Diamond Succession Scorecard
what is the diamond succession scorecard?news		 DJM Institute
1. the incumbent leader transfers his know-how and finds a new role
2. the successor is competent and well-motivated
3. there is governance of the family business and of the family
4. the successor finds his proper place in the leadership team
5. the family business is professionally run
6. the succession is carefully planned
7. relationships within the family are good
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  jozef lievens

1. the incumbent leader transfers his know-how and finds a new role
For most incumbent leaders, succession is a radical process. After having for many years devoted their best efforts to the family diamond business, a new phase is beginning in their lives. Incumbent leaders play a very important role in the succession process. If they do not fully support the succession, the process will often run aground. Essentially, the transfer of management - as well as of ownership - entails that the incumbent leader will be playing a new role. For this to take place successfully, it is important for the incumbent leader to consider and plan every element carefully. This planning process consists of four steps:

Step 1: Acceptance of the evolution
A lot of diamond entrepreneurs think that they will die with the loupe in their hand. Often this refrains them from making adequate succession plans. Hence, the first thing the incumbent leader has to do is to accept the fact that he is not going to live forever. After coming to terms with this, they have reached the point in their life where they are ready to plan their succession.

Step 2: Transferring know how and relationships
In the diamond business know how about the product is very important. Equally significant as relationships with clients and suppliers. A crucial task in succession is to transfer the know how and relationships to the succeeding generation. This requires a planned and systematic approach.

Step 3: What vision does the incumbent leader have with regard to his new role?
It is of decisive importance that the incumbent leader thinks carefully about the new role which he wants to play. The following questions can help in this process:

  • What new role does the incumbent leader want to play in the diamond family business?
  • Research shows that most incumbent leaders do not want to simply disappear from the family business overnight. Most incumbent leaders will prefer to play a new role in the family business: chairman of the board of directors, member of the board of directors, advisor. The latter role occurs very often in practice.
  • What are the rights, duties and limits entailed by this new role in the family business? In order to avoid conflicts with the successor, it is advisable that these be precisely defined.
  • What new activities will the incumbent leader develop outside of the family business? The possibilities are endless: travel, sports, at last devoting yourself to a hobby which you never had time for earlier, spending more time with the children and grandchildren, teaching, philanthropy, and so on.
  • How does the life partner see the incumbent leader's new role and her/his own role in the future?

Step 4: Transferring leadership and ownership
The last step in the succession is to gradually transfer leadership and ownership from the incumbent leader to the succeeding generation.

Jozef LIEVENS holds a degree in law and an MBA. He is a lawyer and partner in the Eubelius law firm. He is managing director of the Institute for Family Business and FBNet Belgium. He is an UAMS executive professor teaching the module "Leading the Family Business" in the DJMI Managing the Diamond and Jewellery Course. His website is: www.familiebedrijf.be
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