LAST week I wrote about the sudden death of the chairman and founder of Company B, a US$200 million family business with regional presence in Vietnam and Singapore. Sir K.B (names have been changed to protect the family’s privacy) as he was fondly called died of a massive heart attack.
Long-time executive Jack, group head of human resource and administration was requested by the family to make the official announcement to all its employees. “Ma’am Lucy asked me to inform all of you that her husband our chair and founder died this morning.” Our beloved Sir K.B. was 65. Some employees began to cry softly. Others bowed their heads.
I also highlighted the challenges that Jack faced when he was confronted by worried managers with issues related to job security, succession and debt servicing. He was simply overwhelmed and he just could not offer any solid answers. As he locked himself in his room, Jack started pondering on the urgent things that must be done—coordinating the funeral services, responding to queries from creditors, family and friends, suppliers and employees, announcing some of the critical decisions discussed in the board meeting, his role in updating the family and the anointing of the chairman’s successor.
Then he started to ask himself, “Should all of these responsibilities fall under my department just because I am one of the most senior non-family members?”
Death as an unexpected event
Without a doubt, the organization was totally unprepared with the founder’s sudden demise and Jack suddenly realized that his boss (after steering the company to unprecedented growth and industry leadership for many years) never really planned any transition, much less for a major crisis or event like death or incapacity. Walking past the main lobby and heading out of the building to meet Lucy and the children, he sees fear and uncertainty in the eyes of every colleague he meets along the way. It is the fear of confronting the many challenges that the company will face in the days to come.
Death is not an easy subject to talk about; nor is retirement, especially for rugged individualists and entrepreneurs or their families. But it is a subject that needs to be addressed by all members of a family owning business. Is the business merely a reflection of the founder? Is it his personal property? What part do other family members play, shareholders and stakeholders alike? Who will run the business after the founder steps down? When will the founder step down? Answering these questions and others, leads to the development of what is known as a “succession plan.”
It is important for founders and next generation leaders to make sure all bases are covered, which includes death planning. It may not be the most glamorous decision family members have to make, but from a survival, legacy and continuity perspective, I would argue it’s one of the most important events the family must pursue. To make it less morbid, I normally substitute the dreaded word “death planning” to succession planning or post-founder planning. This goes beyond getting life insurance and creating a personal will. Post-founder planning leaves your team with a course of action after you’re gone.
In my experience, business leaders have two choices to pick from at the start of the plan. They can either decide to sell the business and give employees/partners/family members a share, or they name a successor.
To be continued...