Your retail baby is growing up. The retail world is changing. You aren’t as young as you used to be, but you aren’t ready to walk away.
Your children and maybe grandchildren have joined the business and their generation is nothing like your generation. How can you continue to grow the business, maintain family harmony and keep ahead of the retail game?
Succession planning is a crucial step in a business’s future growth. Unfortunately, many people consider it like a will in that it spells the end of their career or the end of their involvement in their retail business and they avoid the process or continue to put it off.
When you discuss family businesses and succession in retail, a founder finds it even more difficult to walk away from their retail baby. They started the business from scratch, they have built it to what it is today. What will they do with their time?
In Australia, succession planning will continue to be a growing issue. We have an ageing population with in excess of 4,000 people turning 65 each week, people are living and working longer than ever before. How many people are actually looking to retire at 65? This creates further challenges when it comes to succession planning.
With everyone living and working longer, we are seeing what is considered a generational “stack up”. What does that mean?
We have the potential for 4 generations to be all working in the business at one point in time. When we look at the generations;
- Gen Techs – the oldest of this generation are about to turn 20;
- Gen Y – the oldest are approaching 36
- Gen X – will be approaching their late 50’s
- Baby Boomers – some will be in their 70s.
To add to the challenge, each generation has a very different skillset, approach to work and attitude towards life. If the succession process is not properly managed this can be difficult.
The key to succession planning as part of your overall strategic plan, is to ensure you are aware of and on top of all these issues, and you are working towards developing each of your team members, including the development of the next generation. It is a matter of understanding what skills the next generation bring to the business as well as having them understand what they can learn from the previous generations. The older generations still play an important role in the business, they have experience the younger generations can learn from.
The older generations still play an important role in the business, they have experience the younger generations can learn from. Conversely, the younger generation has a new way of doing business and new outlook and philosophy on life. If you wish to grow you need to embrace both of these and not just continue to do things as they were done by the previous generation and expect you will continue to progress forward.
Succession planning is a continual process. The development of the next generation should become a permanent Key Performance Indicator (KPI), for all family members. The success of the family business relies on the development of the next generation.
As in the corporate world, as soon as someone has transitioned into the CEO role, it is time to start analysing the skill set required for a successor. In a family business, this can be more challenging, particularly when there are family members in the business that may not have the necessary skills required. As a consequence, we encourage independent people to have a strategic involvement in the succession process to ensure it is not overly influenced by family emotion.
Retail businesses that have successfully transitioned from one generation to the next have followed the following steps:
1. Analysis
Succession planning is a very important step in your businesses strategic plan to ensure business growth for the future. The Analysis stage is forecasting the future, what do you believe will be the challenges and opportunities in the next 5-10 years. What skill set will you be looking for in someone to ensure your business has the opportunity to mitigate the challenges and make the most of the opportunities?
It is unusual that when a business looks into the future, that they will need the same attributes and strengths of the current CEO. They have been selected as they have the right characteristics to help the business grow in the next 5 years, not beyond that.
The process of creating a credible outlook for the future should not be taken lightly.
In a family retail business, it is important that judgement is not clouded by the current skillset of family members. Just because they don’t have the skill set today, does not mean they can’t be developed over the next 5 years. Nor does it mean that they are not the right person for the job. It will demonstrate however where the future development is required. This process is best approached with a blank piece of paper where you detail what you are looking for.
2. Development
Once you have analysed the skill sets required for the future, you are in a strong position to design a development plan. The plan can include external courses, development of leadership skills, gaining experience in another retail business, obtaining qualifications, attending coaching and mentoring sessions.
A lot can be done in 2-4 years to grow and develop the next executive.
It is also important that your current CEO is aware that developing the next generation is part of their role and KPIs. Jack Welsh of General Electric is considered one of the most successful CEO’s to develop a succession plan. It is said that he allocated 50% of his time to developing, growing and nurturing the next generation.
3. Selection
It is important that you don’t earmark only one potential successor. Over the next 5 years, you don’t know what will happen they may want a change in career, may fall ill, and may not develop in the areas you need and at the pace required. By having multiple potential successors, you are not only setting them up for success, but also creating a high-performance team.
Those selected may include both family and non-family members. It is beneficial having independent people in the process to ensure the required skills are a characteristic of all potential successors.
4. Transition
It is important in the transition phase to allow individuals to shine at what they are good at. They were appointed as successor because they possess the skill set required for the future success of your business. Ensure you enhance that skill and don’t stifle it.
A coaching plan should be in place for at least the next 12 months. Remember an incumbent has different skills to yourself, but equally, you have experience and knowledge and they can learn from sharing. All CEO’s make mistakes and learn from them. If you can pass on your learnings, it ensures one less mistake may be made in the business going forward.
The development plan should not cease at this point in time. There is always more to learn and other areas which can be developed.
Providing a coach will also offer a supportive resource that can help the successor continue to do the personal work he or she began when the company initiated the succession development process.
