Boyden Managing Partner Jim Harmon on the financial and family risks when business owners skip formal succession planning
When a family business owner decides a son or daughter will one day take over the company, it can feel like a natural and settled arrangement.
But Jim Harmon, Canada Managing Partner at Boyden, a global executive search and leadership advisory firm, says that assumption is one of the most dangerous things a business owner can make and one of the most common.
With over 20 years of experience in executive search, Harmon has seen family businesses thrive and unravel through leadership transitions. In a conversation with Wealth Professional Canada, he explains what proper succession planning actually looks like, where financial advisors fit into the process, and why independent voices matter more than most owners realise.
The fiduciary case for a formal plan
For Harmon, the question of whether to formalise succession planning isn't really a question at all. It's a matter of fiduciary responsibility, one that extends well beyond the family dinner table.
"Unless the owner is the sole owner and stakeholder of the business, he or she has a fiduciary accountability to other stakeholders,” he said. “A critical aspect of fiduciary responsibility is 'duty of care'. Simply put, the owner has an obligation to act in the best interest of the business, which extends to having the best leadership possible in place. The son or daughter does not automatically satisfy that obligation."
A formal succession plan, he argues, is itself a mark of good governance. At minimum, it should address who would lead the business in an emergency – whether from sudden illness, death, or incapacitation. But ideally it goes further, mapping out a multi-year pipeline of internal candidates and setting clear criteria against which family and non-family candidates alike can be fairly assessed.
There is also a family dimension that often gets overlooked. "A proper, maintained succession plan plays a critical role in family harmony," Harmon says, "ensuring expectations are set and 'Lord of the Flies' scenarios are avoided in the event of a sudden transition."
The financial risks of doing nothing
For financial advisors working with business-owner clients, understanding the financial stakes of inaction is essential. Harmon is direct about the consequences.
"The ruination of the business and the compromise of loss of family wealth. We have seen numerous situations where surviving relatives have failed to assign leadership accountability to either a family member or a hired gun, resulting in the decline or selling off of the business or its parts."
When succession is left unaddressed, the business often becomes the casualty of competing family interests, operational paralysis, or an absence of anyone with both the authority and the knowledge to lead. Assets accumulated over decades can erode quickly once strategic direction is lost.
Harmon is also clear about where advisors should be engaging directly: whenever ownership of the business enters the conversation.
"Financial advisors should be involved whenever the actual ownership of the business enters into the discussion, particularly from a valuation, remuneration, or tax planning perspective," he said.
Evaluating family members fairly
One of the more nuanced challenges in family business succession is how to assess whether a family member is actually the right fit for the top role. Harmon argues the answer lies in structured evaluation.
"Evaluate them against external candidates. In these comparisons, it is important to recognise and weigh the strengths the family member brings, such as the ability to embody the brand, tolerance for family nuances/dysfunction, and present a lower flight risk overall. Being the better candidate on paper does not automatically make an outsider more suitable."
Family members bring genuine advantages that a conventional talent assessment won't always capture – institutional knowledge, cultural continuity, and a long-term stake in the outcome. An objective evaluation process can credit those strengths while still holding all candidates to the same leadership standard.
When there's no plan and no time
For owners who have put off the conversation, Harmon offers a practical starting framework.
First: document who should lead the business in an emergency, explicitly noting it as an interim arrangement. Second: create a brief profile of an ideal successor. Third: write down who within the company or family could be ready to lead in one year, five years, or ten years – benchmarked against that profile.
He also recommends engaging an external succession planning consultant early, though he cautions against assuming size equals expertise.
"This does not need to be a large firm with high fees and multiple suits. Many HR executives are well-versed in the basic mechanics of succession plans too, but they may lack the family-level experience and competence necessary for a CEO-level transition," he said.
If a crisis arrives before a plan does, Harmon says the immediate priority is an interim operational leader – a senior executive from within the business – and the involvement of independent parties to bring neutral, fiduciary voices to the table. The worst outcome, he says, is a vacuum of decision-making authority at the moment it is most needed.
Harmon’s message is that succession planning conversations with business-owner clients aren't a niche add-on; they sit at the intersection of business continuity, estate planning, and family governance and the cost of avoiding them can far exceed the cost of any advisory fee.
