Question: Can you further elaborate on the meaning and essence of PEC in succession planning?
Answer: Succession always starts with the first P, which is planning. The latter requires the identification of major priorities, and one of these priorities is to change the mindset that has made you successful. You must accept the fact that sooner or later, you will have to step back and allow generational change to happen. That is the natural cycle of leaders passing the baton to the next generation. Understandably, it is by far your most agonizing and challenging step and will require a tremendous amount of emotional commitment to share decision-making with your children. When a transition happens, every central pain point must be meticulously addressed, starting with your commitment, capacity to mentor and inspire, management oversight, nurturing type of leadership, and your ability to hone the skills of the next set of leaders. When the day comes that you will step aside and transfer power effortlessly, it will be one of your greatest accomplishments as a father and a leader. That is the essence of empowerment and the commitment to move forward. That is why actual preparation among all stakeholders is an absolute must and can never be set aside.
Is this something that you are open to wholeheartedly embrace? More than the time of leadership change, the real challenge is your desire to embrace the reality that you’re heading to the phase in your life where you are called upon to mentor your children. Are you ready to empower them instead of leading them? Your unwavering commitment will define the end result.
Question: Why are you uncomfortable with my suggestion to step back in the next two years? Do you think it is too short?
Answer: The PEC program I mentioned to you is not about forcing leaders to retire and leave the business entirely. I do not subscribe to the idea of overnight and abrupt decision to let go of power. It goes against the grain of governance. Unless you are sick or incapacitated, the decision to suddenly relinquish leadership is ill-advised and dangerous. Personally, it is still not advisable for you to disengage right away.
On top of all these interventions is the need to manage the collaboration process with your children in order to reach a clarification regarding each one’s role before you step down. This process of role clarity within the children vis-à-vis the organization is time-consuming. If you want to speed up the transition journey, you need to explore other experts like an O.D. (Organizational development) specialist to accelerate the process. Another important engagement is hiring a good CFO (Chief Finance Officer) to put “best practices” in place.
Question: What do you suggest is the ideal timeframe for the “changing of the guard?”
Answer: The objective is for adult children to gradually assume a higher degree of decision-making in the next 3 to 5 years. If you are 72 now, stepping back at 75 can be worked out, but I have to warn you, time is not on your side... the runway is short. Ideally, a 5 to 10-year leadership transition is preferred. Your children (likely to be in their mid-30s to mid-40s) must now assume leadership roles with real accountabilities. You have to trust them, allow them to make mistakes, and “give them wings.” There is no other way!
“It appears that I don’t have much of a choice. If I continue to lead the company, the odds of the PEC program succeeding are zero. It does not help that my children are already demotivated, and the business may likely get stuck to my way of doing business.” That was the founder’s last reply. It has already dawned on him that the time to do the PEC is now.