By Rajesh Narain Gupta June 11, 2022
Opinions expressed by Entrepreneur contributors are their own.
On succession planning, it is critical that the corporate have a well laid plan so that the key management personnel (KMPs) and the board of director, pass on the business to next generation without any hiccups. This may be true for individuals as well who may have their succession planning in place for passing on their wealth to the next generation.
It is true that both the corporate succession planning as well as the personal succession planning is paramount and critical and cannot be ignored in today’s world. The new age has created new type of asset classes such as digital assets, art and artifacts which make the task a bit difficult for the patrons and patriarchs of a family while dealing with the new asset classes. To put it succinctly, today, even how to plan the succession and handing over of digital assets is a serious subject matter of discussion as the link and access to bank accounts, virtual communication, payment modes, etc., are part of the digital assets. In the absence of a well-laid out plan, successors will have a difficult time to discover and distribute these assets.
In addition to the normal issues, KMPS, UHNIs (ultra high networth individuals), HNIs and individuals need to apply mind as to how to pass the relationships to the successors. The question is: How does one ensure that the relationships which one has cultivated all the life smoothly pass on to one’s successor? It’s difficult but not impossible.
The importance of nurturing healthy relationship is underlined by the very many episodes in the family business world where sore relationships leading to acrimonious disputes often spilling over to courts or painful arbitrations. However good personal ties and family relationships which lasts forever could solve this problem once and for all and there are events and stories around such episodes which each one of us can relate to.
We have heard so many stories as to how the Emperors and Kings used to send their children to other kingdoms as their ambassadors so that their children could be introduced to royal families of other countries and the relationship thus continued. Similarly, many of the KMPS, (UHNIs) and HNIs and other make sure that their successors / children meet all such important persons whom they know or wish their children should know.
This idea is not something which is new but certainly this thought is lost somewhere when human civilization is riding on today’s digital wave. One should understand that the relationships cultivated over decades have their unique advantages and are part of important assets which need to be passed on to the next generation with care and pride.
It goes without saying that it takes a life time to build personal relationships which are deep running and important. So, it’s important that due care is taken to:
- Pass on those relationships to the next kith and kin so that the advantage is not lost.
- This may take steps to educate the successors about such relationships and also to make appropriate introductions during one’s life time to ensure that the successors enjoy the good will and benefits of those relationships.
- Certainly, it would also depend upon the successors as to how good they are able to nurture those relationships but once the real value and advantages of such relationships is described and explained, there will be cogent reasons to explore its tenets in letter and spirit.
In short, it is high time that family patriarchs and patrons realise the value of building personal relationship cutting across generations not only to preserve the value of the business but also grow the assets that will be benefit all in a family. Such deep rooted relationships help family members to see the business as a whole though they may be in charge of only a part of it after the succession planning is implemented. This also helps preclude avoidable fragmentation of business or assets which on a standalone basis may not yield the optimum returns. But as a whole the business may be a able to thrive by navigating new challenges with the combined effort of the relatives. To say that one critical but often overlooked maxim in succession planning is to include solid relationship that benefits everybody concerned. Simply put it `all for one and one for all’ is an idea whose time that has come in succession planning. Relationships should be treated an asset worth preserving that can be passed on to the next generation. Once such an approach fructifies, all the members in the family will live happily ever after.