This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
The problem of successful succession planning in the family run businesses is very evident and not been analysed so far in depth. Most of the entrepreneurs see their ventures as extension of their dreams and values. They consider that they have put their passions and vision in their professional and personal lives. Mostly when they want to handover their responsibility, they think about their children because of their trust in them. They have a strong belief that their children will put the similar passion and value as they have put earlier. Usually most of the entrepreneurs think that the transformation of responsibility to their children will happen automatically when they will not be able to carry on. And they ignore the need of any planning in this process. Perhaps the main reason of ignoring the planning need is the fear about facing the reality that in the future they would not be able to carry on their business.
Unfortunately, the literature survey shows that slightly lesser than 50 % of viable small and medium sized businesses are able to continue under the command of next generation leader. And there are very few businesses which are able to survive from the transformation of second and third generations. Generally this happens due to lack in agreeable common strategic vision and poor succession planning.
After conducting the preliminary research on small and medium sized family run businesses I have observed that entrepreneurship grows at the "grass roots" level as well. I believe there are many similarities in the way large and small entrepreneurial organizations manage their companies effectively, with a view to passing them on to the next generation of owners. In essence, by following an effective succession plan, the entrepreneur will protect the company's culture and enable the implementation of a long-term business strategy that will smooth the transition phase that is required to pass control to the next generation.
The goal of this research study is to identify the problems faced during transformation from one generation to the next and study the methodologies used in succession transformation. The shortfalls will be analysed and recommendation will designed in order to overcome these shortfalls.
It must be emphasized that this is but one part of the process: a well-defined succession plan must be supported by appropriate estate and tax planning as well. In literature survey I have found that there is five principal stages of a succession planning model which can be used effectively. And there is also ongoing enabler includes which have a well-defined strategic planning process and leadership support, competitive compensation and access to high-level performance management tools and processes. The utilisation of the right combination of these key enablers can control the leadership and organisational continuity from one generation to the next. These elements are very important for the organisation success.
A formal approach of succession planning which should include the strategic planning process is a very important key element for any family business success. The first step is to articulate the mission statement to ensure that the owners have clearly formulated and communicated the vision of the organisation. The organisation's culture and values are desired throughout the organisation. In practice, the need of written mission and visions is denied by most of the entrepreneurs. However, the written mission and vision in any organisation ensures the commitment of the entire organisation to accept and implement that vision. As family members are also part of the organisation, they also understand the effectiveness and participate in the organisation vision.
Ultimately, the strength of the strategic planning process has a direct impact on the future transition of the business to the next generation. Assuming a healthy, structured, and analytical debate in the preparation of a business plan, the risk of family differences arising as to what direction the business strategy should go is either eliminated or greatly reduced.
In one of the literature survey, the proposed five principal stages of our succession planning model are:
Stage 1: The business case for proactive succession planning
Stage 2: Identification of target roles and positions
Stage 3: Determination of core competencies and skills
Stage 4: Identification/assessment of successor candidates
Stage 5: Leadership developmental programs
The business case for proactive succession planning requires the entrepreneur to develop a business case that includes succession planning. This, in turn, requires the entrepreneur to articulate a clear vision and company mission encompassing the business culture and values. The mission statement is the foundation for developing a strong strategic planning process that incorporates the development of a longer-term business plan. Requiring the entrepreneur to envision where the business will be in the next five, ten, and twenty years requires the making of decisions about organizational structure and effective leadership. In turn, this focuses creative debate around Succession planning for small- to medium-sized family businesses.
Then assessing the degree to which the owner's retirement and attrition issues will impact on the management of the controlling interests of the business in the future, and leads ultimately, to a decision to either carry on the business in perpetuity or to divest at a strategic time in order to obtain maximum value for the shareholders. There are numerous considerations to take into account in developing a business case that works for each owner but, with the inclusion of a succession plan, it is especially critical to fully understand the long-term impact of the following five factors:
Industry sector, market share, competition and barriers to growth
Long-term business strategy for growth and required return on capital investments
Independent business valuation and the potential to increase brand equity over time
Timeframe for implementing a succession plan
Commitment, ability, and leadership potential of family members
For successful organizations, a formal strategic planning process is an ongoing business activity. Developing a business case is a total company effort, involving all family members and senior management, who assist in identifying key roles, responsibilities and organizational structure. There is annual review of the business plan; modification is incorporated based on the new organisation needs and the business plan is validated against the long term vision. The business plan should always be align to the agreed values of the company's owners. In succession planning, the business case is different from what is used in other planning activities. As the business case developed in succession planning represents the situations when either the business reached a critical mass, or new generation members are interested in contributing to the business and are desired to develop the organisation further. These situations make the consideration of leadership and organisational continuity necessary for the organisation. The analysis of every characteristic of the business plan strategy is essential in order to develop a practical business case for succession planning.
