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5080 N. 40th St., Suite 235 Phoenix, AZ 85018
602.468.9667    cfg@cfgllc.com

QUIZ
Test your management succession progress
How is your family business positioned for succeeding management teams? The following questions should help you identify strengths and weaknesses in your management succession plan. They will help you decide where you are on target, and where you need to concentrate more attention.

For a more complete picture, have all family business stakeholders take the test separately, then have a meeting to compare answers and map a strategy for tackling the most neglected areas.

PRINTER-FRIENDLY VERSION

Are there formal criteria for employing family members?

______

A. We have a written policy specifying education and outside experience required for all management applicants, whether they are family members or not.

______

B. We have a written policy specifying education requirements only.

______

C. We are in the process of putting together a written policy on employment criteria.

______

D. We have an informal policy, but because it is not written, many family members expect they will automatically have a job at the family business when they want one.

______
 E. We make room for any and all family members who are interested in working at the family business.
Is there a training program to prepare new family employees for future management?

______
 A. We train all new management employees and rotate them through each department, then they start at the bottom and work their way up. They are included in all or most management meetings.

______
 B. Each new family employee is trained by the head of the department he or she is assigned to, with some training in other areas.

______
 C. We encourage and pay for new management employees to attend local community college courses or trade association programs.

______
 D. We are in the process of developing a training program for all new hires.

______
 E. Our company is too small for training. Training is ad-hoc, on the job. Everyone is expected to pitch in as required and is responsible for acquiring skills they need.
Is there a mentoring program for successors?
______
 A. We match future family managers with long-time non-family executives, who provide formal, professional guidance for up-and-coming leaders.

______
 B. There is no formal program, but we do match younger generation managers with seasoned non-family mentors.

______
 C. We don't assign mentors to young family employees, but we do encourage senior managers to counsel and "watch over" future family managers.

______
 D. There is an outside family advisor with whom future family managers can talk when they have a problem.

______
 E. Our non-family senior managers would be too threatened to train young family members who will eventually out-rank them and out-earn them.
Have key non-family executives been given incentives to help develop next-generation managers?

______
 A. We provide long-term and short-term incentives through a deferred compensation plan and current bonuses.

______
 B. We provide short-term incentives by tying a portion of current compensation to increasing company profit or value.
______
 C. The executives have been asked to design an incentive proposal.

______
 D. Key non-family executives have employment contracts to reduce their concerns about future succession.
______
 E. There are no financial incentives. We rely on the loyalty of long-time employees.
Has the current owner identified a next-generation leader or leaders?
______
 A. A future successor has been identified and is being groomed to take over at a designated time.
______
 B. No timetable has been set for management succession. Team-building and enhanced communications are being implemented, which we hope will help identify a future leader.


______
 C. Potential future successors are too young to know where their interests and abilities lie, but interim non-family managers will take over until future family successors come of age and demonstrate the interest and ability to take over.

______
 D. There are many family contenders, their talent and/or family politics have prevented current owners from selecting among them.

______
 E. Current owners plan to let the next generation "duke it out" for themselves after current owners step down.
Do employees, family and non-family, receive regular performance reviews?

______
 A. Family employees are assessed at least annually by their direct supervisors, based on measurable, objective criteria.
______
 B. Family employees are assessed regularly, but criteria are mostly subjective.

______
 C. There is no formal performance review, but when performance problems arise, we inform under-performers and keep a record of such discussions in their personnel files.

______
 D. Employees understand our judgment of their performance based on the size of their holiday bonus.
______
 E. It's just too sensitive for us to assess family members.
Have future successors articulated a vision and values statement?
______
 A. Yes, and they have translated their vision and values statement into a written strategic plan, complete with revenue/expense projections.
______
 B. They have written a vision and values statement, but not a strategic plan.
______
 C. They are in the process of working on such statements and plans now.

______
 D. Future successors' views and goals are so disparate that they are unable to find, let alone articulate, shared vision and values.
______
 E. Future successors have been unable to work together in any capacity.
Have current owners articulated their expectations for business performance in objective discussions, e.g. return on assets or return on investment?
______
 A. Current owners have outlined business performance objectives, compared with the company's own historical performance as well as industry standards.
______
 B. Current owners have informal business performance benchmarks, but they are not weighed against industry norms.
______
 C. Performance benchmarks are based on profitability, but not adjusted for extravagant family perks.
______
 D. Our company and/or industry is experiencing so much change and economic strife, we are lucky just to be breaking even.
______
 E. Current owners are unwilling to set performance measures, because we would have to share financial information we keep strictly secret.
Is there a dispute-resolution plan to help future family owners/managers amicably work out potential disagreements about management issues?
______
 A. All family managers must take courses in constructive negotiation and mediation as well as attend an annual family meeting to bring issues to the table.

______
 B. Our shareholders agreement contains incentives to work out any future conflicts concerning the business, including valuation formulas, buy-out terms and liquidity requirements.
______
 C. We employ outside mediators to help settle any disputes that crop up
______
 D. We know we get the best results when family managers compete intensely, and so far current owners resolve all disagreements.
______
 E. We have no dispute-resolution plan.

For those questions in which you answer:

A. You are in good shape, but make sure you revisit this area every reconsider any aspects that may require updating or changing.

B. You are well on your way, but it would be wise for you to make contingencies are properly accounted for.

C. You have taken important steps, but have not considered some crucial aspects.

D. Day-to-day priorities that have prevented progress in this area should now take back burner, before unresolved issues fly out of control.

E. Your lack of attention to this area puts your business and family in a risky position. Immediate attention is recommended.

 

Management Succession Strengths & Weaknesses

  Positioned
to Succeed 		 
Positioned
for Disaster
A
B
C
D
E
Are there formal criteria for employing family members?
         
Is there a training program to prepare new family employees for future management?
         
Is there a mentoring program for successors?
         
Have key non-family executives been given incentives to help develop next-generation managers?
         
Has the current owner identified the next-generation leader OR leaders?
         
Do employees, family and non-family, receive regular performance reviews?
         
Have future successors articulated a vision arid values statement?
         
Have current owners articulated their expectations for business performance?
         
Is there a dispute-resolution plan to help future successors amicably work out potential disagreements?
         

 

 

 
CFG Business Solutions LLC
5080 N. 40th St., Suite 235 Phoenix, AZ 85018
602.468.9667 800.422.3883 Toll-Free
602.468.9704 Fax
cfg@cfgllc.com

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