Succession, refers to the process of transferring managerial control from one leader or one generation of leaders to the next. It also includes the dynamics preceding the actual transition as well as the aftermath of the transition (Adedayo, Ojo, 2016, p.91) .
The succession process is described as a mutual adjustment between the role of the founder and the next generation. It is an evolutionary process with multiple periods, characterised by a gradual increase in the involvement of the successor, accompanied by a diminution of the founder’s involvement, which, in a final phase, culminates in the transference of power between the founder and the successor (Marques, Couto, 2020, p.44) .
Family companies risks can be summarized as legal risks, financial risks, cognitive and emotional risks, managerial risks and family risks.
These risks are related to succession management. In general, succession management is the manage of risks. In fact, bad planning at the time of succession could result in the loss of 6.3 million jobs, according to estimates by the European Observatory. The European Commission points out that approximately 30% of companies in a transfer situation are on the verge of bankruptcy due to poor preparation of the succession. Most recently, the European Family Business Barometer (KPMG, 2017) anticipates that, in the next five years, the greatest transfer of power and intergenerational wealth of modern times will be seen at European level.
Thereby succession management is a comprehensive study which inludes law structuring, ownership structuring, financial structuring, emotional sturucturing, administrative structuring, strategical structuring, human recourses structuring. Briefly succession management is being managed of succession process and succession of property and management control from one generation to another generation.
As it can be understood, succession management which acts as an insurance in case of being sold to someone out of the family, is a study, which has a high level of expertise. It contains a long term, needs a planned working, includes many emotions, needs the balance of emotion-logic. To get started this study any term does not count as early. Many people who are afraid of planning such as experiencing emotional trauma, the disintegration of the family, the loss of power and control with the transfer of authority, the loss of membership and the approach of death as a result of election of one of the children may be postponed. It is even more difficult to start the process as the family is crowded or step-brothers and step-cousins work in the family company.
However, the well-managed succession process provides the transfer of the rewards, such as taking a part of society and taking financial management advantages that they gained as adminstrators, to the following generations. That is why to be able to manage the process of succession succussfully, it is necessary to give point to some matters. I can express like these:
- Willingness of the major shareholder to initiate the process of succession; committing to carry out the work at all points of the process, willingnes of changing in case he/she is the obstacle to the process.
- Being suitable of family culture for the process of succession, for his/her purpose, organising the trainings and workshops related to the process, through these meeting increasing the family’s level of knowledge and consciousness, statistical explaining what it would cost not to start the process.
- Determining and transferring the intentions, conditions, and preparatory studies which would provide to increase of company values, related to belonging of the company to the family or not.
- Identifying possible risks to the sustainabilty of the family company, making individual plans for each, by determining(ditörminin) the current situation and the targeted situation in relation to legal, financial, strategic, managerial, human resources, cognitive, administrative issues for each risk, and by consisting(kınsisting) of the impact to each other; carrying out necessary studies related to managing the risks which has talked about, before setting the ideal(aydiyıl) succession management system
- Within the legal structure, forming of policies related to legal reserve/reserved surplus and company main contract; arranging of contracts such as share contract, renunciation of the inheritance and partial renunciation of the contract; placement of share acquisition(ekuzişın) through inheritance into the company main contract; arranging of the prenuptial(prinaapşıl) contract; preparing testament; arranging family constitution
- About cognitive structuring, re-programming of mind and mentally clleaning, carriying out the studies to make strong communication
- Within financial structuring, arranging matters related to international accounting standards, financal analyse, international financial reporting, budgeting, dividend and investment policy, expense policy, wealth management, fund management, jouissance(ceeusıns şeer) share, corruption
- Carrying out studies related to board, family council, family assembly, committee for administrative structuring
- In human resoources structuring studies, re-structuring to be integrated with the succession management system and to include family members of systems such as recruitment and placement, layoff, performance measurement - evaluation, performance based career management, performance based wages.
- Arranging of familiy constitution
- Realization of applications related to values – harmony of systems and strategies, adaptation of family and company’s values within cultural structuring
The succession management system is a multidisciplinary study and it is directly related to the realization of the applications I mentioned. The process of structuring and operation the succession management system, including the succession of property and management, is very short by doing the studies of legal, financial, property, human resources, cognitive, cultural, administrative and family constitution; realizing to make an effective and efficient study easier. In addition to what I have mentioned, studies must be carried out on the following issues.
- Regarding the situation in which the encounters are not planned, making the secondary plans as retrograde succession plan, strategic risk plan, crisis plan, etc.; and focusing on the facts
- Showing with words and behavior that the major shareholders and their family elders have confidence in family members and non-family professionals that they will take the family company further
- Simultaneously initation and consideration of each other to raise the institutionalisation levels of the family and family company; clear separation of platforms to discuss about family and family-related issues
- Determining the trusts
- Creating the data base
- Defining the family and family company mission and vision for the purpose of managerial structuring, carrying out parallel planning, integrating the strategic management system and the succession management system
- Arrangement of retirement, successor determination and training, each of the sub-stages of preparation, execution and evaluation
- Carrying out the studies on the equivalence(iku-ı-vılıns) of authority and responsibility
- Ensuring that the successor focus on learning first and then making money, creating environments in which they can present themselves, encouraging them to work in different duties and positions
- Entrepreneur’s support to the new president on all platforms, directing those what have reached out to him/her about the business to the new president
- Making activities to strengthen family communication
- Clarifying some policies for those who join the family through marriage and with a blood line; major and minor shareholders, employees and non-working shareholders and family members, women and men, relatives and non-family members
- Clarifying the responsibilities of carrying the family surname
- Transfer of the management first and then property
- Preparation of retirement and succesor development programs, utilization(yu-tu-li-zeyşın) of coaching services
In particular, I would like to know Anita’s knowledge and experiences about the process of succession, which should be started as early as possible, when the entrepreneur is stil working and does not have mental health problems.
Phd. Ebru KARPUZOĞLU