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Family Business

Succession Planning

Succession planning is the process for the transfer of management control from one family member to the next (Christensen 1953). Research has shown that succession planning is positively related to the propensity of the incumbent to step aside, the presence of an active advisory board (Christensen 1953), and the agreement to continue the business (Wong, McReynolds, and Wong 1992). Conflict during succession planning can arise when no written plan exists, and when the stockholders connected with the enterprise, including the founder, the family members, the managers, suppliers, and customers, are uncertain of the significant changes associated with the impending shift in power and authority. Additionally, conflict in succession planning may involve disagreements about the knowledge, skills, and abilities of the successor, the educational level, experience, and background of the successor, and the level of trust, faith, and goodwill the successor can generate. Conflict during succession planning can also include disputes over whether family members should take over the enterprise or not, whether the incumbent has accomplished everything desired and possible during his or her reign of the enterprise, whether the incumbent was ready to give up power, what criteria would be used to identify the successor, and how decision outcomes are communicated.

Additional topics

Marriage and Family EncyclopediaFamily Theory & Types of FamiliesFamily Business - Mutual Acceptance Of Roles, Agreement To Continue The Business, Propensity Of A Successor To Take Over