Succession plan in a family run business

This can as simple as incorporating a succession plan as an official company policy and do a yearly pledge of it in the annual report.  Remarkable examplary succession plan by Qian Hu as below :-

 
During Qian Hu's recent AGM on 15 March 2012, shareholder, Manohar P Sabnani (“Mr Mano”) suggesting that Chairman (Kenny Yap) should move from beyond the family members to search for a capable CEO to run the business should the performance of the Group remained stagnant or deteriorate going forward. He felt that if Chairman only relied on his family’s talent pool, there might be constraints on the growth of the Group.  Chairman reiterated that as mentioned on page 50 of the Annual Report on Qian Hu’s succession planning as well as in dialogue sessions with various media and professionals, he had always been advocating that the best person should run Qian Hu and that family members would not be given any special preferences.


From Qian Hu's 2011 Annual Report :- 

"QIAN HU’S SUCCESSION PLANNING

Succession planning is an essential process for maintaining growth momentum and business continuity, no matter how certain the future holds. We recognise that no one is indispensable, but the absence or loss of key management can be detrimental, resulting in a loss of shareholder confidence. Modelling the succession planning policies in some of the larger organisations, Qian Hu has put in place a structured succession planning programme as early as 2004. This is because we recognise that it would take some 10 to 15 years for the next generation to garner suffi cient experience to take over the leadership of the Group. 

We are not looking for a single talent, but rather a cohesive team that will take Qian Hu to the next lap of growth. We have identified a team who has the potential to be Qian Hu’s future leaders, and out of this group, one will be chosen to be the next CEO. This decision will be based on assessments from the Board’s nominating committee; peer appraisals, individual track record and performance. Performance recognition at Qian Hu has always been, and will continue to be, based on merit. It is our company policy that family members will not be given any special preferences. 

The person whom we are grooming to be Qian Hu’s future CEO must embrace our corporate culture and values wholeheartedly. The new CEO must be able to put the interest of the company before personal interest, be able to handle stress, and yet be hungry and ambitious.  This is necessary because the Group must not rest on its laurels but continue to progress and evolve. With the current senior management as their mentors, all of our management trainees are rotated to handle different portfolios. Those who are capable must be able to take on overseas assignments and be able to reliably perform in challenging environments."



From Qian Hu's "Chat With Kenny" web page dated 25 July 2011 :-

"Dear Jeremy Scott, you wrote:

You mentioned during your result briefing that Qian Hu is expected to have a new CEO by 2020.
Can you briefly elaborate on your succession plans leading to 2020 and why 2020?

Hi Jeremy,
When I reached the age of 40 years old in 2005, we started Qian Hu's succession planning process by recruiting management trainees, aged 25 to 35 years old. We planned to train and develop them for the next 15 years hence the 2020 timeline for a revitalised management team for Qian Hu. In 2020, I would be 55 years old and a new CEO from the succession team should take over in his or her mid-forties. I intend to stay on as Executive or Non-Executive Chairman for another 5 years. By the age of 60, I will exit the management team of Qian Hu but will be offering myself as an FOC (free-of-charge) advisor to the company whenever they need me.

I plan to exit the company at a relatively "young" age of 60 by corporate standards. I could stay on longer but I feel I should give the next generation of management complete freedom and authority to bring Qian Hu to greater heights. I should only be there to provide guidance and advice when needed without interfering with the way they run the business.

Kenny the Fish"