Transfer of power in the business world is an inevitable topic just as change is inevitable. A corporation is a distinct personality that lives on generation after generation. For this reason it is vital to establish mechanisms for smooth and seamless transfer of power from one generation to the next. In most family owned business, there are two predominant modes of succession; the first is the CEO as the architect of transition since he is the architect of governance and the second is the next generation as the architect of transition.
In institutions where the CEO is the core architect of transition, it is often apparent that the CEO is the key figure that is looked up to for leadership. As such he is the one that initiates the process of transfer of power by enlisting individuals he deems as the right people and executing the right strategies to see to it that sustainability and continuity is assured (Poza, 2013). Essentially the focus is on the person of the CEO to provide leadership at this time. He is therefore looked upon to place the interests of the company above his own interests. On the other hand, in institutions where the next generation is at the frontline in the transition process, the heirs to the business are required to have worked for a considerable amount of time in the organization and gained sufficient knowledge educationally and in practice so as to successfully take up the top management responsibilities. They are also required to have sufficient influence within the organizational structures, good relationships with other employees and ability to accommodate others. Essentially the focus herein is on the next generation to fast-track the transition process. All in all in both modes of succession, one common factor is the fact that power is being transferred within the family structure.
Institutions that have the CEO as the core architect of transition may experience challenges in this regard. This is primarily because a corporation has a multi-faceted composition and it is not wise to place its survival or otherwise in the hands of one individual. Problems with regard to transition may arise if the CEO does not want to leave, if he intentionally or otherwise fails to prepare the next generation member for leadership or if the succession is triggered by the illness or death of the CEO (Poza, 2013). For the successful transfer of power through the use of this modality, it is vital that other governance structures be established in the corporation including a board of directors, an annual shareholders meeting, a family assembly and a council (Poza, 2013). With such established institutions in place, the survival or otherwise of the business will not be in the hands of one individual since decision making is devolved.
Institutions that embrace the next generation as the propellers of transition are more likely to have a seamless transition process especially in instances where this succession team works in close consultation with the exiting management. This new managerial team comes with more energy and a new outlook thus they may embrace technology and other modern ways of conducting the business and may ultimately propel the business to the next level. However to have an assurance of smooth transfer of power herein, the new generation should be careful to bring in their new vision without compromising the establishment and original vision of the founders of the corporation. As they focus their energy on the future of the business and family, they should respect the past and work in consultation with the exiting leadership as well as the non-family members of top management.
Poza, E., J. (2013). Family Business. Cengage Learning.