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Succession of management refers to the transition of leadership and management of the family business to the next leader/manager. In the context of family business, this phrase usually refers to transfering leadership and management to the next generation.

The transfer of power
“Chief executives preparing to transfer power do not, single-handedly, have to make succession happen…they have to be the architects of the transition and then know when to get out of the way, letting the engineers, contractors, and trades people (advisors, staff, and next-generation members) take over. (Poza, 109)

“In other cases, some of which I have personally observed in my work as a family-business advisor, significant ownership stakes have been passed on to the next generation but without passing on any real voting power or control”. (Poza, 110)

Six Most Common CEO Exit Styles
· The Monarch: “The monarch rightfully operates on the assumption that they will die with their crowns on.” (Poza, 112) Many business owners have similar mindsets in their exit strategy with their companies. After “retirement” some are still involved with the day-to-day business of the company, and may even second-guess decisions made by new management. It is near impossible for a monarch type of manager to find a replacement that they feel will do an adequate job, because they feel that they are the only person that can do the job. In regards to succession and estate planning, it is not planned or spoken of, out of denial of change in responsibility. Close family to the monarch, such as daughters, sons, and spouses, need to be prepared for conflict.

· The General: “…these chief executives leave office reluctantly and plot a return. Generals wait patiently. Hoping that younger officer or popularly elected leaders will demonstrate his or her sheer inadequacy.” (Poza, 113). In today’s world, the retired business executives live in Florida, California, and Arizona climates during parts of the year where they can enjoy their retirement, however have their cell phones glued to their sides for the “just in case” situations arise where the general would be asked to return. If there is ever a need for a family member to take over leadership responsibilities, it is made known it is only for a short time frame, for the general will return to his “post”.

· The Ambassador: “Most family business owners take on the role of either monarch or a general when they exit their business” (Poza, 114). The ambassador type of leader would delegate operational responsibilities to the new leadership, however hold on to their diplomatic representation duties on behalf of the company. This leave room for the executive to still be involved with the company in more of an advisory capacity, rather than the decision-making capacity. Normally this type of leader is slow to exit the company, making sure that the new leader can run the operations of the company.

· The Governor: “…fewer than 5 percent of all family business owners exit after having set a deadline for the transfer of power.” (Poza, 115). Governors will publicize a date of transition for the leadership and then commit their time to training the new executive in the remaining time frame. The public aspect of the transition helps and reluctant feelings of leaving pass, as key management, employees, suppliers, and customers are aware of the transition.

· The Inventor: “The inventor designation is really a metaphor for an existing CEO who takes on a satisfying key position in another enterprise.” (Poza, 115). The inventor is someone who is very creative. They tend to like a challenge, make improvements in a company, and then move onto their next challenge.

· The Transition Czar: “…very few CEOs choose to exit by becoming the lead agent in the multiyear transition known as succession.” (Poza, 116). Transitional Czars’ value added is through their family contribution efforts of passing along leadership. Often transitional czars are able to carry out their succession planning with the help from a spouse. A large emphasis is placed upon family-business governance.


References:

Poza, Ernesto J. Family Business 3E. Canada: n.p., 2010. Print.

Further reading and external links



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