The organization’s board of governance is balanced with members represented by customers, alliance partners, CEOs from high growth companies, the management team, and investors. Advisory boards comprised of highly talented and experienced members are utilized to access very deep and specific expertise.
The organization’s board is balanced, and advisory boards are utilized for specific and specialized expertise.
The organization’s board is balanced. Advisory boards are not utilized.
The organization’s board is made up mostly of management team members and investors, and advisory boards are not utilized.
The organization has no formal board of governance.
Research conducted by David Thomson, business advisor and author of Mastering the 7 Essentials of High Growth Companies, identified substantial differences in board composition for high growth companies as compared to board composition for small or struggling companies. Governance boards of high growth companies were balanced and notably included a CEO from a highly successful company as a "growth coach." Additionally, high-growth companies made use of highly-experienced and talented advisory boards to access deep and very specific expertise. Small or struggling companies, in contrast, had no formal board or had boards comprised mainly of management team members and investors. These organizations seldom or never utilized advisory boards. According to David Thomson and his research, "A board that can challenge and guide management is invaluable."
Succession plans are defined for all key leadership positions in the organization, with on-going leadership development programs and mentoring in place to prepare and develop internal pools of qualified candidates for advancement.
Succession plans have been defined for all key leadership and management positions. Internal candidates have been selected and are being developed for advancement.
Succession plans have been defined for all key leadership and management positions. External recruiting is utilized to fill most open positions.
Succession plans have been defined for key leadership positions. External recruiting is necessary to fill most open positions.
Succession planning is minimal. External recruiting is necessary to fill most open positions.
Leadership and management quality and continuity is critical to organizational success and profitability. Succession planning and leadership development programs ensure an adequate pool of qualified internal candidates should key leadership positions turn over or new ones become available due to expansion or reorganization. Succession plans with identified internal candidates also foster employee loyalty leading to increased productivity and reduced employee turnover.
The company’s growth strategies result consistently in revenue growth, positive profit and cash flow, stable investment in new product and service development, and company expansion.
The company consistently realizes revenue growth, profit growth, and positive cash flow irrespective of economic cycles or market anomalies. High value product and service development drives growth.
The company realizes revenue growth, profit growth, and positive cash flow through most economic cycles and market anomalies. New product and service development efforts drive growth but are inconsistent.
The company realizes revenue growth, profit growth, and positive cash flow through some economic cycles and market anomalies. Expansion and new product and service development efforts fluctuate.
The company’s revenues, profits, and cash flow are positive during many good economic cycles but lag industry standards. New product and service development efforts are limited.
Highly successful companies carefully manage resources and implement growth strategies around high-value products and services.
The organization benchmarks the performance of each functional area of the business and implements change necessary to achieve top industry performance.
TThe organization benchmarks all aspects of the business and consistently shows improvement in focused areas.
The organization benchmarks some aspects of the business and shows improvement in focused areas.
The organization measures some or all aspects of the business periodically but has no structured benchmarking process.
The organization has no structured measurement or benchmarking processes.
Highly successful companies define and monitor financial and non-financial key performance indicators (KPI) or metrics for each functional area of the business. These metrics are benchmarked and incorporated into continuous improvement initiatives that assess organizational improvement over time, measure organizational performance against published industry standards, and drive change. Key performance indicators, comprehensive benchmarking initiatives, process improvement initiatives, and change implementation teams make up the core of all continuous improvement initiatives in organizations striving to achieve the success associated with top industry performance and business excellence.
Planning is an integrated and on-going process within the organization.
Planning is a formal and recurring process within the organization that prioritizes and addresses all issues relevant to organizational success.
Planning is a formal and recurring process within the organization that prioritizes and addresses some of the issues relevant to organizational success.
Planning is an informal process within the organization.
Little planning is performed by the organization.
