Com­pa­ny Suc­ces­sion

Small and medi­um sized enter­pris­es (SMEs) have a huge eco­nom­ic impor­tance in Ger­many. SMEs are often own­er-man­aged and part­ly for many gen­er­a­tions. How­ev­er, what hap­pens if the own­er retires, dies or hands over the man­age­ment of the com­pa­ny due to oth­er rea­sons? The top­ic of this arti­cle is to high­light sev­er­al aspects of com­pa­ny suc­ces­sion out of Human Resource per­spec­tive.

Along with the hand-over of the respon­si­bil­i­ty, the ques­tion for a suit­able suc­ces­sor is asked. The ide­al sit­u­a­tion would be that this ques­tion was asked at an ear­ly stage, so that a com­pa­ny suc­ces­sion can be han­dled, sched­uled and sort­ed with­out greater dif­fer­ences. This is often not the case for exam­ple if the own­er dies unex­pect­ed, becomes inca­pac­i­tat­ed for work, does not want to hand over the respon­si­bil­i­ty or has to retire due to his age. The occur­rence of one of those cas­es can have immense eco­nom­ic impacts on the com­pa­ny since it will lose its oper­a­tive and strate­gic direc­tion with­out a com­pe­tent com­pa­ny leader. To pre­vent this, it is tried to find quick­ly a capa­ble suc­ces­sor. Espe­cial­ly, for own­er-man­aged com­pa­nies this could be a huge chal­lenge. Do fam­i­ly mem­bers exist? Are they appro­pri­ate for this posi­tion? Do they want to con­tin­ue the com­pa­ny at all? Do gen­er­a­tion con­flicts exist? Fam­i­ly dis­putes are play­ing a role, which should not be under­es­ti­mate and could bur­den the process immense­ly or even stop com­plete­ly. Smol­der­ing con­flicts, which become known, inher­i­tance dis­putes or com­pe­tences, which are judged wrong, are only a few of the prob­lems, which could make the search for a suc­ces­sor dif­fi­cult. If one of these sit­u­a­tions occurs, it could be wise to pro­vide exter­nal sup­port for exam­ple in form of a medi­a­tor, who has the func­tion as a neu­tral per­son to solve poten­tial con­flicts and to accom­pa­ny the search­ing process. What is more, with assis­tance of an expert it can be defined which qual­i­fi­ca­tions and char­ac­ter­is­tics the poten­tial suc­ces­sor should have to achieve an opti­mal fit to busi­ness require­ments and to the exist­ing com­pa­ny cul­ture. If there are will­ing fam­i­ly mem­bers, it is obtained how far they are appro­pri­ate for a pos­si­ble ad hoc or a lat­er suc­ces­sion. The suit­abil­i­ty as well as the per­son­al­i­ty are very impor­tant since the con­tin­ued exis­tence of the com­pa­ny should be guar­an­teed. Fur­ther­more, in advance of the recruit­ing and selec­tion process it should be clar­i­fied who are the deci­sion-mak­ers. Espe­cial­ly in deal­ing with com­pa­nies, which exist for many gen­er­a­tions, there could be for exam­ple many fam­i­ly mem­bers or inti­mates who would like to co-decide. Here too: Deci­sion-mak­ers should be the per­sons who have an excel­lence knowl­edge about the par­tic­u­lar com­pa­ny and have the pro­fes­sion­al com­pe­tence. Is it not pos­si­ble to find a suit­able suc­ces­sor, it is nec­es­sary to think about oth­er solu­tions even con­sid­er­ing the sale of the com­pa­ny. Anoth­er pos­si­bil­i­ty could be the recruit­ing of an exter­nal per­son, who will be employed as a com­pa­ny leader. Here again it is high­ly impor­tant that a clear search­ing and com­pe­tence pro­file is pre­pared to ensure a tar­get­ed search.

This arti­cle should give a short overview, how dif­fi­cult and time con­sum­ing the process of com­pa­ny suc­ces­sion could be and that due to the inter­link­ing of fam­i­ly and busi­ness there are often many psy­cho­log­i­cal aspects, which should not be under­es­ti­mat­ed. There­fore, for an entre­pre­neur / own­er it is rec­om­mend­ed to deal with this top­ic at an ear­ly stage and if nec­es­sary to get exter­nal sup­port to ensure qual­i­ty and neu­tral­i­ty in deci­sion mak­ing.

Future Ahead!