So when the latter decided to step down after years at the helm, his annointed heir seemed an obvious choice. However, after less than a year in the job, having failed to take the business forward, the younger man was ousted and ultimately replaced by a vastly more experienced peer. 

Although you might struggle to draw many parallels between the print industry and Premier League football, Manchester United’s decision to replace Sir Alex Ferguson with David Moyes, is a scenario that’s commonly replicated across numerous different industries, including print, on a regular basis.

Far too often businesses make a decision based on flawed logic and end up choosing the wrong candidate when selecting their next leader. And then there are those businesses who don’t even consider a succession plan until it’s too late to do anything meaningful about it. 

So what do businesses need to know about succession planning, what processes should they follow to identify the right candidate and what are the perils of getting it wrong – or worse, not having a plan at all?

Business critical

Succession planning is fundamental for all businesses whatever their size and should be focused around building strength in depth and building for the future, but unfortunately too many people tend to think of succession in terms of retirement, according to Dani Novick, managing director at Mercury Search & Selection. 

“Realistically, retirement is just one of many reasons you need to plan for succession, including accidents, illness and hopefully business growth or sale,” says Novick. “Certainly if you discuss business with some of the serial entrepreneurs in the print industry, while being totally committed to their businesses they are focused on their exit strategy almost from the start and so building succession and strong management teams is central to their thinking.”

She splits owner-managed SME businesses, of which the print industry has a high number, into two different camps. 

“Some leaders are very autocratic and surround themselves with ‘yes men’ or at least people who take instruction,” explains Novick. “Others focus on finding the best people they can and aren’t hung up on being the best or brightest person in the room. They put their egos aside and don’t mind – or even relish – their staff being more of an expert in their field.”

As a result, the former usually struggle with succession planning – and typically find their business growth limited by the limitations of their owner – whereas the latter, although not necessarily guaranteed success, typically fair better and the owners are more able to step away, says Novick. 

It’s a view shared by Nick Devine, founder of The Print Coach, who argues that succession planning isn’t just about appointing a new leader – it’s about ensuring a business has a strong team in place across four key areas.

“Every business has four core functions or roles that need to be managed and the better the people in those roles the easier it is to plan for succession,” says Devine.

The four areas he identifies are: leadership and strategy (this is usually the entrepreneur who “sets the agenda for the business”); sales and marketing; production and fulfilment; and administration and finance. 

“Depending on the size of the organisation these roles can be carried out by between two and eight people, but it’s critical there are strong people responsible for each of those four core functions,” adds Devine.

As a large percentage of printing businesses are owner-managed by an entrepreneurial type, it’s only natural that the outgoing business leader will be keen to have a say in appointing their successor to ensure that the company is left in safe hands. However, this isn’t necessarily the best plan, according to Matthew Peacock, director at lean consultancy Active PPP.

“The existing chief executive is probably not the best person to choose his or her successor as there is a danger they will choose a ‘yes man’ without enough independence,” says Peacock. “If the company has a chairman then it must be one of their priorities. The takeover process must also be designed to ensure the incomer has a good understanding of the business and can take over without interference from the outgoing CEO. If the process is well structured then a lot of destructive internal politics can be avoided.”

Handover

One way of avoiding falling into this trap is for the incoming business leader to ‘shadow’ the departing one. 

“If the business decides to go for an internal applicant it is important this person shadows the managing director for at least a year before the intended retirement date,” advises George Thompson, joint managing director at Harrison Scott. “If there is no targeted single individual then it can be made known to a group of directors that one is to be appointed, which therefore creates internal competition. This can be extremely motivational for the shortlisted candidates as it gets close to the time of final selection.”

Thompson says that it’s good for the morale of a company if the current boss makes it clear that his successor will come from within the existing management team. However, he cautions that care must be taken to handle the candidates who are not chosen for the post. “If no internal candidates are deemed suitable for consideration it is also equally important to indicate this to them and make them aware how important it is to the business that the right external candidate is found,” adds Thompson.

When it comes to family-run businesses – of which there are many in the printing industry (see case studies) – considering an external candidate is a particularly worthwhile exercise as inheriting a family business can be a tough ask.

