Succession Planning: The leader you like or the leader you need?

Succession Planning: The leader you like or the leader you need?
Published: 6/02/2010 at 12:00 AM
Newspaper section: Business

One major factor in determining an organisation's character, direction and future is the character of its leaders. This is why leading organisations worldwide attach considerable importance and investment into finding good leaders, leaders who can respond to expectations and to the organisational direction and changing circumstances to create success and sustainable growth.

How can organisations be confident that the leaders they choose will be well-suited for dealing with the organisation, its challenges and future? What characteristics and qualifications should the organisation leader have? And what parameters and characteristics should be used for this consideration?

For almost two years, an alliance of APM Group and Hogan (a leading global company specialising in personnel evaluation) has done research in this area. The goal is to find the qualifications of leaders who will be suitable successors, leaders who will best be able to face a continuously changing business future and best be able to handle the current and future competition and competitive environment.

We started by finding information on high-performance CEOs in America, Europe and Asia. Initially, we could not clearly identify common characteristics and qualifications. So we narrowed our focus to good performance in profit and expansion of business growth. Finally, we obtained information on 55 leading organisations with double profit expansion every year.

We also studied 94 leading organisations that have shown the best succession planning. We considered what characteristics and qualifications the successors of these organisations had by specifically emphasising the people undergoing succession planning. We studied how the 94 organisations prepared their people and what qualifications the people had.

Next, we compared the obtained information with the information from the first 55 organisations to find similarities and differences. We also considered 405 middle talent managers who have been under talent management plans for five consecutive years.

These are the information sources I studied to bring that important and useful information to further exchange with readers.

The leader you "like" and the "ideal" leader: I have worked closely with executives of many leading organisations over my 18 years as a consultant, and one question I always ask is whether they use old information when selecting people or in succession planning. It is an issue I want all executives to consider.

Currently, leading organisations use the current situation or future plans to prepare and select qualifications and characteristics for new successors. The past is not usually taken into consideration.

Finding new characteristics and qualifications for organisation leaders is very important. It is a significant factor that affects the organisation model, business operation, strategy and future of the organisation for more than 10 years. Therefore, selecting a new leader is delicate and must be seriously done in an in-depth manner.

The leader must be both a person you like and the ideal person for the position. Organisations have to ask themselves what information they use when they make succession plans, whether they consider previous guidelines or future expectations.

Today, organisations have a forward-focus: they look to tomorrow and not to yesterday. In the past, old methods and old qualifications might have been successful and suitable. There is nothing wrong with methods and qualifications that have been proven successful in the past. But today's e-world revolves faster: we have to closely watch trading and business operations - every second, it seems.

Currently, the rate of change is fast. There are a myriad more factors, situations, information sources and data. And there are requirements with which we must be more careful than in the past. So we have to be careful when we ask ourselves if the leader we intend to select is the person we like and is also ideal for the position.

Today, organisations are focusing their readiness on those areas they expect to increase or change in the future. And they need to ask themselves whether the leader they are looking to can deal with those things. While many organisations still adhere to old models that used to be successful in the past, they need to ask whether those methods can still be used now.

Some of the old methods can - should - be kept, but they need to be carefully considered in the light of expected future events and changes. In those areas where the older methods will not work, organisations need to consider new requirements both in-depth and widely, in order to select the most suitable and most ideal leader.


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Arinya Talerngsri is managing director at the APM Group, Thailand's leading Organisation & People Development Consultancy. Write her at arinyat@apm.co.th

http://www.bangkokpost.com/business/economics/32439/succession-planning-the-leader-you-like-or-the-leader-you-need

Feud over family company is better avoided through careful planning

Saturday January 16, 2010
Feud over Syed Kechik’s millions goes to High Court
By NURBAITI HAMDAN


KUALA LUMPUR: The children of the late Tan Sri Syed Kechik Syed Mohamed Al-Bukhary have gone to court to fight over the RM400mil estate he left behind.

The High Court granted an injunction applied by his two daughters – Sharifah Zarah and Sharifah Munira – to prevent their half-brother Syed Gamal from interfering in Syed Kechik Holdings Sdn Bhd’s affairs yesterday.

Syed Gamal, 45, who is Syed Kechik’s only son from his first marriage, is not allowed to intervene in the administration, enter the premises and access the records and accounts of the company.

He is also barred from interfering in the duties of the company directors.

The sisters, who are directors of the company, were not present but were represented by laywer Datuk Vijay Kumar.

This is the second injunction granted by a court in the family saga that started after Syed Kechik’s death last year.

Syed Gamal had obtained an ex-parte injunction at the Syariah Court on Sept 14 to stop his 44% stake in the company from being sold or liquidated.

Justice K. Anantham, who presided over the High Court case in his chambers at the Jalan Duta court complex here, ruled that the Syariah Court had no jurisdiction over the company because it is a corporate entity.

