The Murdochs Show Us What Not to Do in Succession Planning

[ad_1]

Opinions expressed by Entrepreneur contributors are their own.

Rupert Murdoch created and built a monumental legacy over the course of his lifetime. As the founder of News Corporation, Murdoch built a global empire, which includes influential media outlets like The Wall Street Journal and Fox News. However, his succession planning — or lack thereof — has been rife with controversy and challenges.

This article will explore the lessons business leaders and owners can learn from Murdoch’s failures and will emphasize that these lessons are relevant for business owners and leaders.

What went wrong?

Murdoch’s succession planning issues are well-documented, and most of the challenges are centered around family disputes, a lack of clarity and power struggles. His children engaged in a very public feud about who would take over the business. Murdoch tried to appoint his son Lachlan as the primary heir, but this led to backlash from his three other children, who then sued their father. This created significant turmoil for News Corporation and negatively impacted the company’s reputation and stability.

The dispute and miscommunication could have been mitigated with a structured succession plan. Without a succession plan, businesses of all sizes may face significant internal conflicts, decreased morale and stability and a loss of important talent.

Succession planning and business continuity

PwC’s 2021 US Family Business Survey, which surveyed family-owned business owners, found that only 34% of respondents had a “robust, documented and communicated succession plan in place.” This alarming statistic should be a wake-up call for all business owners. Can you afford to put your hard work and what you’ve built at risk? If not, here are four lessons we can glean from Murdoch:

Start early: Ten years is the perfect amount of time to prepare your business for an exit. This will give you plenty of time to find the right successor, train and mentor them, and put the necessary processes in place to help ensure your business will thrive after the transition. Giving yourself plenty of time to navigate the unknown will help facilitate a smoother transition and set you and your team up for success.
Be transparent: Clearly explain the responsibilities for each role and their expectations. Transparency helps manage expectations and reduce conflicts.
Separate personal and professional: Transitioning your business to a loved one can offer distinctive financial benefits, including gift tax exemptions and income-splitting, but it also comes with challenges. Setting guidelines and boundaries and having everyone approve them helps ensure that all parties are in sync.
Plan for multiple scenarios: As business owners, we know that things rarely go as planned. It’s important to be agile and prepare for the unexpected. Having multiple plans in place can help you navigate unforeseen challenges as they arise.

Creating a robust succession plan

There are several key elements of a good succession plan. First, you want to define your future leadership needs. Once you identify them, it’s critical to communicate those roles and responsibilities to all parties involved. Foster open communication to align everyone on the team with the shared goals. Once you identify your successor, it’s critical to provide them with ongoing training, mentorship and leadership opportunities to prepare them for their future role. But your job isn’t done once you create the plan; it’s important to regularly revisit it to help ensure it’s up to date. Most importantly, surround yourself with a professional team of lawyers, financial advisors and Certified Exit Planning Advisors (CEPAs) to help you navigate the process.

Overcoming common succession planning challenges

Succession plans can be complicated inherently, but when family dynamics are added to the mix, those complications may increase. This could be because family members have different visions for the company’s future, which could result in conflicts of interest. These challenges at times are heightened because of individuals’ emotional states, which in turn create a pressure cooker. It is vital to be proactive about these issues and address them when they arrive by facilitating open communication to determine and mitigate concerns early in the succession plan writing process.

One of the most effective ways of having these types of conversations is to have a family meeting where you have an intermediary to run the meeting. As an example, we’ve done this with some of our family clients where I or another intermediary will act as the facilitator to learn and find out what the goals are for all the stakeholders. We’ll have individual conversations with everyone, which helps us get everybody on the same page.

Leaders often fear retirement or stepping aside, which can hinder the succession process. As a professional in exit planning, I work with many individuals who are scared to start their next chapter. I encourage you to sit down with friends, family and your trusted advisors to address these fears openly and honestly.

Conclusion

Rupert Murdoch’s succession plan created a surplus of key learnings that business leaders, large corporations and the media could take away. I believe one of the key learnings is transparency and avoiding internal conflict whenever possible. While you may experience emotional challenges during the process (especially with family), many long-term benefits could outweigh the negative ones. By taking proactive steps today, you can help safeguard the stability of your business. This will hopefully put your mind at ease and help ensure that your vision and values will be carried forward for years to come.

[ad_2]