From the series: Successful succession planning – corporate culture as a component of succession planning in family businesses

Family-owned businesses are distinguished by their unique corporate structure and accompanying corporate culture, as leadership responsibility is often not distributed among many but carried by a single individual. This person stands at the center, possessing in-depth background knowledge, making all decisions, and understanding the company’s strategy. When the long-standing management retires or exits due to other circumstances, it leaves a significant gap. Filling this position from within can be challenging, and an ad-hoc solution through external management quickly reaches its limits. Succession planning does not happen overnight. It is a process that needs to be planned and thought through. Change takes time to be sustainably successful.

Assessment of Corporate Culture

Typically, family businesses have a strongly people-centered corporate culture. The entrepreneur is always accessible to employees’ concerns and acts in their interest. This microcosm, with its individual rules, values, and attitudes, invisibly influences the thought and action patterns and the entire communication of everyone involved. How and when reactions occur is not written down anywhere, yet it is predetermined for everyone.

When leadership predictably or unexpectedly disappears, it’s not surprising that the operational business no longer runs smoothly, and the workforce loses itself in professional and social uncertainties. The solution lies in paving the way with the support of external consulting before the rough patches arise.

It’s Never Too Early to Start

Strategic implementation of succession planning cannot begin too early. The sooner it starts, the longer the path on which innovations can develop alongside daily operations, and employees have the opportunity to gradually adjust to a new distribution of tasks, a new leadership style, and a new corporate culture.

To objectively analyze existing thought and action patterns and to sustainably break up structures for the future, profound external expertise is necessary. External consultants evaluate internal processes and analyze existing and future potentials, initiating structural steps necessary to keep the company competitive in the market.

Analysis of the Status Quo in the Company

Since the entrepreneur often acts as the contact person for all concerns, the entire corporate culture is strongly oriented towards him. Since the entrepreneur often acts as the contact person for all matters for his employees, the entire corporate culture is strongly oriented towards him. Without him as a fixed point, many employees feel uncertain in their actions. Making independent decisions is unaccustomed, as is developing their own solutions. To counteract this in time, the external consulting team gains an overview of the operational business, leadership tasks, and responsibilities. To help the family business achieve a sustainable leadership and decision-making culture, a detailed inventory is essential.

In the spirit of a new understanding of leadership, tasks, and responsibilities are sensibly re-segmented and distributed among several people in the next step, so that the owner is no longer the sole contact person for all topics.

What Does a Family Business Need for Succession Planning?

Uninfluenced and capable of making independent decisions in the interest of the company and all employees – that is the standard for the new leadership team. Internal leaders cannot meet this because letting go of all previous thought and action patterns will not be feasible for them. Due to their years of conditioning, they would continue to seek the owner’s perspective on major decisions and issues.

Therefore, the implementation of external leadership is obvious. Consultancies can competently support the selection process, as they have gained an objective insight into the family business and know the requirements for future leadership precisely.

Once the decision is made, the new management will focus on distributing leadership tasks, involving employees more in decisions, and empowering them to a greater extent.

Security in Times of Change

To develop the organization purposefully and enable change, it is relevant for the team of external consultants to communicate all steps transparently to the employees and reduce uncertainties. The involvement of the long-standing boss is essential here. Everything stands or falls with his support. A company should not lose its humanity, warmth, and social proximity because the leadership is changing. These values distinguish family businesses. Consistently conveying this during the transformation process is also the task of external consulting and important to maintain the sense of community in the company and motivate the workforce to embrace changes and support decisions. Only then can a broad, resilient foundation be created on which the realigned company can continue to grow: with strong leadership positions and a modern understanding of leadership.

As all these changes take place, the corporate culture also undergoes a transformation. The new fields of action require new behaviors, which gradually overwrite outdated thought patterns through consistent application. Communication becomes more branched. The company benefits from a broader knowledge base and higher motivation of the employees.

Succession Planning Requires Courage

Letting go and trusting that success is possible in a different way requires great courage on the part of the long-standing manager. Yet, it is a necessary step for the sake of all employees. The family entrepreneur is challenged to gradually relax his role and support and enable the change. It is essential to distance oneself from the operational daily business and no longer act as a contact person for the employees, so as not to undermine the new management.

Benefits of Timely Succession Planning

Change takes time, especially when not only professional changes occur but also the familiar work environment undergoes extensive changes. The earlier the first steps are taken and the more gently the realignment proceeds, the more the employees will carry all changes and embrace a modern leadership style.

Equally important is the change in corporate culture, which only happens over time. Employees who are allowed to fully develop their potential and are perceived at eye level are more motivated and, above all, more satisfied. Especially when, despite the comprehensive transformation, the guiding principle of a family-owned business – humanity – reliably remains.