In order to the aim for which this research is being undertaken, following objectives need to be accomplished which will lead to provide us the clear view how effective and proper succession planning can help the Small and Mid-sized family run business to transform the leadership smoothly.
The research objectives are as follows:
To analyse the problem occurred during transformation of small and mid size family business from one generation to the next
To analyse the reasons for ineffective transformation from one generation to the next
To Analyse the problems occurred after transformation under new leadership
To analyse the methodologies of Succession planning in small and mid size businesses
To identify the shortfalls of these methodologies and recommend the improvements to overcome the ineffectiveness of these methodologies
To achieve the objective of this research, I will come up with the following research questions which will be answer in my dissertation.
What the problem occurred during transformation of small and mid size family business from one generation to the next?
What the reasons for ineffective transformation from one generation to the next?
What the problems occurred after transformation under new leadership?
What the methodologies of Succession planning in small and mid size businesses?
What the shortfalls of these methodologies and how to overcome the ineffectiveness of these methodologies?
SIGNIFICANCE OF THE STUDY:
This research will help the small and mid size family run businesses to effectively plan for succession transformation and to mitigate the risk the involved in conventional ways. It will also help me to understand the effective strategic planning the key elements of leadership transformation.
CRITICAL REVIEW OF THE LITERATUR:
A clear justification of the ideas will be put forward by referencing them correctly; and clear distinction between the facts and opinion will be made throughout my dissertation.
Literature Sources Available
Primary Sources Available
Finding the information in the digital age
Libraries provide a gateway to all kinds of information. Library provides access to information. Librarians help to develop strategies for finding and using the most appropriate information for research. For an academic paper, one should use books and articles as well as websites that collect information important to the topic. One might also include documentary films, Current news programs, Lectures and even examples of art and film.
Internet is the vast store house of information located at different places. In fact, the internet is much more than a vehicle for retrieving information. Internet allows storing and uploading information of any kind, As a student one should take care that information which is access is referenced properly accordingly with the date.
The methodology is described in the following sections
Description of the methodology
The variety of techniques has been employed in this study. In the following section each individual technique employed in the research methods are described. This description is important in order to clearly express the prime objective and function of the research conducted. All the practices used are in the order of their accomplishment during the course of this study.
1) Initial theoretical model
A model based on initial fundamental theories was developed before executing the methodology of this research. This model is an integration of concepts and plans collected and formulated in the pre-study conducted. The model acted as the one of the basis to define the process of testing and values concept in the introductory phase of the research.
2) Literature review
The review of the literature and development of the research questions was done in the initial research. The literature review spanned the body of journals, abstracts, relevant book sections, and references from articles across the works of financial Institutions, finance, and share market reports, financial times magazines etc.
In the forgoing literatures presented with hereunder having the research questions which have been derived and scratched about by digging up and down the values to personal as well organisational having being in confliction since starting. A comprehensive planning abstraction was reached before setting down the questions of the research and their sequential patterning for the purpose of the interviews. The assessment and review dimensions were well taken care of by the faculty and the peers in order to have and present with the fair research contribution being independent and unbiased in the stances of the presentation.
3) Literature case analysis
It becomes of due importance to analyse the various types of case studies while undergoing the process of research by reviewing the literatures being taken from the wide areas of the journals for the organisations and industries at large. Henceforth these all case studies shall be well assessed by interpreting and evaluating them. The main priority would be of the conduction of the analysis pertaining to the form of cross-case assessment as prime one. The studies pertaining to the processes and its implications have been taken for the banks performances being the topic thereupon.
4) Development of model being case-based
As reported in several research papers, the preliminary structure of measurement of effective Succession Planning was drawn. After this, it was cursorily tested on already measured performance. This preliminary structure was specifically analysed for it applicability in the light of individual and organisation behaviour. This was also analysed for the relevance of data and resources from where data was supposed to be collected. Interview questionnaire was created and iteratively developed by utilising this structure.
