“It’s critical to find an objective means of verifying that the individual is really competent to take-on the job. You can put people through a process, but we’ve always relied on non-family, reputable directors and probably, their most critical job is to be influential in succession,” he says. “They need to be comfortable that the right individual has come through the process and in order to do that you can’t just bring them in for succession. They’ve got to know you, the family and the business: what it needs and what it will take in future.
“You’re dealing with peoples’ hopes and dreams, so my advice is to pass the job on to the non-execs – they’re not going to have to go to the family Christmas parties and the weddings!” he jokes.
The succession osmosis
“If you consult the text books, there’ll be a good step-by-step process to achieving a successful succession,” says Alex. “When I did it, it was more of an osmosis – it was more flexible and fluid.”
First of all, Alex explains that the family is more than just names on a list. “We facilitate family get-togethers where we spend time with each other and get to know each other. It’s an important part of ensuring that there’s coherence amongst the family group and it’s something we’ve invested in for the last twenty-odd years,” he says. At one of these family gatherings, Alex broached the subject of succession.
“I said: ‘I’m not going to do this forever, someone in your generation will need to step-up and become the future leader. There is no specific timeline, but let’s talk if you’re ready.’ In that room it wasn’t obvious to me who it would be, there were some good candidates,” he explains, “but the beauty of having 36 members of the next generation is that it’s not like having to choose between two children. The opportunity to find a good leader is greater.”
“Depending on who stepped-up, the way we shaped the role would have been different,” says Alex. “We would have flexed according to the individual who eventually emerged, and had several emerged, then I would have gone into a more formal process. This isn’t textbook. I think no family will follow the textbook ultimately – although you probably want to read the book because that gives you a shape of best practice – but you can flex around best practice to fit your own particular circumstances,” he explains.
From that conversation to the succession took three to four years. “It all comes back to when the person is ready,” insists Alex. “My successor was pursuing a very successful career elsewhere. I knew who he was and was impressed with what he was doing, but it was only when he approached me that I thought, ‘let’s grab him!’. I knew he was qualified and would be highly acceptable amongst the wider family, but I still had to wait for the non-executive directors to agree,” he adds.
How strong a voice should the non-executive directors have in the decision?
“Theoretically, I think this is one area where they should have a veto”, claims Alex. “If their job is to assist the family to ensure the long-term health of the company then the most important job that any non-executive or any director takes is the appointment of the Chair and the Chief Executive. The choice of people is critical. If the family decides not to listen to those non-executives, then caveat emptor,” he says.
The last big risk
According to Alex, it’s not fair and it’s not kind for the older generation to hang on beyond their time. “If you don’t want to be fair or kind to your children and your descendants, then look at yourself in the mirror and ask yourself why,” he challenges.
“I get it. I understand how frightening it can be and how risky it feels, but I’d also point out to the person who’s refusing to move aside, that they probably took enormous risks in the creation of the business, the fortune, the family enterprise, and they’re going to have to take a risk again! It will probably be uncomfortable, but better to make that decision when you’re around, so that if it falls to pieces you can help to pick them up – but don’t be the reason that it falls to pieces. That latter piece is critical,” he adds.