Deciding who will take over the farm is often a difficult task. There are some tricky emotional dynamics involved. Owners worry about how the operation will do without them at the helm, the happiness of family members not chosen as successors, and rifts that might pop up because of their decisions.
Your best bet is to make thoughtful, smart decisions that are best for the business and communicating often with those involved.
Categories of Successors
Other family members like nieces and nephews
Non-family members like key employees
Objectivity is critical when choosing a successor.
It’s difficult to be objective where family is concerned sometimes. Owners might want to transfer the farm to one or more of their own children. But sometimes that isn’t the right choice. Maybe a niece or nephew is a better fit for the role, or a long-time employee. Then there’s always the challenge of breaking the news to the other family offspring that they are not in line for succession.
When you’re choosing a successor, be as objective as possible.
We haven’t chosen our successors yet and we need some help.
Who Should Choose
Formal committee - of family and non-family professionals
Objectivity is key to effective succession planning. Try to maximize the objectivity of the process as much as you can by getting some help with choosing a successor.
You might consider involving a family panel made up of members who are respected in the family, know how to keep their biases out of decision-making and know all the potential successors involved.
Or you might consider enlisting a trusted colleague, fellow business owner or consultant, who won’t have the same biases as you do.
Even if you choose the successor alone, you should use an objective process that everyone involved will feel good about.
I need to determine who will help me choose a successor
What to take into account when choosing successors
Level of interest
Level of expertise
An objective selection process is going to ensure the farm has the best chance of flourishing in the future.
You can choose the successor by one of the elements above but that’s not very objective. Each method alone takes some things into account while ignoring others. Have a look at the table below.
Notice the last line of the table above. A blended approach to choosing a successor means you can take a lot of important things into account.
Methods of choosing a successor
There are many ways to choose a successor, including:
Consensus of majority support
There’s something to be said for gut instinct and lots of research that shows it’s an important part of effective business decision-making. It allows you to take into account a lot of things that are difficult to measure like personality type and personal interactions. But it isn’t perfect – gut instinct can be overly biased by emotions or bad experiences.
Gut instinct should be part of any decision you make, but don’t rely on it alone.
Consensus or majority support involves other people who you trust to help make the decision. Maybe you’ll choose the one successor everyone can agree on but research shows that consensus is unlikely to yield the best decision – it often simply yields the decision everyone can live with. Majority support is a better option but it can be governed by emotion as well.
Choose consensus or majority support if you want to involve some family members or trusted advisors/colleagues. This is also a good choice if you want to add some perceived objectivity to your decision for the sake of family peace.
Formal evaluations involve things like interviews, competency assessments and reviews. They have the downside of seeming overly formal for a family business. But, it’s a business at the end of the day. Since choosing a successor impacts so many people, it likely should be more formal than day-to-day decision-making. And this method is the most objective among the methods mentioned here.
Formal evaluation is well-suited for situations where there are a two or more potential successors, each strong candidates and each with strong pockets of support. This is also a good choice for farm operations that are large and complex, where the successor will fulfill a true president/CEO’s role.
Choose the method you want to use to identify and choose your successor. You’ll know best which method is the right fit for your situation.