5) Data collection:
Data are fact, figures, enumerations and other materials, past and present serving as basis for study and analysis, they are raw information or material for analysis purposes and its provides basis for testing hypothesis developing scales and tables. Largely data can be considered to be of two types which are:
A) Primary data
Primary data can be collected by asking people and staff on telephone or by e-mail. In this research study a questionnaire has been designed to interview professionals of small and mid size business, case study and experimentation etc.
B) Secondary data
A variety of methods were used in collection of secondary data.
I) Meta analysis (an analysis of several analyses)
The Meta analysis is a way of extracting meaningful statistical information or data from lots of small studies trials.
II) Historical method
Historical method deals with the evidence in order to establish the facts and draw conclusion about past events.
It attempts to test the truthfulness of the reports and observation made by others sources
III) Content analysis
A quantitative analysis of contents of written documents, i.e. a multipurpose research method meant specially for investigating a broad spectrum of problems in which the content of communication serve as a basis of interference.
It transforms verbal, non-quantitative document into quantitative data. The data was collected from the financial Institutions using questionnaires and printed journals and published accounts of the company and a details study of financial institutions was also made for this purpose.
6) Use of quantitative or qualitative methods
The selection of an appropriate research approach in a given study was based upon the problem of interest, resource available, the skills and training of the researcher and the purpose of the research study. Although some of the research incorporated both quantitative and qualitative methodologies but it is not advisable. In the pure form, there are significant differences in the assumption underlying these approaches, as well as in the data collection and analysis procedure used.
The quantitative research was approached making use of scientific methods, which includes the following details:
The generation of models, theories and hypotheses
The development of instruments and methods for measurement
Experimental control and manipulation of variables
Collection of empirical data
Modelling and analysis of data
Evaluation of results
The qualitative researchers typically rely on four observations which are as follows:
Participation in the setting.
In depth interviews
Analysis of documents and materials
In the current research study, instead of using either qualitative or quantitative methods, a combination of both quantitative as well qualitative research methods has been used.
The following section provides an overview of sections in which the details of the current research study has ben done. The research topics are divided into three major sections which are discussed in here.
Part one consists the measurements of effectiveness of Succession planning in which the description of the impact on the following areas will be done.
How to transform company's mission and vision
How to transform leadership
What should be change with this transformation
What should not be change with this transformation
In the second part of the report, a detailed description of the impact of others factors on succession planning like:
Quality of resources
Resource utilization etc
The third and the final part consists description of research techniques and recommendation to improve the effectiveness of Succession Planning. As mentioned earlier, a variety of different and innovative technique has been discussed and used to improve the Succession Planning. This section describes the overall outcome of the current research study. The study, discussions as well as approaches are valuable to the small and mid size businesses as well as to an individual.
Report writing and submission
1) Layout of the report
The report was prepared keeping in considerations which are proposed by the university. Otherwise the current report has the layout as per the layout suggested by the London College of Business. It includes (type of Paper, Headings Footings, Standardized form etc)
2) Length of the report
The research study includes only the matter related with the subject and length will be specific as per the limit set by the university.
3) The actual writing of the report
The information collected in the current research study is arranged in the logical order while taking care of the structure. In addition, the case studies, research process, and methodologies are arranged systematic order. The report is prepared in keeping into consideration following important points:
The study should provide answer to all the questions raised by the proposal
The structure of the report should be well balanced and logical
Properly numbered pages and indexing of the pages
Critically reviewed by the Professor before submission in order to get important suggestions which are missing in the report.
4) The structure of the report
I) Title Page includes
The title of the report
The sub-title (if necessary)
The name of the author, college and university.
The date of the submission of the report
II) The Index (Table of Contents)
III) Executive Summary
The executive summary will reveal the most important points or parts covered by the Dissertation
IV) The Main text of the report
The main text is commonly divided into the following chapters.
Clarification of the problem statement
Methodology (Description of how the information was obtained)
Annexes (For e.g. Bibliography)
In addition to the above discussed points the detailed explanation, variety of examples, drawing, statistic techniques etc in included in the current dissertation in order to make this study an apt example for implementation in real scenario.
PRACTICAL AND ETHICAL ISSUES:
The research design section has described the pros and cons of every technique adapted from sampling to focus groups, however utmost care will be taken place to minimize the impact. Other limitations which I may come across with my dissertation are:
1) Time Limit:
As seen from the above time scale, I have only three months to conduct this research; I need to try my best to solve the above research problem.
2) Lack of Access:
It may be difficult to obtain actual problem areas of the organisation due to limitation of the access.
It may not be possible for all the staff to disclose confidential information of the organisation to me. I need to go through the detailed employees interview and company info myself.