Highly successful businesses have clearly-defined plans and strategies for business growth complete with contingency plans and strategies to address unforeseen market variability. They manage their intellectual property for increased stakeholder value and long-term contribution to the organization. They define and manage all risks that could adversely affect business performance. They develop, manage, and support talent to achieve industry-leading productivity, retention, promotion from within, loyalty, and employee satisfaction rankings. Comprehensive, on-going planning processes are essential to achieving the success and profitability associated with business excellence.
The company grows through the development of products and services that provide customer-responsive solutions in targeted, high-value market applications consistent with the organization’s core expertise.
The company regularly solicits market feedback from clients, non-clients, and industry experts and utilizes insights shared to redefine the markets it serves and the products and services it brings to those markets.
The company periodically solicits market feedback from clients, non-clients, and industry experts and utilizes insights shared to validate new product or service introduction.
The company periodically solicits market feedback from clients, non-clients, and industry experts but utilizes the events primarily as selling opportunities.
The company develops new products and services internally with little outside market feedback prior to market launch.
Highly successful businesses regularly solicit market feedback from clients, non-clients, and industry experts. They look at successful technology and solutions utilized within other industries for adaptation and application to their own industry. They constantly seek redefinition of the markets they serve to identify high-value applications for their documented expertise and guidance for their new product and service development efforts. They utilize customer advisory boards to offer advice on how best to grow, ways to meet new customer needs, and opportunities to create exceptional value. Highly successful companies are characterized as being market-driven or market-responsive from product or service development planning stages through post-sale support.
A senior executive chairs a formal, monthly sales and operations planning process in which sales results and forecasts are matched to production capacities and schedules and progress against the business plan is reviewed.
The sales and operations planning process occurs monthly and is chaired by a senior executive.
The sales and operations planning process is chaired by a senior executive but is not performed monthly.
The sales and operations planning process is not chaired by a senior executive and is not performed monthly.
There is no recognizable sales and operations planning process.
Highly successful companies integrate sales and operations through a planning process that is chaired by a senior executive, consists of a series of meetings with leadership in sales and operations, and culminates with a board level meeting where key long term decisions are made and current progress against the business plan is reviewed. This process syncronizes sales activity, production capacity, and scheduling. The sales and operations plan is the document used to evaluate the company’s current and future expected financial performance.
All current and proposed company assets and operations represent quantifiable strategic advantages to the organization.
All significant organizational assets are regularly assessed for their effectiveness in meeting their strategic purpose and their comparative opportunity costs.
Most significant organizational assets are regularly assessed for their effectiveness in meeting their strategic purpose.
Some top organizational assets are occasionally assessed for their effectiveness in meeting their strategic purpose.
Organizational assets and operational sites are listed as assets on the company’s balance sheet.
Company assets, operations, and infrastructure represent significant investments. Dollars invested in these areas cannot be invested elsewhere. Successful businesses ensure maximum stakeholder return and minimal lost opportunity costs with all investments by regularly assessing them for efficiency, cost-effectiveness, responsiveness, contribution to the company’s overall success, value, their effectiveness in meeting their intended strategic purpose, and re-purposing opportunities. Investments are guided by the current and potential strategic advantages assets, operations, and infrastructure represent to the business.
All functional areas of the business are structured and empowered to serve as strategic partners in realizing the company’s vision and mission.
Leadership communicates the organization’s vision, mission, and values to employees at all levels, encourages employee and departmental collaboration to achieve them, routinely reports on organizational progress to all stakeholder groups, and rewards meaningful progress.
Leadership communicates the organization’s vision, mission, and values to employees at all levels.
Leadership communicates the organization’s vision, mission, and values to the management team.
Leadership does not have defined vision, mission, or values statements for the organization.
Employees of highly successful organizations take ownership of their organization’s vision, mission, and values. The employees understand how their responsibilities contribute to their organization’s mission and vision, and they work collaboratively to achieve success as defined by their organization’s vision and mission statements. Employee engagement is fostered through effective internal communication and involvement in activities such as orientation, on-going strategic planning and implementation initiatives, and incentive programs.
