Succession means different things to different CEOs.
For family businesses, it means readying the next generation for leadership, as well as managing the financial well-being of both the older and younger generations. If the shift is from company founder to the next generation, a board of directors must generally be created. All parties need to learn how that should work, and what roles and responsibilities are appropriate for each of the “hats” that family members wear. Confusing the roles of owner, board member, executive and sibling is common.
In many professional services firms, there isn’t enough emphasis on the value of leadership, and no clear career path for partners who want to put leadership ahead of or on par with their professional duties. Without a leadership track, the firm may find itself pulling from a small pool of reluctant candidates, or eager candidates who have not proven themselves in smaller leadership roles or who have not fully earned the backing of their partners.
Investor Backed Firms
Most of these firms plan to grow quickly. That pace of growth challenges all the team leaders to grow their skills as fast as the firm. Many of these companies need new talent in their top management team. Sometimes incumbents fight this and other times they support it, knowing that the real payday comes with an exit and the liquidation of their ownership interests. Successors must be identified before the organization becomes desperate to get them on board, to allow ample transition time. Regardless, such transitions are uncomfortable, yet they remain critical.