Family business succession is hard – because it’s family!
Family business succession is hard – harder than other privately owned business. Why? Because it’s family!
Families are complicated, relationships are literally lifelong and deep, but often tainted with some “experience” – the niece’s wedding when the Matriarch ignored our side of the family, the Christmas lunch when the smart-arse nephew accused Dad of promoting his own family members way above their ability, the BBQ when the two older brothers fought over the CEO role and completely ignored the older (and smarter sister).
The issue is actually simple – people are wearing multiple hats and cannot separate the roles. Family member, shareholder, employee, board director, father, manager – it is not uncommon in family for people to wear 3, 4 or even more hats. When having a business discussion about a promotion, as a senior manager, it is very hard to ignore the fact it is your daughter being promoted. When discussing payroll changes in the business, it is hard to ignore the effect this will have on your dividends. Using the hats in meetings to clarify which role you are playing is a great technique: which hat are you wearing now? Can I ask you to take off your family hat and wear your manager hat?
The other significant issue is family members, often Dad, staying on far too long “waiting” for the right time to handover, “waiting” for the kids to show they really want it and are ready, “waiting” for…
“The dinosaur is having one last roar at the meteor before it wipes him out.” – Kendall Roy, Succession
The solution is to design and structure a family succession plan, a documented succession strategy over 5 to 10 years, including an organisational chart for today, 1 year, 3, 5 and 10 years, showing each person’s progression thru the organisation (and agreeing milestones for progression, not just time-based). Each person should have a personal plan – which roles? what training? Both formal and on the job experience is needed for each progression. What qualifications are needed to hold the “licence”?
Then it’s about communication – internally, externally, business, family, shareholders, employees all need to be informed and updated thru the implementation. Constantly review and update, hold people accountable for their milestones, don’t let people hold on too long, make sure the financial arrangements are clear and documented.
Family succession doesn’t have to be a blood sport!