Change is accepted across all functional areas of the business and embraced by employees at all levels.
Employees look for change opportunities and lead them.
Employees are generally responsive to change.
Employees are generally resistant to change.
To remain competitive, viable, and market
responsive, organizations must continuously work to improve each aspect of their business. This necessitates a culture responsive to change. Top performing organizations manage and embrace change, and that makes them responsive to client needs, keeps them ahead of their competition, and generates increasing value to stakeholders.
The family-held or closely-held business is satisfying the goals and objectives of all owners and their family members
All owners and their family members agree.
Most owners and their family members agree.
Some owners and their family members agree.
Few owners and their family members agree.
Open dialogue, strategic planning, partnership agreements, buy-sell agreements, estate plans and wills, succession and leadership transition plans, business operating procedures, and a performance-based management and compensation system lead to a more sustainable family-held or closely-held business model, increased business productivity and profitability, and higher overall satisfaction levels within the business.
The owners and families of the family-held or closely-held business enjoy close and harmonious relationships both at work and outside of work.
Relationships among owner-related family members are close.
Relationships among owner-related family members are distant with some conflict.
Relationships among owner-related family members are contentious.
Relationships among owner-related family members are full of conflict.
Unresolved owner-related family conflict yields devastating blows to business continuity upon the loss of a founder. Owners of highly successful, multi-generational family-held and closely-held businesses implement standardized processes for communication to work through and manage relationships, conflict, and other ownership aspects of business continuity.
The family-held or closely-held business maintains communications structures and processes that include a formal board or governing body, regularly scheduled meetings, and rotating chairmanship to plan for and manage all ownership aspects of business continuity. Ownership aspects of business continuity include but are not limited to: procedures to manage unexpected change due to crisis or loss of a founder, succession planning, leadership transition planning, estate and financial planning to ensure business continuity and adequate funding for estate taxes and continued operations following the loss of a founder, current buy-sell agreements and related funding mechanisms, entitlement assumptions, conflict resolution, performance standards and reviews, compensation issues, ownership benefits and responsibilities, lines of communication, defined business roles for owner-related family members, stakeholder representation, and reflecting ownership values and heritage (culture) in the business.
Ownership aspects of business continuity are managed through a formal board or governing body that meets monthly. Chairmanship rotates or is elected. Unresolved ownership issues seldom have adverse effects on business operations.
Ownership aspects of business continuity are managed through a committee of business leaders and/or owners. Unresolved ownership issues sometimes have adverse effects on business operations.
Ownership aspects of business continuity are managed informally by the ranking leader. Unresolved ownership issues have adverse effects on business operations.
Ownership aspects of business continuity are addressed during times of crisis.
Formal communications processes to manage all ownership aspects of business continuity are critical to ensuring the viability and transferability of a family-held or closely-held business to successive generations. Highly successful family-held and closely-held businesses work through formal boards or governing bodies to achieve appropriate stakeholder representation, manage and reduce conflict, and drive all planning necessary to support business continuity.
Everyone working in the business is evaluated against defined performance measures and paid fair market compensation based on their performance and contribution to the business.
Compensation for everyone working in the business is at market value and based on performance measures tied to the organization’s strategic plan goals.
Owner-related family member compensation is based more on family values than market values with family members being compensated according to position in the business or level of housing and family need. Bonus programs help align performance with strategic plan goals. All other employee compensation is at market value and based on performance measures tied to the organization’s strategic plan goals.
Owner-related family member compensation is based on family values with family members being compensated according to position in the business or level of housing and family need. All other employee compensation is market value.
Owner-related family member compensation is subjective and determined by the founder or ranking leader. All other employee compensation is market value.
Performance management systems and fair market value compensation practices result in significantly increased productivity by everyone working in the business, improved employee morale due to perceived fairness, less conflict during the leadership transition to successive generations, and a healthier work environment more supportive of business and wealth growth.
