When Pope Benedict XVI tendered his resignation Monday morning, he didn’t have to worry about finding a successor—the Vatican has a time-tested process for picking the next pope. But his announcement brought up emotional issues of mortality, identity, power that will be familiar to many chief executives who know that someone else will be sitting in their corner office one day. And when that CEO is running a family business, the process can get extremely complicated. Tensions naturally underlie the succession planning process, as it forces CEOs “to face their own mortality,” says John Beeson, principal of the management consultancy Beeson Consulting, and author of The Unwritten Rules: The Six Skills You Need to Get Promoted to the Executive Level (Jossey-Bass, 2010). “They’re afraid that’s going to prompt their departure, before they’re ready.” But add to the mix the logistical and emotional dynamics of a family-controlled business, and you’ve got a succession-planning task that can be challenging for any board of directors or general counsel to navigate. The overlap among family ties, family owners, and family employees or managers can make the situation even more complex. “Having objectivity in terms of determining who is best qualified to take over the leadership role can be more complicated,” says Stephanie Brun De Pontet, a senior consultant with Family Business Consulting Group Inc. The stakes for making the right leadership selection, though, are high. “A poor choice can fracture the board relationships—or in some cases can fracture family relationships,” says Beeson. Not to mention the risks to the company’s brand or its growth potential, lest a bad decision about a CEO lead to reputational damage or in-fighting among family members. “Having an objective, candid, open dialogue about this—that’s key,” says Beeson. “In the absence of that dialogue, some very unfortunate things can happen.” A sound selection process can mitigate those risks by creating transparency and breeding confidence about who ends up taking the helm. “Having a well-understood, methodical process—that helps breed confidence in the ultimate choice,” says Beeson. He recommends that boards ask not just who should be running the company in the future, but what skills the future leader should possess. “What kind of leadership will the company require based on industry trends and company strategy over the foreseeable future?” he asks. Beeson also advises companies to implement a fair process for identifying and testing internal candidates—and to apply those measures to external candidates as well. “What job experiences would best develop and test these individuals?” he says. With succession planning done far enough in advance, the company can also take steps to make sure board members get to know and trust possible successors, he says. By being an advocate for best practices, “the general counsel can play a really important role here” Beeson says.
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