According to a survey conducted by the Family Office Exchange (FOX), almost 40% of family offices did not have a formal succession plan in place. The survey also found that a significant number of family offices lacked clarity on the roles and responsibilities of team members and had not established a clear governance structure to guide decision-making.
Creating a succession plan for your family office can be an incredibly important and complex process. But it is vital to ensure that the longevity of the business is secured, and its future is well planned out.
There are many different methods and strategies involved in developing a robust succession plan, but most family offices have found success by focusing on several key areas.
What’s the Pecking Order?
Getting a plan in place in a high priority in family offices. In fact, UBS reports approximately 68% of family offices have a documented succession plan in place. The report, which included responses from 121 family offices from around the world, also found that more than half of family offices view succession planning as a top priority.
So what’s the first step to take if you don’t have a documented succession plan?
First, having an effective governance structure in place is essential for any family office. The leadership of the family office must be clear and well-defined, with established roles and responsibilities for each member involved. This helps to ensure that if one key individual who has been instrumental in driving the growth of the business or making critical decisions needs to step away due to illness, retirement or other circumstance, there is appropriate guidance for carrying on without them.
Having the hierarchy of decision makers define also allows for the development of long-term plans which will help to guide new leaders as they take over from those who’ve left before them.
Are You Growing Acorns into Mighty Oaks?
Another important element of any successful succession plan includes finding ways to get talented individuals for key positions in the family office.
Although family offices have a net worth of close to USD 500 Billion, many still struggle to attract and retain talent. According to a survey conducted by UBS and Campden Wealth, 51% of family offices reported that it is somewhat or very difficult to attract and retain top talent.
Regularly recruiting new staff members with fresh ideas can be incredibly beneficial in helping a family office grow and evolve as its needs change over time. It’s also important to make sure that existing staff members are properly trained so they can continue contributing even when leadership changes occur. Growing the size and leadership ability of your team is critical.
Succession planning also involves setting up systems which will ensure continuity in both day-to-day operations and long-term goals at the family office. This may include creating policies which specify how certain decisions should be made, assigning roles which designate who is responsible for what tasks, establishing protocols that require regular check-ins between staff members at different levels within the organization, and much more.
Proper documentation should also be kept handy so anyone taking over a position will have access to all relevant information about how things were done previously.
Communicate Early and Often
Last but not least, communication is key when it comes to developing a successful succession plan for your family office.
Having regular meetings between staff members at different levels within your organization can help keep everyone on track with what needs to happen next. Additionally, sharing information through newsletters or internal memos can help make sure nothing gets overlooked during transition periods or when new leaders come into play; this way everyone can stay informed about changes or developments that may affect their work going forward.
Spending and returns are expected to increase significantly for family offices in the coming years. Have a clear plan for the future is a necessity.
Developing a thorough succession plan isn’t easy; it requires commitment from everyone involved as well as dedication to ensuring all bases are covered before changes are made at your family office down the road.
By following these steps and maintaining effective communication throughout all stages of planning throughout implementation however you will ensure that your organization remains strong no matter what happens in years ahead!
Want to know more about being ready for the future of your family office? Avior Executive Search can help.