Coles Partners with EY for Study on Succession Planning
The Coles College of Business at Kennesaw State University recently joined with EY to produce a joint report examining effective succession planning within leading family businesses.
The report, entitled, Staying Power: How do Family Businesses Create Lasting Success? examined leadership succession within family businesses, with a focus on looking at the world’s longest-lasting family businesses and analyzing their approaches.
The study surveyed 525 family businesses, including 25 of the largest family businesses in all of the 21 top global markets. In analyzing successful succession planning, Coles and EY were able to formulate the four key best practices for successions.
The four key practices included:
- Clearly defining who is responsible for the succession
- Focusing on next-generation preparation
- Nurturing an entrepreneurial culture
- Working to attract top talent
The first key practice– defining who is responsible for the succession– has a proven track record in inspiring successful successions. According to the study, 97% of family businesses that do not clearly define a succession strategy do not succeed past the third generation. In contrast, however, 88% of the most successful family businesses put a strategy for succession in place well in advance.
Focusing on next-generation preparation is the second most important key factor for a successful succession. Understandably, the study revealed that businesses with successful transitions had spent more time educating the next generation on how the business should be run.
Finally, nurturing an entrepreneurial culture helps to define the company’s ability to grow and change, while working to attract top talent is imperative when the next-generation leaders in a family business are not family members.
Joe Astrachan PhD, a Professor of Management and Entrepreneurship at the Coles College of Business, commented further on the study. “How long-lived family businesses approach succession planning can serve as a model for other family businesses, as well as companies that aspire to maintain an entrepreneurial spirit, innovate and grow consistently through leadership changes.”
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Alanna Shaffer
Staff Writer, covering MetroMBA's news beat for Atlanta, Houston, and Dallas.
