The Pros And Cons Of A Fixed Retirement Age

The Pros And Cons Of A Fixed Retirement Age

The retirement of the chief executive officer is a major event in a company’s operations. For argument’s sake, Professor Pramodita Sharma of the University of Vermont’s School of Business laid down the pros and cons of the argument on establishing a fixed retirement age. For the start, the pro side says “not letting go is one of the key risk factors facing family business.” It adds many organizations failed because their leaders became so enamored with their positions in the business. It warns the scenario would be disastrous for the company as potential successors would be discourage to work in the organization. At the end of the day, the pros says fixing a retirement age , for example, 65 years old, is the best way. On the anti-side, a flexible approach is the better way to ensure the stability of the leadership. Furthermore, the antis say putting a fix age is discrimination against the person. “You could have a situation where someone by far is the best person for the job, and supremely suitable in almost respect, yet they are forced to leave the business simply because of a birthday?,” says the anti. They say it is unfair. They argue it should be left for the individual to decide whether he or she wants to retire. At the end of the day, nothing is forever. It would be a good move for the company to craft a roadmap for the retiring executives who still want to pursue an active lifestyle in their post corporate life. While the family is developing an option for a third career, family members must organize a...
Passing The Baton

Passing The Baton

Training the next generation is quite important for family-owned businesses to ensure a smooth transition in the business. One good measure is to set a retirement age. This measure is also an assurance that the business can start training an individual or group of persons who have the potential to head the company once the CEO retires. Dann Van Der Vliet, director of the Vermont Family Business Initiative, established by the University of Vermont School of Business Administration, says succession is also an opportunity for family members to embark on realigning or repositioning the company especially in these age of intense competition and rapid changes in the business world. “There’s a big difference between running a business and owning a business,” Van Der Vliet explains.In expounding, Van Der Vliet there is a big difference between running a business and owning a business, “Running a business implies you’re working there day to day. But the higher calling of ownership is to, hopefully, get to the point where the business can run without you; so instead of being a day-to-day thinker you become a year-to-year thinker, or a generation’s thinker. You become more strategic than operational.” (http://www.vermontguides.com/2011/vfbi1211.html) To enable family members to experience and engage thoroughly in these challenges, the VFBI developed two group structures: the CEO group and the next-generation group. Right now there are three CEO groups and two at the next-generation level. “We keep the groups small, typically only six to eight in a group,” says Van Der Vliet. “It helps foster discussion and keeps confidentiality and accountability high.” The next-generation groups study and prepare for the complications of succession. CEO...
Change is The Only Way To Go

Change is The Only Way To Go

As they say, change is the only permanent thing in this world. It goes this same in business. The head of a business organization has to go and ride into the sunset so to speak when his or her time to retire is up. The owners of the family and owners must create a board to determine the successor of the outgoing CEO. As far the Gokongwei clan is concerned, organizing a board composed of outsiders is a good strategy to ensure there will be no biases towards any member of the family who is gunning for a position in the company. It would be useful to check the article “Understanding the Fundamentals of Succession and Transition Planning by Andrew J. Sherman, Partner, Dickstein Shapiro Morin and Oshinsky LLP on the dynamics of succession planning. In the article, the authors pointed out those family owners must realize that “succession planning” is a process, not an event.” Moreover, they say the board must always remember that even if the succession plan is going full steam, “it must be a living, breathing and evolving document which is reviewed and updated from time to time to reflect changes in the marketplace, competitive conditions and the health or capabilities of the current leadership.” With a process being used as a template, the board is capable to handle delicate issues such as Selecting the most qualified successor among deserving successors Dealing with lethargic attitude among the family members because nobody is qualified What if the current leadership is deteriorating, yet unwilling to relinquish authority or ownership? And Settling intra-family feuds that could affect the succession plan. The study also suggested that...