Siblings Julie and Frank have worked in the family business for close to ten years. Frank is 32 and Julie is 29. For their dad, who is 61 years old and in excellent health, the business is practically his whole life. He still goes in at 7 AM each morning, and even works most Saturdays.
But every time that Frank and Julie raise the question of a leadership succession plan, Dad’s response is either, “We have time to work on that…” or “Are you kids trying to get rid of me?”
Frank and Julie are reasonably concerned about their futures and that of the business. Everyone has heard the horror stories about how a lack of succession planning is the number one reason most family businesses fail to make it into a second or third generation.
But Dad is struggling with his emotional attachment to his business – and facing this issue means admitting that he is growing older. Dad may also be reluctant because he sees no clear solutions, or he may not be convinced that his “kids” are ready.
What should the family do?
- Make the issue discussible.
Ideally, Dad will bring up the topic – but sometimes the younger generation needs to prod a little. Should Dad be unwilling to respond, the help of a spouse, a peer, or advisor may be needed to stimulate the process. Everyone needs an opportunity to express thoughts, concerns, dreams, hopes, and fears.
- Separate the tasks.
While in general, the issue is continuity, there are two distinct, but related tasks at hand. One is an ownership transfer issue: Who will own the stock in the business? The other is leadership succession: Must Dad now retire completely? Who are potential successor CEOs; family members, non-family key executives, or an outsider who needs to be recruited and trained? Or one of the above on an interim basis, while his successor is being groomed?
- A plan for Dad.
Dad needs to have something positive to move toward rather than away from, whether that’s a leadership role on the hospital board or at the local golf club. Perhaps some travel plans with grandchildren or the establishment of a family foundation or investment office would be appealing.
- Establish a timetable and articulate the steps.
This process can happen over several years and is often done with the help of family business, legal, accounting, insurance, and investment advisors. A few hours of professional time at this stage can save many later on.
As tough as it is, implementing a successful succession plan is the ultimate reward for any chief executive in a family business. The successful perpetuation of that business may be the closest he can come to immortality.
