The World Keeps Turning
I wonder how long we are going to refer to our present as “unprecedented” or “life-changing.”
Yes, those descriptions feel accurate, but what happens with the dust settles? How can we put the lessons we’ve learned into practice?
I think we already knew one of those lessons, even if many of us hadn’t had to face it for a while. Life is unpredictable. Everything can — and sometimes does — change on a dime.
This is certainly something successful business owners know. It is why companies have contingency plans, and why they create backups to the backup plans in case of emergency.
But those plans don’t necessarily cover how a pivot to remote work will affect the company’s cybersecurity program. Or how to roll out hand-washing protocols to protect frontline workers. Or where to get materials when supply chains break. The most important plan needs to get to the very heart of the company — succession.
We often talk about succession in our sister publication, Family Business Magazine. That issue is no less important here. And it is equally as fraught, particularly when an owner is leading the company.
It’s hard to face your own mortality. Many CEOs pretend the end will never come or believe there’s no urgent reason to plan for it just yet.
Not so. The healthiest people get hit by buses. And sometimes there is a pandemic that sweeps the planet.
If the owner group worries that talking about the worst happening will actually make the worst happen, that is the right time to look to the board.
Good advisers give a company a fresh view from the outside and can take emotion out of the equation. Note: Your board should be made up of a majority of people who are not the owners.
Your independent board members should have experience with other companies that have made it through challenging circumstances. Those directors can guide you to truly see what’s happening outside your business’s door.
That includes facing the reality that refusing to address succession will not eliminate the need for it. Succession planning is a life insurance policy for the business.
This issue of Private Company Director features two examples of how a board guided a family business through succession.
Richard Seaman shares his experience with three CEO successions in his family business, the Seaman Corporation. While his father, the founder, died at the early age of 55, Richard served as CEO for 40 years. Succession from Richard to an internal candidate was deliberate in that management and the board developed that CEO’s skills. When that CEO decided to retire earlier than the board expected, the company took yet another approach to find an outside non-family CEO with the help of a search firm.
In “Our Board Evolution,” Letitia Hussey Beauregard recounts the activity leading up to and then following the passing of her cousin Tim Hussey, the leader of both their family and their business, the Hussey Seating Company.
With the other directors’ support, Beauregard was elevated to chair of the company’s board prior to Tim’s death. Then the CFO was promoted to CEO, becoming the company’s first non-family leader.
Beauregard says having the succession plan in place gave the family room to grieve their loss. They knew the management of the business was in good hands, so they could focus on how the family would be led in Tim’s absence.
In both these cases, the board served as a guide and supported the owners in finding a successor. There’s little doubt that Seaman Corporation and Hussey Seating Company made it to the other side of the process and that they now know how to prepare for the next transfer of leadership. Other companies would be wise to follow their planning processes.