Sooner or later, all family businesses face succession processes. Ideally, these are founded on professional criteria and approved by both predecessors and successors.
The lack thereof is an all too frequent mistake and the most common source of conflict in family-owned firms.
Movie: YES. Ongoing series: NO
A generational handover should be framed as a movie, with a clear beginning and an end, as opposed to a neverending series that drags on season after season.
While both follow the same plot line, the latter often sets off a perfect storm, jeopardizing the continuity of the business, stability of the family unit and happiness of its members.
The key is to make an excellent movie with a solid start and a happy ending.
Script
As Alfred Hitchcock observed, “To make a great film you need three things–the script, the script and the script.” Extrapolated to the realm of family business, this means a family protocol with clear rules outlining the succession process.
The script must put people in the spotlight and consider everyone’s concrete circumstances and concerns in the succession process since the will of the people will determine its success.
Cast of characters
We need the best actors and need them to stick to the script. Generational handovers in family businesses have four main actors: the predecessors, the successors, the company and the family.
> The predecessors: The first step is to reflect on their leadership archetype: are they monarchs, generals, emperors or ambassadors? Armed with this knowledge, we can develop the best approach to pave the terrain and assist them in handing over the helm. Identifying and deliberating their “non-negotiables” will be key.
> The successors: Rational and non-emotional criteria should be the basis when choosing a successor. Respect their personal ambitions rather than forcing them into taking the helm. As in relay races, motivate them to tug the baton to let the predecessor know he or she can let go, that they’ve started the race and are ready for action.
> The company: Prepare the company by clearly delineating company functions and decision-making responsibilities among ownership, governance and management. Decision-making systems should evolve from an individual model to a shared one.
> The family: As explored in a previous article, family councils are the cornerstone for fostering cohesion, commitment and communication, essential to build trust and ensure a smooth succession process. Family councils must manage expectations and navigate the “emotional tsunamis” that sometimes arise when decisions affecting family members are made.
The audience
All stakeholders–employees, suppliers and customers, among others–will sit back and enjoy the movie and, above all, feel assured when the succession process gets under way and the right decisions are made to safeguard the company’s future.
When working with family-owned firms, I am often asked, “When should I start thinking about succession?”
My answer is always the same: yesterday.
Homepage image: BOOM · Pexels.