One of the chief issues in family business succession is the tension that arises from the older generation’s reluctance to let go and the younger generation’s desire to assume the reigns quickly. There is no such thing as perfect timing in a family succession, but both generations need to be willing to negotiate and agree to a time when the transition will fully take effect.
For first generation owners, in particular, it can be extremely difficult to step back. They built the business; the business defines them and is like life itself, in many respects. No one knows the business like they do, and it can be hard for them to think that a son or daughter could run the business as well as they did. So they hang around and look over the 2nd generation’s shoulder, often second guessing the successor’s decisions and potentially undermining their authority and leadership position.
For the succeeding generation, there is often an urgency to make their mark and be recognized as the new captain of the ship. They want the founder out of the way so they can make changes and set the course they have longed to initiate. But sometimes they do not pay the proper respect to the founder who has given them their opportunity. They may not acknowledge or even fully appreciate the blood, sweat, and tears it took to start and build the business or the wealth of experience that has been accumulated by the previous generation.
One side does not want to let go, the other pushes for autonomy. This is the tension of the two generations.
Here are five steps to help ease this dilemma in your family business:
- The founder should set a date for “retirement” that gives the succeeding generation a clear timeframe for when they will take over.
- In the interim, the founder should take more frequent and longer vacations, leaving the succeeding generation in charge. The founder can then judge how smoothly the business has run in his or her absence, hopefully providing more confidence that the succeeding generation can operate without the founder.
- During the transition, regular meetings should be scheduled for the two generations to share their perspectives, and in particular, for the successor to share plans and initiatives they would like to implement. The successor needs to respectfully consider the perspectives of the experienced predecessor.
- The founder’s future role should be clearly articulated and agreed to by both generations.
- Once the transition takes effect, it is imperative for the founder to do nothing that would undermine or otherwise suggest that anyone other than the succeeding generation is in charge. This may include giving up the corner office, which is symbolic of a company’s leader.
Contact us at 215.441.4600 or Email if you have questions or would like to discuss how this topic may impact your business.