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In the context of evolving markets and generational changes, it is vital to establish a competencies development plan to address the resulting challenges.
In many cases, business transferors have an entrepreneurial profile; this does not necessarily correspond to the typical definition of managers. They enjoy being in the thick of things, using a trial and error approach, relying on their business instincts. As a result, they often have an informal, somewhat patriarchal management approach, with few rules, little structure and no management programs.
The transferees, on the other hand, will likely be facing different challenges such as:
- Market growth,
- More employees,
- Specialization and increased demands,
- Financial and legal controls.
New organizational needs may arise in terms of the structure (official organizational chart), internal operations (management committee, management scorecards and marketing plan) and human resource programs (employee handbook, compensation structure, etc.).
Prepare a profile
It’s essential to clearly define the required skills for the management positions while building in some flexibility to share responsibilities. For example, among others, a general manager should have strategic vision, finance skills and the ability to delegate.
Assess competencies
The transferees’ current abilities should then be evaluated using a variety of tools: analysis of their experience, behaviour interviews, psychometric and aptitude tests. A common misconception in many family businesses is that management skills are innate, this must be avoided at all costs. Some transferees may not want a management role, they may prefer to be on the operations side. Properly evaluating their profile will be useful for both them and the business.
Draw up a plan
Lastly, a competency development plan should be drawn up for each transferee filling a key position to ensure that they are able to take on that role efficiently. There are numerous options: training, internal or external coaching, discussion groups, etc. The transferor could serve as a mentor, but this role should be clearly defined. The transferor’s knowledge and experience can then be passed on to the successors and foster a successful transfer.
A business’s activities can be looked at from many perspectives: rational, financial and operational. These are significant management requirements, but the human aspect is just as important, and in a business transfer context, it is most often at the heart of discussions. Psychometric tests and a competency development plan are key to the succession plan discussion and implementation process to ensure a smooth transition.
Contact an expert in your region to find out how Raymond Chabot Grant Thornton can support your business transfer process!
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