Advisers should consider the psychological factors at play between business stakeholders if they want to implement an effective succession plan, according to one expert.
Speaking at a seminar for HLB Mann Judd in Perth this month, Psychological Strategist, Catherine Resnick, said understanding the psychological drivers of the business’ stakeholders was critical to delivering a successful transfer.
Ms Resnick told the seminar’s attendees that succession was a ‘process’ not an event. She said the psychological make-up of the stakeholders involved in the transfer of ownership would influence the process, and that it was important for advisers to consider each individual’s needs carefully.
It all comes down to three things – love, money and control
According to Ms Resnick, business owner/founders are usually entrepreneurs that typically dislike repetition, rules and letting go of control. Their high energy and lack of interest in detail means they can feel challenged or constrained by a formal succession process or confronted by the conversations that need to take place. Similarly, those in line to take over the business may have developed a sense of entitlement that could be damaging to the process.
She stressed the importance of communication in order to be able to manage expectations: “Clarity and communication can overcome the resistance to change, address those governing myths and avoid misinterpretations.”
She also recommended taking time to define the cultural values of the business owner, and which of these they expected to be incorporated in the business’ vision, mission and values, while still giving those next in line permission to change things.
“It all comes down to three things – love, money and control,” Ms Resnick said.
