Why Your Family Business Needs a Leadership Transition Plan
“It can be a smooth, positive experience”
No amount of success in your family business is worth destroyed relationships and family issues. I have seen this happen to many family businesses while transitioning from one generation to the next. I have also seen families build success and prosperity for generations to come with a defined leadership transition plan.
Family businesses have unique challenges when facing the decisions and process of transitioning the leadership of a company to the next generation of leaders. Managing the emotions, individual wants and needs, and family dynamics are extremely important to a successful outcome. And most family businesses simply wait too long to face these important conversations.
The good news is that with a solid process, a family business transition can be a smooth, positive experience. Having a defined plan in place will dramatically improve the chance that the transfer of ownership and/or management to the next generation will be smooth and successful. But without a process to address some of the following, the family can experience fractured relationships at Christmas dinner, and morale and culture issues within the company. There is no reason why siblings and other company leaders should feel uncomfortable having conversations around the future of the business.
Here are some of the issues that need to be sorted out. These require real conversation and honesty within the company and family leadership:
1. What is the Goal? Is it legacy, is it keeping the business in the family, or is just making sure family members have a job? How do the family dynamics and personal relationships affect the outcome? What are the honest and candid answers to these questions?
2. What is the “Estate Plan”? Company transitions and estate plans can be very complicated. There are many legal and tax issues that need to be considered along with ownership and leadership questions. Good, solid professional advice is a must.
3. Does the next generation have both the passion and the skills? Does the next generation really want the responsibility and are they “wired for the work”? Have they developed the skills needed to lead the company or might they choose to have a non-leadership role and allow a hired manager to do the heavy lifting? There is no right answer; all are sound options!
4. What are the conflicts? It is very important to identify the pain points. What are the risks, problems and emotional “triggers”? Is there role clarity for all the individuals involved and does everyone know where they “fit” in the future vision of the company?
5. How does all this affect the Team? Is there a communication plan to ensure clarity and that the morale of employees and company culture is headed in the right direction? Is the leadership team on board with the decisions and is there a plan to develop a support team around those decisions?
So, having a plan to address the transitioning of leadership from one generation to the next can be difficult. But it does not have to be! If approached in a logical way, with an unbiased advisor to guide the family through some of the pain points, it can and should be a positive and productive experience.
Often the hardest thing to do is simply to get started. So, don’t wait … face the issues sooner rather than later and enjoy the benefit of having the clarity, peace of mind, and confidence that your company will be in good hands for many years to come.