Is Your Time Horizon Long Enough for Succession Planning?
Lost in the day-to-day?
Too busy trying to stay ahead of the bankers, bureaucrats and competition to think about succession or any kind of planning?
There is a basic business rule that says that your worth to your business is equal to what you would pay someone else to do your job.
In more practical terms, if the work you’re doing is clerical then you should be paying yourself clerical wages – a better solution would be to hire someone to do that work giving you time to work on more valuable things.
Another measure is that the value of your work is directly related to the time horizon your work affects. Clerical work is generally an “input” process. The time horizon is short, now ‘till lunch time for instance. Clerical pay is $10 – $20 per hour.
If you’re in middle management your time horizon is this month and this year, your work is measured by output, meeting this years budget and achieving pre-defined targets. Your value is middle management level $30 – $50 per hour.
Executive managers must be strategic thinkers, working with a time horizon that is typically 2 – 5 years. This strategic work can be worth several hundred dollars per hour, however, it is also the most sensitive to the success or failure of the work.
Too many family business owners pay little or no attention to the strategic level of management and yet this is where their real value shows through. Experience, instincts, ability to take risks and “see” trends are important criteria for strategic thinking and planning. Delegation of day to day operations has two substantial benefits: first is to allow time to start to think strategically and second to provide opportunity for growth into the role of manager by next generation employees. Accepting the responsibility for strategic thinking is also a good first step to answering the question: “What happens if I get hit by a bus today” or perhaps “Can I take off to explore the markets in Tahiti for a month”
When you extend your time horizon you start to appreciate how the long term growth of the family business will affect long term family wealth, your succession plan will become a natural part of the strategic plan that grows from your vision. To your family this step could be worth millions.