How family firms can best plan for succession

David SilverbergBusiness reporterAFP through Getty ImagesIn September it was introduced that Rupert Murdoch would hand over the reins to his eldest son LachlanWhen Rupert Murdoch and his youngsters lastly reached a deal earlier this yr to finish the years-long succession battle over the media mogul’s empire, the high-profile saga supplied a precious lesson for each family-run firm.The clear message was that such companies want a radical plan in place for a way the enterprise is handed over to the following era, or else they could possibly be mired in emotional and authorized drama.Right here three family-owned and run firms, from either side of the Atlantic, reveal how they’ve approached the succession problem.Biscuit-maker Walker’s Shortbread is certainly one of Scotland’s largest meals exporters, with its tartan-coloured tins and packets a daily sight at supermarkets and airports around the globe.It was based again in 1898 by Joseph Walker, and right this moment his great-grandson Nicky Walker holds the highest managing director place.Walker’s ShortbreadNicky Walker, sat on the steps, took the highest job at Walker’s Shortbread in 2022Mr Walker says the enterprise operates what it calls a “cousins consortium” mannequin. What this implies, he explains, is that every one members of the prolonged Walker household, and particularly their youngsters, are inspired to affix the enterprise. And every is allowed to have a say on the place they’d ideally place themselves in a managerial position.”Our succession plan basically says that if you wish to come into the enterprise, there is a position for you right here,” says Mr Walker. “And for the reason that firm’s increasing, there’s a complete profession to be fashioned and honed right here.”He provides that when “factors of competition” do come up, the intention is at all times to achieve a consensus. “We now have at all times reached choices based mostly on what’s finest for the corporate… with the agency understanding that the enterprise at all times comes first.”With the understanding {that a} unity of voice is of paramount significance, a suitable end result has at all times been achieved.”The corporate can be not averse to bringing in exterior consultants, corresponding to partaking with skilled advisors on the formal, authorized settle for of succession planning, and the formation of an govt board with administrators who will not be relations.Constructing a succession plan to bridge the hole between the talents in a enterprise right this moment and people wanted tomorrow is important for household companies, says Charlie Grubb, a senior managing director at international recruitment firm Robert Half.”Emotional and private dynamics is usually a actual problem for household companies in relation to succession planning. There is a ability in with the ability to take that emotional household tie out of the decision-making course of, and recognise there are household and management roles, and people is perhaps fairly completely different from one another.”However too usually, firms fail to look forward. Greater than 4 in 10 enterprise leaders have not recognized somebody to take over their position after they determine to maneuver on, based on a survey in Canada this yr by Robert Half.In the meantime, a separate 2025 report discovered {that a} lack of succession planning “may result in elevated enterprise closures, job losses, and financial uncertainty”.Getty ImagesAnnual revenues at Walker’s Shortbread now exceed £200mMike Bronner is boss of California-based Dr Bronner’s, well-known within the US for its soaps, lotions and toothpaste. His grandfather Emanuel Bronner, who based the enterprise in 1948, did not arrange any paperwork for the way it needs to be operated when he needed to step away within the Nineties on account of declining well being.Emanuel Bronner, who died in 1997, additionally ran afoul of the Inner Income Service, and left the household agency with a $2m (£1.5m) tax invoice.”We realized from that,” says Mike Bronner. “And ever since we started fascinated by the following era, and the way to make sure that two generations down the road we’re nonetheless going to perform with the identical values now we have right this moment.”As for his personal succession plan, Mr Bonner says he is seeing indicators his youngsters are inquisitive about working the corporate. “My son Mike mentioned he needs to be CEO and I requested him why, and he mentioned, ‘Properly, I really like the mission and the free lunches’.”What helps with succession planning is involving youngsters early within the enterprise. At St James City Steak and Chops, a butchers and delicatessen in downtown Toronto, proprietor Mark Michelin has been coaching his two youngsters, Noah and Alex, each of their mid-20s, to captain the 54-year-old family-run ship as soon as he retires.”It is best for us to have the enterprise keep within the household,” says Mr Michelin. “And that blood bond is one thing our prospects recognize, too.”They usually say to me, ‘Oh wow, this can be a third-generation household enterprise, and I liked how your dad gave me some deli meats without cost after we got here in as children’.”Mark MichelinMark Michelin is coaching his two sons to hold on working the household businessBack within the Scottish village of Aberlour, Nicky Walker says he firmly believes “that proudly owning and managing a generational household enterprise is an unbelievable privilege. And to have the chance to put the foundations to be succeeded by our family is improbable however ought to by no means be taken without any consideration.”The recommendation I might give, from my very own journey, is that the total assist and the nice deal of steerage and nurturing I used to be supplied was distinctive. And it’s now incumbent upon myself and my era to, in flip, supply the identical, to the following era.”We have to supply them unequivocal assist, and that may be a message I might move, with respect, to any household enterprise.”