There are several key factors to consider when transitioning leadership and management. While the required skill sets may vary across roles, the considerations are similar. For example, when planning for continuity, the person taking on ownership and leadership roles may be the same individual, or may not be. Overall, the plan will outline how to assess a candidate's characteristics in such main areas as interpersonal skills, professional experience, accomplishments, and business and financial acumen. Many even suggest that EI — emotional intelligence - trumps IQ.
Family member or not, assuming a leadership role will require the same traits including humility, accountability, maturity, integrity, and diligence. Such traits are often a reflection of the family's values. The candidates for management or executive positions should possess these characteristics, even if they do not have an ownership role or voting control. A wide range of leadership positions may need to be filled, so the continuity plan cannot focus on a single heir or successor. For example, a management role in the family office will require a different skill set than someone on the management team of the family business. Thorough continuity planning will account for each leadership opportunity and outline the specific preparations necessary.
This process cascades throughout. Each role that transitions should have a detailed job description that defines the core functions, responsibilities, authority, and accountability. This description should also draw on input from people in the role and those aspiring to be. This helps to identify the required knowledge, attitude, skills, and habits of a preferred candidate. A non-judgemental, objective evaluation of candidates' capabilities will help to assess and address any gaps. Ongoing development and evaluations of the candidate will keep the transition on track. These evaluations can also be tied to compensation and reported to the board for approval.
A leadership role in the family office requires an understanding of the family's history and values, as well as a thorough knowledge of all investments. The successor will need to have a clear grasp of the family's risk tolerance and its long-term, multi-generational vision. Crucially, this role also calls for the emotional quotient to manage personalities and balance the many competing interests within the family.
For leadership in the family business, the successor needs to have a comprehensive understanding of the business's products and services, systems and processes, culture, and more. The ability to persuasively and positively advocate for the organization and the family is critical. They should also have deep-rooted industry knowledge and experience, which will help them tap the best people to fill roles throughout the business. They will need to combine this knowledge and experience with strong business acumen and the ability to manage people, so they can form and articulate a vision for the future that gains firm-wide and family buy-in.
There are important interfaces between the family office, the family business, and the family. It is essential to have effective governance in place: clear controls, boundaries, and communication protocols. The family should bear in mind the three Cs that form the pillars of effective governance: consensus, communication, and consistency. These strong governance practices help facilitate information sharing as appropriate to achieve alignment and maintain unity. They also help to manage conflict and smooth decision making.