What Factors Contribute to Effective Succession in Family-owned Businesses?
Given the importance of succession planning in family-owned businesses, identifying the factors that contribute to success in family-owned businesses is not a matter of personal opinion and speculation but hard research evidence should unearth the factors. Carrying out research and finding research evidence is not easy. It requires a lot of effort. Moreover, just identifying the factors is not adequate. How each factor gets operationalized such that one executes an effective succession planning requires deep knowledge of psychology and organizational behavior.
Research suggests that six factors contribute to developing effective succession planning in family-owned businesses. These are: related to the incumbent, the successor, the mechanism for phasing in and phasing out, the constitution of the board of directors and their role, and lastly, following certain ground rules. Addressing none of these factors can happen by chance but is an area of expertise and timely making the right choices are important.