Syed Gamal, who was with his cousin Syed Azman Syed Mansor Al-Bukhary, said his lawyers would appeal against the decision.

“I will continue with my struggle to pursue my rights according to Faraid law. My rights have been denied almost all my life. This is not a struggle for myself but also for my family,” he said when met outside the courtroom.

Syed Gamal was represented by his three lawyers – Atan Mustaffa Yussof Ahmad, Az-mi Tan Sri Dr Mohd Rais and Zulkifli B.C. Yong. Syed Kechik died at the age of 81 on April 10 last year.

His son-in-law is Al-Bukhary Foundation chairman Tan Sri Syed Mokhtar Al-Bukhary.

http://thestar.com.my/news/story.asp?file=/2010/1/16/nation/5483928&sec=nation

Setting your family meeting structure

Nothing is wrong with the living room for an annual family business meeting if you're talking about your immediate family, but consider these guidelines as your business evolves:

- Always have a formal agenda that all participating memebrs contribute to in advance.  As in any business meeting, you should be prepared with facts and exhibits, if necessary.  Distribute this agenda before the meeting so everyone can review it.

- Designate a facilitator for the meeting - in small groups, the responsibility can move around (it's good training for the kids), but as the group gets larger, you may want to work with a professional facilitator or someone who can manage the event without a stake in it. 

- Appoint someone to act as the meeting secretary to keep a running history of discussion in these meetings.

- Make it a priority to increase the growth and value of the company, and devote at least part of the meeting to report on how that's going.

- Set ground rules about anger and conflict, in family businesses, emotions run high, and unchecked emotion in family meetings can derail other critical business.

- As more family memebrs join the business, consider neutral territory if doing so makes the crowd more comfortable and facilitates discussion.

So your kids are in grammar school? Plan anyway

Considering how the transfer of assets will go in a family can never start early enough. 

Your objective is to preserve the value of the business and personal assets you've created, no matter how old you and your kids are. 

The uncertainty over the estate tax exemption (US) in the next few years means that the best idea is to discuss strategy now rather than later.

Most financial experts advise that you revise your estate plan every five years or as lifestyle issues change.

Remember, the estate and valuation issues with your business don't exist in a vacuum.  To ensure that the value of your business will benefit your kids and future generations, you need to do some very prescient planning.

Succession conspiracy in family company

Does your business look like this?

Ivan Landsberg, a Yale University expert in family businesses, coined the term succession conspiracy - how business owners, their spouses, their family members, and non-family co-workers either consciously or unconsciously make damaging decisions that foil the effective succession of the busines to the next generation.

He described three general types of family business management structures back in the 1980s:

Controlling owner:  A single owner is involved in every aspect of the business and makes critical decisions.  Typically little or no planning occurs for this owner's departure.

Sibling partnership:  Siblings may share leadership, or a lead sibling may be designated - or designated by default - to make most of the business's key decisions.

Cousin consortium:  This structure is common among some of the biggest family fortunes in the world.  When the business has been passed on to the children of prior sibling owners, eventually several branches of the family share ownership, and coalitions may be formed to create blocks of stock that represent more voting power.

Aligning with any of these ownership structures doesn't mean your family company is necessary sliding off the rails.  But if you recognise yourself in any of these structures, ask yourself whether the following also applies:

• The owner has created a succession plan that not only sets benchmarks for who the next generation leadership will be but also comes with full buy-in from all family memebrs, young and old, with a stake in the business.
• The owner and top family officers have spoken with family members recently either separately or in a group about their feelings about the business and whether any conflicts or issues need to be worked out.  Better yet, is there a formal meeting structure?
• The owner has helped craft - with experienced legal and tax professionals - a quality transition plan that allows her the money and freedom to work in the family business if she's asked or to comfortably start retirement or a new phase of her career.

Facts about family-owned companies

The following statistics were collected by the Boston-based Family Firm Institute:

The leadership of 39 % of family-owned businesses changed hands by the end of 2008.

34% of family firms expected the next CEO to be a woman; 52% of participants hired at least one female family member full time, and 10% employed two female family members of  the same status.

Of CEOs age 61 or older and due to retire in 2008, 55% had not yet chosen thier replacement.

Deciding What to do about the Family Company

Need to understand the followings:

Why parallel planning for the family and the business is crucial

Facts about family-owned companies

How families hurt their business's valuation without even knowing it

Ways to constructively manage family conflicts

Family friction and the need for valuation

When a founder dies

When a founder dies, families can go to war for reasons far more emotional than economical.  Relationships forged in childhood don't always translate into effective working relationships in a shared business concern.  At the same time, family members who have been longtime employees in a business may feel that they have a deeper stake in the business than cousins and siblings who have worked elsewhere.

Divorce

Likewise, divorce breaks up more than a few family businesses.  Both partie in a divorce frequently do valuation if a family business is involved as a prime asset. 

Family matters are critical drivers for valuation.