Subscribe

Smorgon: the key to successful family succession

The challenges for family businesses? Cash flow management? Becoming digital? Capital? How about moving out of the business? For around a fifth of leaders of family business, succession planning is considered the biggest challenge.

The key to successfully running a family business – and succession planning – is honesty, career executive David Smorgon OAM says, allowing each member’s individual passions and concerns to be addressed.  

“The essential element [is] open, honest transparent communication involving all family members, whether they’re the oldest or the youngest, whether they are in the business or not in the business,” he told bluenotes on video.

" The essential element [is] open, honest transparent communication involving all family members." David Smorgon

David Smorgon’s key tips for family succession:

  • Succession needs to be put on your agenda
  • You need to prepare for a successful transition
  • Educate and train the next generation
  • Plan for a different life
  • The overall characteristics of a succession plan must be clear: strategic; comprehensive; managed and feasible.

“The whole process stands or fails on the family’s capacity to build trust and foster collaboration.” - Ivan Lansberg, “Succeeding Generations –Realizing the dream of families in business” 1999

“It needs to be created in a safe and warm environment so everyone feels comfortable.”

Speaking after a recent industry event hosted by ANZ and PwC, Smorgon - now executive chairman, family advisory at PwC – said nailing the transition is critical given research suggests more than two out of three wealth transitions fail.

He made the comments as part of a panel featuring Brown Brothers executive director Ross Brown and public relations and content manger Caroline Brown. 

“Transition can be seamless – if it’s done properly,” Ross Brown said. “My belief is if you put the work in and you do it properly you can have a seamless transition from one generation to the next.” 

The panel also touched on the importance of the right culture in a family business and the use of independent facilitators. Watch the video and listen to the podcast above to find out more. 

Brendan Rinaldi is a State Director, Corporate Agribusiness & Emerging Corporate for Victoria & Tasmania at ANZ

Succession was top of mind for many leaders at the industry event, with 21 per cent of attendees citing succession as their major challenge.

In the agriculture sector, 90 per cent of Australian farms are owned by families. As someone who grew up on a family farm in southern NSW, succession was talked about in our family for as long as I can remember and is still a process we are working through today.

It’s often an emotive subject and one that requires empathy, and more importantly respect, as Caroline pointed out.

“I think it's a lot about respect and having respect for every single family member, whether or not they work in the business, or they have completely external activities that they partake in,” she said.

“It's about respecting each other for the decisions that they've made.”

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

editor's picks

23 Aug 2017

Does size matter when it comes to culture?

Andrew Cornell | Managing Editor bluenotes

Banks face challenges in communication and culture – and earnings - which come simply from being too big and complex.

17 Aug 2017

Soundbytes: the future of communication

Tony Field | bluenotes contributor

How long before Google starts asking the questions? We speak to two experts about how tech is changing the way we communicate.

04 Jul 2017

Setting up your SME for the new FY

Tania Motton | ANZ General Manager, Business Banking Australia

Tax time doesn’t have to be a struggle for SMEs. Here are six tips for setting up for FY18 success.

17 Jul 2017

Super: the great Australian apathy

Alexis George | Group Executive Wealth, ANZ

More than half of all Australians significantly underestimate how much superannuation they’ll need for independence.