Continuity Planning: Who’s at the Table?

There are subjects I to return to regularly in this space, and “continuity planning” is certainly one of them.

I still clearly recall first coming across this term, and it was a bit of a head scratcher for me.

Lest your head also feel itchy, allow me to share what I learned when I first asked “Um, what’s ‘continuity planning’?” during the Family Enterprise Advisor (FEA) program in 2013.

 

Goodbye “Succession”, Hello “Continuity”

If the term “continuity planning” sounds new, it’s mostly just a newer, less threatening, and more accurate term for something that family businesses have been doing since, well, forever.  

Only most of them call it “succession planning”.

We were winding down the first module of the FEA program on “Family Dynamics”, looking ahead to the next six multi-day sessions that would take place over the coming months, one of which was called “Continuity Planning”.

The “outspoken” guy from Montreal asked, curiously, “What’s continuity planning?”

 

A More Appropriate Label

While the reply I got was largely that it was a “re-branding” of succession planning, I’ve since come to understand that it’s much more than that.

The biggest issue people have with the term “succession planning” is that it automatically makes one think about a future scenario when the key person or people will no longer be around.

In a non-family business or corporate environment, succession planning takes place all the time in many departments, and the idea is not nearly as “heavy”.

But in a family business, where the idea of “retirement” is somehow less common, that key person’s exit is too often presumed to only occur upon death.

 

What Will Continue, Versus What Will Change

When we substitute the word “continuity” for “succession”, there’s much more focus on what will stay the same, even when some of the people have moved to different seats on the proverbial bus.

The other idea that gets driven home is the longer term nature of the whole exercise.

We aren’t just concerned with the next transition, but also the one after that.  It’s the beginning of a long-running discussion about how to continue to prepare people for increasing responsibility for many years to come.

Setting the Table

If we want to have a good discussion about where everyone fits into the future scenario that we’re envisaging, my bias would be to include as many of these people in the conversation as possible.

What still happens too frequently is that Mom and Dad figure it out themselves and keep it secret.  Sometimes they even go see their accountants and lawyers to draw it all up officially.

And frequently those affected only eventually learn of their fates right after a funeral.  (See #5 in 5 Things you Need to Know: Family Inheritance)

Regular readers will surely recognize that I am not advocating for this strategy.

 

Start with the Family

The family business was likely built and grown for the benefit of the family, in most cases.  

If that’s true, then my belief is that it behooves the family leaders to involve the family in the first stages of continuity planning.

There are too many stories about expert advisors who lead the family down a certain path, for seemingly legitimate reasons (usually around tax minimization), on the assumption that whatever makes sense to them, will automatically also be great for the whole family.

 

Looking for Trouble, Without the Leadership to Solve It

Since this is often about a whole life’s work, there really shouldn’t be a rush to settle everything, just because some of the conversations can be difficult.

This is really important, but it shouldn’t be urgent.

What I’m suggesting is an iterative process, where a preliminary meeting is called to get the family in on the idea that plans for the future are now being worked out.

An invitation is also extended to family members to have their voices heard as to their ideas, hopes, and expectations around how they see things, especially as to what role they may have in things going forward.

 

Growing Into Their Roles

As more meetings are held over the coming months, the future family leaders can grow into their roles slowly over time, as the plans are co-created and become clearer.

After the family’s big picture ideas are clarified, it will then be time to get some outside experts to the table to work on the “how’s”.

Get the family around the table first. The experts get their place after.