Succession Planning: How do I Train the Next General Manager?

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20 Νοε 2013 (πριν από 3 χρόνια και 6 μήνες)

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Strategic Business Planning for Commercial Producers

Succession Planning: How do I
Train the Next General Manager?



Strategic Business Planning for Commercial Producers

What is succession planning?

…it is a
PROCESS

that ensures the
continuation of a business through the
generations.

“The final test of greatness in a CEO is how well he


chooses a successor and whether he can step aside


and let his successor run the company.”





Peter Drucker, management expert


Strategic Business Planning for Commercial Producers


90% of U.S. businesses are categorized as family
owned.


7 of America’s 8 oldest family businesses are farms.


While 78% intend to pass the business on to children,
only 34% create a succession plan (for 25% a will is
the only element of that plan).


70% of first generation businesses fail to survive into
the second generation.


15% survive into third generation.


1% survive into the fourth generation.

Source: Small Business Administration

Did you know. . .

Strategic Business Planning for Commercial Producers

Strategic Business Planning for Commercial Producers

Steps in Succession Planning
Process

1.
Understand what succession is

2.
Discover expectations

3.
Examine options

4.
Create a plan

5.
Check with experts

6.
Finalize the plan

7.
Implement the plan

Strategic Business Planning for Commercial Producers

Step 1. What Succession Is and Is Not

Succession is:


A process


About family, people and
relationships


About ownership,
management and estate


About what is fair


Driven by the family
values, wants and
concerns


Succession is not:


An event


One person’s problem



About minimizing taxes



About equity


Driven by technical issues
that are handled by
lawyers, accountants, etc.


Strategic Business Planning for Commercial Producers

Step 2: Discovering Expectations


Should involve all family member
(whether in the business or not)


Assumptions at any stage about other’s
wants or expectations should not be made


Say no to secrecy!


Strategic Business Planning for Commercial Producers

Perry

Rose

Perry Jr.

Kay

Say NO to Secrecy!

Strategic Business Planning for Commercial Producers

Step 3: Examine Options

Key Questions:


What role, if any, will family members play in the
succession plan?


What can we do to treat all offspring fairly?


How can I prepare for either a different role in the
business or for retirement?


How will the transfer of ownership be handled?


How will the successor(s) be trained?


How will the change in roles be communicated to
stakeholders?

Strategic Business Planning for Commercial Producers

Bob

Joe

Friend

Part
-
time farmer

Key employee

Carl

Farm Owner

Jan

Physician

Family First versus Business First

Strategic Business Planning for Commercial Producers

Robert

Fair versus Equal

Strategic Business Planning for Commercial Producers

Step 4: Create a Succession Plan


Plan for transferring management


Plan for transferring property


Contingency plan for managing
disruptive events

Strategic Business Planning for Commercial Producers

Choosing the Successor


What specific attributes would you
look for in a successor?


Education


Experience


Personal characteristics


Skills required


Job responsibilities

Strategic Business Planning for Commercial Producers

Grooming the Successor


How do you provide opportunities to make
decisions, take risks, and develop management
skills?


Initial evaluation


Management training


Career growth


Regular feedback


Timetable (allow 5 years to 15 years)

Strategic Business Planning for Commercial Producers

Charles for Charles



1
2
3
4
5
6
7
8
9
10
1
Crop Management

Negotiation skills
4
Livestock management
Marketing
Purchasing

17
Leadership skills

16

15
Communication skills


14
Ability to act and accept risk
13
Decision making

12
Analytical ability

11

Emotional endurance

10
Physical endurance
9
Securing resources

8
Financial management
7

Personnel management

6
Building construction skills

5
Mechanical ability

3


2
Low
High
Average
Dad for Charles

l

l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
Evaluation of Farm
Management Skills

Strategic Business Planning for Commercial Producers

Step 5: Check with Experts


Use them to comment on your thinking,
not to do your thinking for you


Should be visited only after you’ve
thought about the process


Strategic Business Planning for Commercial Producers

Step 6: Finalize the Plan

Write it down!

Strategic Business Planning for Commercial Producers

Step 7: Implement Plan


How to announce the plan?


Develop program with action plans


Set target dates


Schedule follow up/review of program


Keep everyone informed


Review the plan periodically

Strategic Business Planning for Commercial Producers

Typical Parent
-
Child Business
Arrangements On Family Farms


Spin
-
off model


Landlord
-
tenant model


The “super
-
firm” model

Strategic Business Planning for Commercial Producers

Critical Issues:



Transfer of management


Transfer of assets


Anticipating disruptive events

Succession Planning

Strategic Business Planning for Commercial Producers

Strategic Business Planning for Commercial Producers

Key Questions About Involvement In the
Family Business


Who are the participants?


What role(s) will each family member
play in the business?


Employee concerns include income and
benefits, financial security, recognition


Manager concerns include
responsibility and authority, career growth,
recognition


Owner financial growth, risk versus
reward, rate of return, cash

Strategic Business Planning for Commercial Producers

Think About Separating The Roles


No single participant need wear all three
hats as manager, employee, and owner


One advantage of business entities
(super
-
firms) is they allow us to separate
ownership and management


Provides opportunity to keep non
-
farm
heirs involved as investors

Strategic Business Planning for Commercial Producers

Fundamental Tasks When Planning to
Accommodate Off
-
Farm Heirs


Assure a degree of marketability to
investments of off
-
farm heirs, minority
interest holders


Provide assurances about current or
future returns on their investments


Provide for legitimate forms of
involvement in family/farm governance

Strategic Business Planning for Commercial Producers

Multiple Entities

(Advantage: Flexibility in Numbers)



May be easier to deal equitably with on
-
farm and off
-
farm heirs


Using a new operating entity reduces the
investment needed by on
-
farm heirs to
gain control of the operating entity

Strategic Business Planning for Commercial Producers

Family Governance Structures:

Family Council



Includes all adult parties in interest to
business or family assets


Deals with questions of the family’s role in
the business and the welfare of family
members


Purpose is to give all stakeholders a
legitimate voice in the family business

Strategic Business Planning for Commercial Producers

Strategic Business Planning for
Commercial Producers