plan in place.

In the recent past, Kenyans have witnessed some family-owned companies collapse in the hands of improper succession planning the likes of Nakumatt, Tuskys and Akamba Bus(Ronalds).

When someone in a leadership position leaves the business, there is an obvious gap to fill. Without a clear succession plan, employees may compete for the position and engage.

Uncertainty of a sudden vacancy in the business’s leadership is enough to cause financial damage. Some businesses recover from these situations, but some never do. Investors scare easily and react to a change at the top by assuming the worst. This situation can be avoided with a solid succession plan where upcoming leadership candidates are groomed within the company.