Why is family succession planning an issue we should be concerned about? It comes back to the word family. Family succession planning within the agricultural landscape conquers within, an emotional connection to the land and a cultural identity within New Zealand. There have always been family businesses running farms and there appears to be a strong desire for this to continue long into the future within New Zealand Agriculture. Family succession also deals with the love and affection of those most dear to us and with significant wealth at stake it must be done well for family relationships to be enhanced through the process.
However when it actually comes to family farm succession, no one size fits all and that is primarily why succession is still discussed, researched, and written about. It has never been an easy conversation to navigate through to the desired outcome with operating environments constantly changing and continuing to evolve. However there are processes that can enable the conversations to occur within the family business to focus them on a desired outcome they can achieve together.
In some cases the terminology of family farm succession is also beginning to change. Being referred to as an ‘intergenerational business model’ and ‘family business continuance’ where the sole concept of asset transfer has broadened to include the transfer of knowledge and experience between the generations (McLeod & Dooley, 2012). This in itself infers a shift in mind set to intergenerational or continuance indicating a natural progression through the generations as opposed to simply succeeding in the family business or a sale of an asset.
Those spoken with and throughout the literature identified numerous triggers for a family succession process to begin ranging from a death in the family, an accident or injury, marriage or divorce, son or daughter wanting to ‘come home’, age and stage, someone asking the family the question of succession, through to business opportunities being identified which require a succession conversation. The trigger point will vary depending on the family situation. Once identified by the family as a priority the process can begin and conversations initiated to determine the way forward. Key attributes contributing to the success or otherwise of the process is a commitment and good will to see an agreed outcome achieved. This will often require patience and perseverance along with mutual respect for all involved.
Communication was identified time and time again underpinning the succession conversations because this is where and how the process has to begin. Addressing the ‘icebergs’ within the family business is about clearly articulating a number of often unspoken expectations, aspirations, assumptions, concepts such as fairness and equality and ultimately what the vision of the family business actually is. The part of communication which is often forgotten is the ability to listen and respect each person’s contribution and opinion to the conversations as the process unfolds. As George Bernard Shaw stated “The single biggest problem with communication is the illusion that it has taken place”.
Starting early often yields the best outcome for the family as time allows identified issues or concerns to be raised and addressed before it is too late. Dr James Lockhart points to the Dutch as an example of how to begin the conversations around family business governance. He indicates this should start from an early age discussing family business matters around the kitchen table. As the family grows and develops keeping the family involved in planning meetings and discussing the future helps to shape business principles and future conversations about their place in the business or what the future may hold. The family is exposed to the process of sharing ideas, listening and discussing plans for the current business and its future. By discussing the family business from a young age, siblings are exposed to business processes and skills which are required when it comes to more formal discussions around family succession planning.
What became clear from interviews with professionals and farmers is that strategic business planning is an area of running a family business that is not given enough priority. Rather time is spent working in the business but not on the business. The planning process involves disciplined time set aside to think about and plan for the future needs of the current business. Thinking through where are we now and where do we want to be with a plan of how to achieve that. Prioritising business planning enables a step towards succession conversations as this should come up within these planning sessions as the future is discussed. Encouraging business planning and governance principles within a family business is an important enabler for a strong platform for succession conversations to begin from.
Ultimately the outcomes of a family succession conversation will be determined by the family, for the family, as success will look different to every business. Following a structured process to succession planning which is led by a strong chair or independent facilitator to navigate a series of conversations, interviews and family meetings can enable this to occur and an outcome achieved rather than being put off or put in the too hard basket.
It is for the family to decide together what they want to see happen in the next phase of the family business cycle, how they determine that to occur, when the transfer will take place and why they want that to be their future.