Our third stage of succession follows neatly on from the previous and involves the perpetuation of the family firm’s relationships. These relationships are important for the successors in creating their professional networks.
An important component of knowledge that can be passed on to advantage in family firms is relationships. In fact successful transitions require key relationships to be turned over to successors. These relationships can be both internal and external. The external relationships are the networks that prior generations have established over extended periods. While it is important not to assume all families are the same evidence has emerged that in their efforts to create trans-generational wealth enterprising families behave more like family groups. Their networks of relationships are both close and are often with other family businesses.
Following succession customers, suppliers, employees, owners and advisors must all see that the successor is truly in charge and leading the firm. If he or she is CEO in name only, the relationships will stay with the predecessor and the transition will likely fail. Successors of course have to earn the trust of all of these stakeholders, but this can be facilitated by the previous leader as part of the transition process.