Succession Planning and Management Blog

We are looking for a young intern to work in our office ( part time ) conducting research into small and medium business , Employee Share Plans and Business succession and Exit planning.

The position would suit a post-grad university student studying commerce, law, business etc and provides the opportunity to work with industry specialists researching topics of interest to business owners.

Please contact our CEO Craig West on cwest@successionplus.com.au

MANY BABY BOOMERS’ REPORTED BEING READY TO RETIRE ALTHOUGH THEY HAD NO DEFINED STRATEGY ON HOW TO EXIT THEIR BUSINESS.

7. Planning for the future

Succession planning and exit strategies were raised as a critical policy issue with the ageing population. Many ‘baby boomers’ reported being ready to retire although they had no defined strategy on how to exit their business. Concern was dominant in regional areas where family members are increasingly pursuing other options, rather than taking over the family business.

ACTION: The Small Business Commissioner will develop ways to help small business operators access the information and assistance they need to successfully manage exiting their businesses.

to view the entire report click here

A study of Australia’s fastest-growing businesses has discovered that they key element for growth is an environment in which staff want to learn and apply new knowledge creatively.

The study, conducted at RMIT’s School of Management, quizzed 253 companies that have achieved growth of between 35% and 600% over the last four years.

“Fast-growth SMEs are the high-power engines of our economy, comprising only 3 to 10 per cent of firms but generating up to 90 per cent of employment growth,” Dr Tan ( the lead investigator ) said.

The significance of what Dr Tan calls “learning orientation” emerged from the study, as many of the fastest growing companies studied had created an environment in which staff are committed to constant learning.

“These businesses know knowledge is power,” Dr Tan said. “It has always been said that learning is the only source of competitive advantage. You can learn from competitors, suppliers, anyone in industry.” Businesses that recognise this empower staff to learn, both formally and from trial and error. Teams are encouraged to learn from members’ efforts, so failures become as learning experiences not negatives deserving of censure.

Dr Tan said the study “Also found that rewards associated with performance do not make employees more market oriented or customer oriented. Money can’t buy creativity.” Willingness to learn, however, can achieve those outcomes because staff who want to learn will pick up the knowledge they need to understand the market and will ensure they have – or seek out – the knowledge to satisfy customers.

Tactics Dr Tan has observed which businesses use to create learning orientation include open question and answer sessions among staff, or adoption of social networking tools like Yammer to encourage collaboration. Physical environment is also important, Dr Tan said, as a pleasant one will stimulate staff to higher efforts.

The research by Dr Tan, Professor Kosmas Smyrnios and Lin Xiong in RMIT’s School of Management showed there was no significant relationship between reward-related human resources practices and learning orientation.

“Benefits and bonuses have their role, but they do not necessarily mean employees are committed to learning or to the goals of the venture,” Dr Tan said.

“In contrast, our study indicated that learning orientation in a firm is only enhanced when high levels of motivation are maintained and employees are treated as valuable resources.”

The Guardian 15th January 2012

Workers could be given the right to request shares in the companies they work for under proposals put forward on Monday by Nick Clegg, to create what he describes as a “John Lewis” economy.

In a bid to deploy century-old liberal principles to the mounting debate about crony capitalism, the deputy prime minister will argue that the economy is in danger of being “monopolised by a minority” and that wider share ownership among employees could be an answer. “Just as the eighties had been the decade of share ownership, so this decade should become the decade of employee share ownership”, he will say in a speech at the Corporation of London and the Centreforum thinktank.

In his speech. Clegg will argue that “liberals believe strongly in the virtues of the market, but only if it is a market for the many, not a market for the few”.

“Our economy is in danger of becoming the latter, monopolised by a minority, serving narrow and sectional interests.” He will describe employee share ownership as “a touchstone of liberal economic thought for a century and a half and a hugely under-used tool in unlocking growth.

“John Stuart Mill hoped that employee-owned firms could end what he called the ’standing feud between capital and labour’. And liberals have been championing it ever since. We don’t believe our problem is too much capitalism: we think it’s that too few people have capital. We need more individuals to have a real stake in their firms.”

The employment relations minister, Ed Davey, has been asked to work on proposals for the coalition and the chief secretary to the Treasury, Danny Alexander, is to review possible tax incentives. Extending the tax relief from the Enterprise Investment Scheme from external investors to employees, as well as restoring tax breaks to employee benefit trusts are to be examined. Both ideas are proposed in a report prepared by the employee ownership association to coincide with Clegg’s speech.

Clegg will also announce an independent reviewer to develop off-the-shelf legal models for firms to ease extension share ownership.

The plan allowing workers to request shares could extend beyond publicly listed firms to private firms. In the case of John Lewis Partnership, the shares are not traded but held permanently in a trust on behalf of all employees. Clegg will argue that companies in which staff have stakes have higher productivity, greater innovation and more patient investors.

All three parties are battling for distinctive political territory in this field both over executive pay, and an end to short term irresponsible capital.

Clegg’s aides admitted the proposal for a right to request shares is at a formative stage, including whether such shares should be voting or offered at a discount.

Broadening the debate, he will claim crony capitalism is the product of poor regulation as much immorality by business. “It’s easy to throw rhetorical rocks at directors, bankers and businesses. But, if we are honest, this is as much a failure of politicians and regulators.

“The authorities are too often cowed by corporate power, Whether that is political parties of all stripes in hock to vested interests, or regulators struggling to stop supermarkets from putting the squeeze on small suppliers, whether it’s politicians kowtowing to media barons. The problem is endemic.”

Clegg will set out four key principles on executive pay, ahead of final publication of proposals next week, but will not support workers on the boards of remuneration committees. He is likely to support a broadening of their membership to include experts from outside the closed shop of UK boardrooms. The four points are:

• Companies will be forced to make information about pay and profits much clearer in their annual reports – for shareholders and members of the public.

• A clear single figure will be given for top executives revealing all the details of their pay.

• Companies will have to have a clear policy for departing chief executives – making it harder to grant hefty pay outs for failure.

• Firms will have to be much more open about how money is being distributed around the company.

According to the recently released Smart Company WHK SME directions survey the message simply isn’t getting thru to business owners – only 35.3 % have a business exit strategy !

For at least the last 10 years advisers have been warning of the impending wave of baby boomers looking to exit and hand over their businesses – but it seems business owners have largely ignored this advice. A combination of the GFC causing business owners to hold off selling ( as the market was so bad ) or chosing to remain at the helm during bad times and the reduction in asset values means many business owners are not going to recieve the nest egg they had been expecting.

This means the great wave of exits has probably simply been delayed by a year or two.

Interestingly, a surprising number of respondents who did have an exit plan said they were simply likely to wind the business down when it came time to exit – Hardly a good strategy to maximise value !