Succession planning is essential and must be part of the company’s strategic planning, whatever the business or its sector of activity. The earlier the company thinks about succession, in all of its areas, the fewer risks it runs and the more easily it can secure its future.
This was the main theme presented by Juliana Assolari, a partner-owner lawyer of the Lassori firm, at the IPGE Strategy & Execution Seminar, of the Instituto Paulista de Gestão Estratégica, held in São Paulo, at the headquarters of the Brazilian Institute of Corporate Governance (IBGC). Juliana delivered the lecture ‘Risk, Succession & Perpetuity’, in a block called ‘Strategy & Execution: Governance Tools’.
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The speaker recalled three cases to begin a reflection in her presentation. “Imagine a director of the International School, with 20 years at the company, who announces her resignation and transfer to the competitor,” she said. “Or an executive director of a multinational who, upon undergoing routine examinations, discovers that he is ill and needs to begin treatment against cancer this very day.” Juliana also highlighted a third example: “Think of an 88-year-old gentleman, owner of a leading company in the segment in which it operates, who, also with failing health, begins hemodialysis treatment at the hospital, and worries his board of directors.”
These cases illustrate that sooner or later the moment comes to think about succession. Juliana emphasizes that succession is not only related to the owner of the company or a share transfer; it also includes the replacement of other executives, of leaders of various areas of the business. “Companies need to prepare for this moment,” she stated.
The lawyer warns that the more time and effort are dedicated to succession planning, the better the results can be. “If the succession is not coordinated, it ends up being traumatic,” she says.
Succession planning is essential and delicate
The greatest challenge in talking about succession is when the company has a charismatic leader, different from the one everyone wishes would retire. According to Juliana, another major challenge is to draw up a succession plan in the financial area. Or when the company’s shareholders or board of directors change. “These are also moments that can impact succession.”
The topic of succession is delicate and needs to be handled with tact, care, and professionalism. After all, it is not easy to talk about the subject to the founder of a company, who has been with it for many decades. To say that he needs to plan his successor and that perhaps it is time to pass the baton.
Juliana recalls that even in family businesses, nowadays succession needs to be professional. Planning is no longer aimed merely at replacing the owner with a family member. Heirs generally end up being prepared to serve on the company’s board. And executives are sought internally, within the company itself, or in the market. Professionals who are more suitable and prepared to occupy the necessary positions and key roles in the company.
Plan B
The speaker closed her participation in the event with a tip. The company that looks to the future, that always has a Plan B, and that concerns itself with succession planning has an easier time ensuring its perpetuity, its continuity in the market.
Download the presentation with the main topics.
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