Being taken in an untimely manner is something most of us don’t like to consider or even talk about.
When I talk to clients (especially Owner Managed SME’s) about their Business Continuity plans it’s one of the first subjects I raise. Usually a shocked look is returned as they were expecting to discuss Fires, Floods, Data Breaches and Hurricanes (strange really when Death is the only one of these risks they can guarantee will affect them at some point)
The sudden death of the Total CEO Christophe de Margerie this morning in Russia is of course a huge tragedy for his family, friends and staff. From a shareholder perspective it appears to be business as usual (at the time of writing 2.5% has been added to the value of the business since news broke this morning)
In all seriousness large companies like Total are usually far bigger than the CEO. Being Darwinian about it, most have evolved to the point that they have their own momentum. They have a depth of Financial, Human and Geographical diversity that makes them SUPER RESILIENT.
Contrast the Total situation with that of most Owner Managed SME’s and the outcome is somewhat bleaker. The untimely death of the CEO is not usually rewarded with an increase in shareholder value, quite often the business will die in the months after the owner does.
I would encourage all business owners to factor Emergency Succession into their business planning process. Some questions to ask yourself are:
1. How can I transfer knowledge to my Management Team (there is nothing to be gained from keeping it all to yourself)
2. Identify a Successor (sit them down and ask them if they would be prepared to step up if needed)
3. Model your Cash Flow (can your business withstand the loss of your input and potential loss of staff focus due to dealing with your death? Will your family still need an income after your death? If cash might be needed to cover interim/permanent management costs, take a look at Key Man insurance)
I recently ran a Business Continuity exercise with the management team of a 50 person business. The exercise scenario started with a call from the Managing Director’s wife to say he had died in a road accident on the way to the office.
The company management team diligently worked through the scenario and the whole team chipped in with comments, questions and a heated debate on succession (which rapidly got personal) – the MD, by the way, was asked to sit and watch – in silence!