Succession planning in construction can be more difficult than ever these days, as generational tides can turn toward other career paths, and owners face the difficult decision in deciding who – whether it be family or someone else – will take over a family-owned construction business.
Without a plan, a company could suffer disruption to the overall mission, processes and protocols. Tony Ivener, a Certified Public Accountant (CPA), founder and managing shareholder of Ivener Management Group (IMG), who has presented at CONEXPO-CON/AGG, stated “Just 30% of family-owned construction companies continue beyond the second generation…just 20% survive through the third generation.”
According to PwC’s 2023 US Family Business Survey, 78% of respondents said that protecting the business as the most important family asset is their top long-term goal for the next five years and 72% want to ensure the business stays in the family. However, two-thirds (66%) say they have a clear governance structure and 65% say they have a person responsible for corporate governance.
With some careful planning, you can keep the company's legacy going, long after you retire. As with other business processes, there are steps to follow to ensure your plan is well thought out and properly implemented. Starting the process early is the key to success.
- It is imperative to take a holistic view of current and future company goals to identify individuals for future leadership positions. List these goals in the handover documentation to aid in a smooth transition process.
- Identify critical positions to fill to create a cohesive transition – this is especially true in larger companies that require an executive team to be on the same page when it comes to making high-level decisions.
- List prospective individuals within the company who can adequately fulfill these critical positions and evaluate any skill or competency gaps to develop an educational/training plan. This may include specific certifications, CEUs or hands-on training in the field.
- Evaluate the succession plan each year. Determine if the chosen individuals, training/development plan and goals are still in line with the company’s best interests.
For company owners who prefer a family member to take the helm, “Make the family business part of family discussions,” Dawson Vanderwiele, family member and equipment operator, Triple C Sand & Gravel, told CONEXPO-CON/AGG. “You have to give them the taste of it. Every day should be bring-your-child-to-work day, whether that’s for a full day or a few hours after school.”
Whether it’s someone in the family or outside the family who is vested with the company and understands the business, it is usually less expensive to nurture and grow that relationship in the company than to replace that person with someone outside the company. Plus, for the more sentimental side of it, turning that legacy over to someone you already trust is invaluable.
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