Your hospitality business has been clicking along nicely under your supervision for decades, but now you're facing the prospect of retirement. Whether you're running a big corporation or a small, family-run operation, you need to plan carefully to replace yourself.
Stan Fuller runs the highly successful Earls Restaurants from an office in North Vancouver. Stan is only 52, but succession — as a concept — has been on his mind lately. He might be relatively young, but he doesn't want to feel rushed about his exit from the business he has lovingly built over many years.
Stan started seriously considering succession after a U.S. study found that people who retire at age 57 live longer than those who cling to their positions. Further investigation led him to conclude that good succession planning hinges on whether or not a company's entire senior management team shares an understanding of three important challenges:
- How can we maintain what we're doing right?
- Do we share a clear corporate strategy and value system?
- Are we set-up to grow and change under new leadership?
Stan makes a clear distinction between the "value" of the company (what the company is worth, the bricks-and-mortar assets, the intellectual property) and the "values" that helped make it a success (the main philosophy applied day-to-day in managing it, customer service policies, employee training), because he feels the two are strongly linked. He wants to see the value of Earls grow, and that goal can best be achieved by communicating the key corporate values to all staff. And since that philosophy is heavily influenced by the owner or CEO of the company, a suitable candidate for leadership must buy into the idea that the value system is the single biggest factor in Earls' success. "On the operating side of the business," says Stan, "it's easy because people are engaged in similar activities. The difficult part is insuring that your business philosophy is communicated through every discipline in the organization." In the end, the winning candidate must "be mindful of the value system you've set up. Then you get continuity."
On a personal level, it is important, he thinks, to be open-minded about the prospect of departure: "I'm going through a process where I'm curious about succession," he says. "Curiosity allows you to look at all the different scenarios that might take place without excluding any — and then to plan for the eventuality that will take place. My director of purchasing, George Piper, retired in December, and he did a masterful job of looking into the marketplace and recruiting someone who turns out to be the best in the organization — a full year-and-a-half before George left." For Stan, this was an object lesson in always looking for the best person, so he is not committed to the idea that the next head of Earls has to be a Fuller. He does, however, believe that the best managers usually arise through promotion from within.
By planning ahead, Stan will avoid an abrupt departure that can upset a company. "I'm going to stay involved for a few years yet, but there's a right balance we have to find — letting someone else run their own show, with me still being available." He is also being realistic about the emotional impact that even a well-planned retirement will have on him "When I do get there (and I've been doing this for a very long time), I expect there might be a period of 'mourning'," he says.
For smaller, family-run businesses, Stan has one important piece of advice: Go outside the family and find a consultant who can objectively assess the role of each family member who works in the business, determine how happy each person is and how well-suited they are for their current roles. "This ensures that someone whom everyone respects is putting everything into perspective — on behalf of the organization and not just to benefit the family," he says. It also ensures that family members who secretly want out can make their wishes known, and it tends to uncover the motives of family members who might rock the boat down the road.
