Involving Your Non-Family Executives In Succession Planning


Specializes in governance, strategy, finance and M&A. Author & Experienced Outside Director. Kona Advisors LLC.

Succession planning in a family business is always a delicate matter. Much has been written about how to deal with issues inside the family; both working and non-working family members need to be considered.

But what about the non-family executives? There is usually a small cadre of loyal, hard-working, non-family executives who are critical to running the business. Often, the chief financial officer or vice president of sales is at the top of the list.

If they have worked for the family for some years, they are likely already talking among themselves about what is going to happen. They know the age and health of the owners, the potential of the children and the health of the business. You want smart people working for you, and smart people ask good questions.

These people are information gatekeepers. They know what the staff is talking about, especially when no one is willing to raise delicate issues with the family. These gatekeepers are who the staff go to when they want to know what the family is saying and thinking. These are the responsible employees who answer on behalf of the family without getting the family involved in certain conversations.

In most family businesses, these few people are the fulcrum of how work gets done. They are the bridge between the “inner sanctum” of family discussions and the rank-and-file staff.

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With that frame of reference, why would you exclude them from the succession process? Having them as part of the process does not mean they are making decisions. But it is a way to increase the likelihood of a successful transition.

These comments apply equally to when the next generation rises to power or when the first non-family CEO is being brought in. In both cases, the key steps to consider are the same.

Establish a communications plan.

One of the most important parts of succession planning is how the family communicates on the issues. You need to manage the message. People like to gossip, especially when it involves job security. You want to tamp down this energy and get people focused on work. While each situation is different, you need to have a plan and stay ahead of the crowd.

The three parts of a good communication plan are:

1. What to say;

2. Who to say it to;

3. When to say it.

These decisions need to be made before the search process starts because the staff will see strangers coming through the building. They usually figure it out. The candidates will want to meet their future direct reports and ask questions to assess their level of interest in the job.

While the communications plan will need to be flexible and adaptable, you need a starting point.

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Get the perspective of non-family members.

The key non-family executives typically know the organization well, and they often know its nuances better than the family since they don’t have the emotional bias of the family members. They are likely to have more input.

Therefore, they can advise the family on risks, opportunities and concerns the family might be blind to. They want the business to be successful, and they want to be successful. They have a vested interest to make sure the succession process works well.

Their biases are easy to understand. Their first concern is likely with their personal job security. How will the change impact their job? Does this create an opportunity for advancement, or does it limit their career and earnings potential? They are likely to want a say in picking their new boss. It is fine for them to express opinions, but I would not suggest they get a vote on the matter, either. The family should be sensitive to these concerns and address them as part of an overall communications plan.

Ask non-family executives for help.

As the family gets close to making and announcing a decision, transition planning becomes the hot topic. If the family chooses to bring in a non-family CEO, then the issue is onboarding.

Great succession planning is marked by a series of non-events. Everyone knows the plan, and it is executed on an agreed timeline, and people perform and behave as expected.

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In reality, things don’t run that smoothly. If a child is promoted, they will likely need training and exposure to parts of the business they have not worked in before. If an outsider is coming in, they need to learn everything. In both cases, the key non-family executives are the critical link to making this happen. You will need their effort and support to increase the likelihood of success.

Build the future team.

Lastly, you want the new team to gel. As mentioned above, the key non-family executives should get to share their opinions, as they might be less cooperative than desired if they feel snubbed or passed over. They are smart enough to not get terminated, but they can make things more difficult as well. Or they can leave altogether. After all, people vote with their feet. The communications plan discussed above is likely the dominant factor in how they choose to behave, and you control the message.

The big issue in all of this uncertainty is that people don’t like feeling unsure, especially when it impacts their job security and professional satisfaction. Owners can reduce the perceived uncertainty by executing a thoughtful communications plan and bringing key non-family executives into the succession planning process. If they are outside the process, you are creating unnecessary surprises for them.


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