Formal succession and leadership transition plans have been created to ensure the smooth transition of business leadership.
The business maintains current succession and leadership transition plans for the founders and all key leadership positions. The plans represent consensus among owner-related family members. They are practiced and ready for implementation at a moment’s notice.
The business maintains current succession and leadership transition plans for the company founders. The plans represent consensus among owner-related family members. They are practiced and ready for implementation at a moment’s notice.
The founder chooses a successor to lead the business.
The business currently has no written succession or leadership transition plan.
Inadequate or lack of planning contributes to nearly 50% of all family-held and closely-held business failures following the loss or disability of a founder. Highly successful family-held and closely-held businesses ensure a smooth transition in leadership through written succession and leadership transition plans that represent consensus among owner-related family members. These plans are current and practiced, and can readily be implemented.
The ownership of the family-held or closely-held business ensures strong future stakeholder value through the careful selection and development of future business leaders.
Owner-related candidates for business leadership roles are identified by members of the formal board or governing body and exposed to all aspects of business operations at an early age. They are encouraged to pursue educational and personal development plans that prepare them for leadership and are advanced (through succession plans) into leadership roles based on their ability to contribute value to the organization. In the event no owner-related candidate shows interest or promise, consideration is given to other qualified internal candidates. Otherwise, leadership candidates are sourced externally and advanced through succession and leadership transition plans.
Owner-related candidates for business leadership roles are identified by the founder and exposed to all aspects of business operations at an early age. They are encouraged to pursue educational and personal development plans that prepare them for leadership and are advanced (through succession plans) into leadership roles based on their ability to contribute value to the organization. In the event no owner-related candidate shows interest or promise, consideration is given to other qualified internal candidates. Otherwise, leadership candidates are sourced externally and advanced through succession and leadership transition plans.
Owner-related candidates for business leadership are selected by either the formal board or governing body or by the founder. These candidates are exposed to all aspects of business operations at an early age and mentored on the job to develop the required skills.
The ownership of the family-held or closely-held business has no formal process for selecting and developing future business leadership.
Highly successful, multi-generational family-held and closely-held businesses are characterized by strong leadership with strong stakeholder backing and support. Leaders of these successful businesses possess a high degree of interest in and aptitude for their businesses. They often bring with them outside experience and perspective. They are curious and constantly learning. They embody their owner’s family values. They earn their leadership roles. They ensure future innovation and stakeholder value. Successful family-held and closely-held businesses plan for and develop future business leaders through formal and on-going processes of selection, development, mentoring, empowerment, and performance measurement.
The future of the family-held or closely-held business is protected through current and adequate estate and financial plans for all owners, formal and practiced leadership transition plans, funding provisions for continuing operations and estate taxes in the event of owner loss and/or business interruption from catastrophic loss, and a formal board or governing body that manages all ownership aspects of business continuity.
All aspects of business continuity planning (succession, leadership transition, estate, and financial) are complete, signed, communicated to everyone affected, and reviewed minimally every three years. A formal board or governing body manages all ownership aspects of business continuity.
Most aspects of business continuity planning are complete and reviewed periodically. A formal board or governing body manages all ownership aspects of business continuity.
Some aspects of business continuity planning are complete. Ownership aspects of business continuity are managed by a formal board or governing body or by the founder.
Few aspects of business continuity planning are complete. Ownership issues are addressed by the founder.
Inadequate estate plans, incomplete or absent succession and leadership transition plans, lack of planned funding to pay estate taxes and maintain operations following the loss of a founder, and unresolved owner conflict are top reasons that contribute to family-held and closely-held business failures. These ownership issues, not business issues, are responsible for nearly 90% of family-held and closely-held businesses failing to survive beyond the second generation of the founder’s family. Highly successful, multi-generational family-held and closely-held businesses plan and manage all ownership aspects of business continuity.