In a recent article in the Globe and Mail,
Harvey Schachter provides a useful critique of a recently published
book, Succession, written by Noel Trichy, a professor at
the University of Michigan and long-time researcher on
The article discusses the importance of continuity of leadership
and developing a pipeline of future leaders who are willing and
able to take up leadership positions within an organization.
According to the article, Professor Trichy argues in his book that
CEO succession is the No. 1 determinant of organizational
performance and that succession planning is not just about
selecting the best candidate from a pool of candidates but rather
should be more about building a continuous pipeline of leaders from
The article also notes that although 80 percent of Fortune 500
companies have formal succession plans in place, many fail in
practice. Why? Seven factors (the so-called "seven sins of
succession planning") are cited, including: far too many
succession plans look good on paper but are inoperable in practice;
many organizations are ill prepared to respond to sudden changes
and falsely assume they will have the luxury of time to find a
successor; a domineering CEO with an outsized personality may cause
future leaders from the inside to leave, often depriving the
organization from the all- important leadership pipeline; and
boards are often inclined to reach for high-flying outsiders (the
so-called "halo effect") at the expense of promoting
Although the focus of the article is on Fortune 500 companies,
many of the principles of implementing a successful succession plan
equally apply to small and medium-sized businesses. So is the
importance of small and medium-sized businesses adopting succession
plans. In order to avoid committing one of the sins of succession
planning (namely, adopting a succession plan that is great in
theory but poorly conceived), succession plans are by necessity
bespoke and must be tailored to the needs and realities of each
In an earlier blog (
Succession Planning: A Rare Tale of Family Business Survival),
I reported that family business survival is a rare phenomenon in
Canada with only about 30 percent of family-owned businesses
surviving to the next generation and only three percent still
operating by the fourth generation. Investing time and resources
into succession planning and building a leadership pipeline would
go a long way to increasing business survival rates in Canada.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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