Conflicts Around Succession: Who Will Lead?

The typical tenure of a CEO in a family business is close to 20 years, three times that of a non-family business. And while many family business CEOs love what they do, have a deep sense of stewardship and are eager to train their successors, there are others who feel trapped. For them, it’s a life sentence without parole. Others fear a loss of identity, or of becoming irrelevant. Additionally, our experience shows that seniors won’t let go until they’re confident that their financial needs are going to be met.

Potential successors, meanwhile, need to accept that having the right last name is not a criterion for leadership, and recognize that like their entry, the succession of leadership is neither an entitlement nor an obligation, but an opportunity to be earned.

Clearly, the matter of succession is rife with potential for conflicts – the kinds of conflicts that can wreck relationships and take a business down with them. That’s why it’s so important to prepare for the transfer of power – and to create clarity around when and how it will happen. This is truly an area in which a little advance prevention can prevent a costly and painful “cure” down the line.

We’ve helped numerous clients deal with these issues: Driscoll Manufacturing is a third-generation family business, led by Mary, the daughter of the founder. She has two children in the business –  a son, Steve, and a daughter, Michelle –  both of whom are in their early 30s. Steve has been in the business for five years, and Michelle three. They are bright, hard-working and appreciative of the opportunity that is in front of them. After hearing us deliver an intergenerational workshop, we were hired by this family to create a leadership development plan for Steve and Michelle. Although both are doing well in the business, it was not clear as to what their paths would be, or which of them (if either) would assume the reins of the business. Through the initial interviews and 360 Performance Appraisals, it was evident that both Steve and Michelle had some areas that needed attention, particularly in their relationship as brother and sister partners in the business, and regarding their management styles; nothing terribly alarming, but rather a refining and enhancing that would better position both to ultimately drive the business together.

Steve and Michelle created a professional development plan, shared it with their mother and the senior management team, and embraced the coaching and consulting process through which we guided them. Now they are communicating better as partners, have incorporated a collaborative approach to working with other leaders and have received support for new initiatives they want to implement. At the same time, Mary, Steve, and Michelle have developed a long-term plan that will position both children to assume leadership positions in the business and ultimately sustain it for another generation.

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