“A lot of responsibility and expectation goes with it,” says Peacock. “Successful printing businesses are changing fast so following the strategy used by dad or mum will not necessarily guarantee success. Fresh thinking must come into play and nepotism does not encourage non-family potential entrepreneurial leaders to stay in the business.”

It’s a view shared by Thompson who says that during the 28 years he’s spent recruiting in the printing sector he’s seen some great examples of a son or daughter who has taken over a business and he’s also seen some really bad examples.

“There are two problems associated with family appointments,” he explains. “Firstly, lack of impartiality and secondly, it can demotivate non-family management and directors who might see the move as nepotism. The ideal way to appoint a family member would be to bring on board a professional interviewer who would not be aware that one of the shortlisted candidates is a family member. This way if the family member is appointed there would be a much higher level of acceptability within the existing team and the newly appointed managing director would gain a much greater level of respect.” 

If further evidence were needed that family-run businesses need to give greater consideration to exploring external candidates they need only look at the numbers, says Novick.

“It is estimated that family-owned businesses account for 80% of companies worldwide and are the largest source of long-term employment in most countries. At the same time, according to the Family Business Institute, only 30% of these organisations last into a second generation, 12% remain viable into a third and 3% operate into the fourth generation or beyond. These are frightening statistics and, if there was any doubt, make a strong case for a rational value-based approach to succession planning,” she adds.

Start now

Regardless of whether or not a business seeks to appoint an internal or external candidate, what doesn’t differ is the fact that companies should constantly have a plan in place to replace their existing leader.

“There is a kind of in joke within pensions and inheritance planning about when is the best time to start making plans – the punchline is ‘about 10 years ago, but failing that today!’” says Novick. “The same applies to succession planning. It’s a way of thinking and working rather than a project you put in place a short time before you think you need replacing. The aim for the owner/leader should be to more or less make themselves redundant.” 

As a general rule of thumb Thompson says that candidates need to be appointed six months prior to the outgoing boss’s retirement date. Any later than that and the company risks encountering problems. On the flipside, starting the succession planning process too early can also be potentially damaging, cautions Novick.

“There are countless businesses where senior team members have been promised equity and/or the throne for years and years. With every passing year they become disillusioned and unhappy until they leave. You can’t use succession as a carrot, rather you have to make the business a rewarding place to be and ensure your team are passionate about being there,” she explains. 

Which brings us back neatly to the key point around successful succession planning. The process isn’t just about appointing an individual leader – it’s about building a strong business with strength in depth, as the Manchester United board found to their cost when they appointed Moyes, who looked increasingly cut adrift in the final months of his tenure having previously disposed of the services of the club’s long-standing, experienced team of back-room staff.

As the football club discovered, replacing any leader – and especially one who has been in place for a long time – isn’t easy and there is no simple answer to succession planning, but there is one imperative, according to Novick: “If you haven’t done it yet, start now and do it by building strength in depth across the business”. 

Case study: Moulton Printing

Blackpool-based Moulton Printing was founded by Robert and Mary Moulton in 1927. Their son David took over as managing director of this commercial printing outfit in 1965 and his two daughters Cassie and Helen currently work for the company as director and marketing consultant respectively. According to Helen Moulton: “A succession plan is important to focus both short- and long-term objectives during what could be a vulnerable time for a business. It also helps to redefine roles and responsibilities as the business shifts to accommodate the succession. As a family business, succession planning is something that has been important to us for a number of years now, and as the business evolves, it’s become an important part of our business planning.”

Case study: Kingfisher Print & Design

Founded in Totnes, Devon, in 1982 by husband and wife team Derek and Jenny Bellotti, this litho and digital printing business is now overseen by their son Ross who, along with his wife Sarita, bought his parents out of the business in 2014. “Our succession plan went really well,” says Ross Bellotti. “What was most important was everyone being happy with the deal. Mum and dad obviously wanted a good price for the business and I also wanted this as I know how hard they had worked over the years and that it’s because of this I have taken on a great company with a great future. But in the same respect I obviously wanted a good deal too. We managed to structure a deal where no big sums had to change hands and annual payment is made and structured over the next 10 years. Overall everything went really well without there ever being a cross word. Much of the credit needs to go to my accountant who structured the whole thing and both parties were happy with the deal as it suited everyone. There is no other succession plan planned at the moment as it only been a few years since I bought the business.”