Are you worried because your finance manager wants to retire soon?
Does this sound familiar?
Your finance manager has been working for the family business for ~40 years, recruited by Dad, or maybe even Grandad. You trust them implicitly with your money and they have been loyal to the family for decades. This person is your most trusted employee, your right-hand person. The “glue” to so many aspects of the business that extend way beyond finance. But the time is looming when they want to spend more time with the grandkids or travelling around Australia. You’re understandably reluctant to let them go.
How can you cope without them?
Succession of the family business includes the succession of key leadership roles that may or may not be held by family members. Finance arguably being one of the most critical roles. Managing the finances of your business (and possibly also your personal financial interests) is not something you are going to entrust to anyone. This high trust relationship has developed over the years of working together through the highs and the lows. I know this from my own experience of holding the privileged position of CFO for the founder of a family business for 15 years.
How are you going to navigate this transition?
I’ve supported clients to navigate this journey particularly where the senior finance person is the most trusted person in the business, has worked with 3 generations of the family and is now approaching retirement. Their pending departure presented a significant risk due to the absolute trust built up over years and consequential over-reliance on them. They had developed their own processes, many of which were manual, undocumented and hadn’t changed much in years.
In one instance the CFO was reluctant to retire because they were genuinely concerned about what would happen in their absence, and their loyalty meant they didn’t want to leave the company in a mess. The key to bringing them along on the innovation journey was to help them realise that if processes weren’t systemised, automated, documented and additional controls introduced their departure would present a significant risk to the business.
A suggested approach
1. Look after your highly valued finance manager through this journey
Acknowledge this is hard for them as well as yourself. It’s quite possible they want to retire but feel like they can’t because they don’t want to leave you in the lurch. You want to give them the confidence that they can retire. The confidence through knowing that their role is in safe hands and controls are in place to protect the family and the family’s assets.
To achieve this, they need to feel valued and involved with the succession of their role. You need to find the right person to support and mentor them through this transition, so they don’t feel side lined.
2. Knowledge transfer
You need to start to get ~40 years of business knowledge transferred to others. All of this knowledge more than likely sits in the head of your finance manager, which represents a huge risk to the business. Revisit roles and responsibilities and delegate more to other team members. Focus on developing and mentoring other staff. Use your incumbent finance manager to train her successors. Get processes documented as much as possible.
3. Reduce reliance on manual processes
Remove the reliance on manual processes unique to your current finance manager. You know what that looks like. They have their own way of doing things, which is more than likely heavily paper based. You need to convince the finance manager that they can help protect the business from the impact of their retirement through systemising and automating as much as possible. Now is the time to invest in process improvement. You need to find the right person to support and mentor them through a different way of doing things, so they don’t feel side lined.
4. Recruit to the future needs of the business
Stop and think about the future needs of the evolving business before recruiting a replacement. Do not simply replace like with like. The business has grown and changed, technology has advanced, risks have increased. Plus, the expectation of the future generation of the finance function may be different from your own. For example; a bookkeeper may have been fine 25 years ago. Now you need a qualified accountant.
If this sounds a bit too familiar and you would like to explore how you might navigate the situation in your business, reach out for a chat.
