Of all the issues that can keep a founder of a privately held or family owned business awake at night is the question about who will lead the firm when he or she decides to retire or cannot function effectively in the job. Well known Small Business Administration statistics are not comforting; less than 30 percent of businesses survive a founder’s departure.
Succession planning in any organization is a complicated process, but this is a particularly difficult issue when there are so many competing subjective forces that affect one’s judgment. Adding executive assessment as part of your succession planning process can bring objectivity to your thinking. Given the statistics, it makes sense for family business owners to add some science to the succession planning process.
Executive assessment, typically, is a process where a psychologist interviews and has an executive complete standardized tests that measure various personal characteristics. For example, if the ability to learn from one’s experience is an important quality for your replacement, it can be measured. If honesty and integrity are important characteristics, that can be measured also. Usually assessments provide quantitative data on an executive’s personality, functional skills, problem solving skills and critical thinking, temperament, communication styles and management skills. The assessment brings rationality into an often too subjective decision making process about “what child should I choose?”
Owners do not often have a structured way to choose the next leader, so they rely on birth order or family precedent. But, an assessment allows you to compare individuals against a profile that is developed regarding what competencies are necessary to be a successful leader in your company. This information allows you to compare one child to another, or even to determine whether a child has some of the skills, but needs to develop strengths in some important, but underdeveloped, areas.
In privately held or family owned businesses, succession planning can be especially complicated because of the relationships and emotions involved. Bringing some science into the succession planning process, will allow the owner to change his thinking from who “should” get the job to who is best for the job. By relying on objective data, rather than emotions, when determining who will replace you it is possible to increase the odds of your company surviving your departure, while at the same time reducing your stress and family problems that can occur with a succession.