In an interview with Human Capital, C R Rajagopal, Partner, Deloitte Haskins and Sells highlights some crucial points on effective succession planning and its challenges…
Why is it important for owner-managed businesses to do succession planning?
Owner managed businesses grow over the life time of the entrepreneur, largely driven by the entrepreneurial skills and instinctive decision making capabilities of the owner; each of the owner managed business has some unique differentiation in terms of the competitive landscape and build capabilities spontaneously. Such of the differentiated capabilities do not develop into organized processes nor there will be formal knowledge transfer; in most of the cases the competitive edge is lost when the owner and his/her team disintegrates either due to age or differences of opinion. The mere need to sustain the growth and also maintain the capabilities necessitates the succession planning. Succession planning is the key, so that no destruction in value occurs when the owner/ his core team disintegrate naturally or artificially. You need to make an omelet and distribute without breaking the egg.
