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Conference highlights the importance of succession planning
Conference highlights the importance of succession planning

Conference highlights the importance of succession planning

 

Navigating succession in family businesses was the theme for this year’s DCU Centre for Family Business annual conference.

Welcoming some of Ireland’s leading family businesses to Dublin City University, Eric Clinton, director of the Centre for Family Business, said the question he is most frequently asked by family business leaders is how they should plan for succession and what do they need to do to pass their business on to the next generation in better shape that it was received.

With the latest PwC research revealing that half (49%) of Irish family businesses have no succession plan of any kind in place and only one in seven (14%) have a plan that is robust, documented and communicated, the conference proceeded to cover succession best practices including how to choose a successor; preparing to let go and exit styles.

Keynote speakers, Paul Darley, CEO of W.S. Darley & Co. along with his daughter and potential successor, Audrey Darley, shared their perspectives on family business dynamics and their challenges of succession management.

Founded in 1908, W.S. Darley and Co. is a third-generation family business which has remained a world-leader in the firefighting industry over the course of its history. The business is 100% owned by the Darley Family, they achieved $185 million in sales last year and currently employs 235 employees.

As President and CEO, Paul highlighted a number of issues faced by all family business leaders:

  • How to decide which family members can join the business?
  • What happens when a family member employee doesn’t work out?
  • How to handle conflict resolution?
  • Do they have to work outside the company first, if so, for how long?
  • How to evaluate and pay family members?
  • Permitting in-laws or other non-blood relatives to work in the business?

Paul spoke about some of Darley’s succession planning best practices. The Darley Family Participation Plan for example means that anyone that wants to join the business must be required to work outside the business for 3-5 years. He also spoke about the following a code of conduct when handling conflict and the importance of always remaining true to the family core values.

Paul urged fellow business leaders to put a formal succession structure in place and to never ignore the “smelly moose’ meaning that it was easier to address hard issues that everyone is thinking about, but afraid to address. He also stressed the importance of always being open to new ideas coming through from the next generation and to never to be afraid to seek outside help.

Audrey gave an account as a 4th generation family business member. She listed a number of things that have worked well for her and for the company:

  • Rotating through different areas of the business so as to learn as much as possible
  • Forming a G4 advisory team comprised primarily of 4th generation working in the business
  • Volunteering for various company committees
  • Utilising family business resources
  • Always maintaining a level of professionalism

This was followed by a panel discussion and Q&A in which Brian O’Donovan, RTE journalist and event MC, invited Kevin and Rachel O’Connor of Irish family business, Colourtrend, to the stage to join the discussion and share their experience

Rachel agreed that reporting to a non-family member worked particularly well for her and Kevin said one of the best things he ever did was to hire a non-family member chairperson. They both also added that gender didn’t play a role in their succession planning and having the right person for the job, whether it is a non-family member, was the most important thing for them and the future of their business.

Professor Carole Howorth from Bradford University led a seminar on next generation learning and involvement. CFB sponsors, PwC, William Fry and AIB facilitated a student session for final year undergraduate and Master’s students of DCU Business School.

Pictured (l-r): Kevin O'Connor, Rachel O'Connor of Colourtrend; Paul Hennessy, Leader of PwC's Irish Family Business practice; Audrey Darley and Paul Darley of WS. Darley; Eric Clinton, DCU Centre for Family Business