Succession Planning – The Current Position
There is much literature on succession planning, with most of it focusing on the mechanics of the “transaction” and looking at various aspects of what is generally a complicated and multidiscipline strategic issue for business owners. Gersick et al ( 1997 ) remark “Succession is not one thing but many. It is not a single event but a process.” In the realm of family owned businesses (FOB) much work has been done in terms of the different issues facing FOBs as they approach succession and the varying outcomes as a result.
Ip and Jacobs (2003) maintain “Successful succession results in a continuation of the business at least in the short term” – LeBreton-Miller, Miller and Steier( 2004) define the successful outcome of succession as “the subsequent positive performance of the firm and the ultimate viability of the business.” This is one of the keys to why business succession planning is such a low priority for business owners as this suggests the mechanics of the transaction are in fact not a large determinant of the success or otherwise of the outcome.
Smyrnios and Walker (2003) report that 82 percent of Australian Family Businesses identify succession is an important issue. At the same time 83 per cent of Australian Family Businesses do not have a succession plan in pace for the CEO (Glassop et al 2008).The dramatic disconnect between intent / perceived value and implementation needs further examination and a framework for removing the barriers to succession faced by business owners needs further work as this market is extremely valuable – the estimated value of business cessations in Australia was 3.7 % of GDP or approximately $17.6 B.
KPMG / Deakin 2008 Survey
Primary reason for not having a succession plan:
No likely successor identified 36 %
Too early to plan 27 %
Selecting a successor is too difficult 8 %
Other reason 29 %