This article was originally published in BusinessWeek

Many parents refuse to let go of the family enterprise, even when their “kids” are managing the business beautifully

Early in my family-business career, I got a call from a woman concerned about her 65-year-old brother, Bob. The conversation went something like this:

“Tell me about your brother.”

“The problem with my brother,” she replied, “is our 90-year-old father.”

“Then tell me about your father.”

“He called me this morning,” she continued, “to tell me what a great job Bob did with the payroll last week.”

“And what did you say?”

“I asked him, what on earth did he expect? He’s been doing it for 40 years!”

I eventually suggested that her brother consider retiring from the family business, because their father certainly wasn’t going to. Does this ring a familiar bell?

FIERCE LOVE. Such family business stories could make for scores of novellas all their own, but there are some common themes at play. Some parents possess a “can’t let go” mentality. They have a passionate love of their businesses. When we’re talking about Dad, the company is often more than his baby or his mistress — it’s an extension of himself, it’s his true identity. And in each situation, it seems that the “kids” are caught in a trap and succumb to unnerving, if well-meaning, domination. So many times, especially in father-son relationships, I see situations where sons in business with their fathers are almost victims.

I remember meeting with another father, after I interviewed his three children who were managing the family’s business. Benito was an old-timer who typified a paternalistic model — he loved power and control. “So, what do my kids think?” Benito asked. “Well,” I said cautiously, “they think you’re pretty tough.”

“Tough? Tough?” he bellowed, smashing his fist on his thick oak desk, without a hint of irony. “They think I’m tough? How can they say that?” he screamed, his face turning beet red. “I never, ever hit one of my kids!” The “kids,” by the way, all happened to be in their fifties. And while Benito had transferred the official ownership of the business to them long ago, he was still very much in charge.

SELF-WORTH BAROMETER.. My dear friend and mentor, Harry Levinson, noted psychologist, author, and professor emeritus at Harvard Business School and Harvard Medical School, explains it this way: “Men often start a business to represent themselves. It becomes their mode of achievement, their reputation, and their weapon against anyone else who would take their baby away. They believe that only they have the right to manage the baby that they built and sustained. For the children to try to take this away is painful for both parties.”

Dr. Levinson describes retirement as emasculating for the father, an event that renders him nothing — when the instrument of his creation rendered him something. The separation can destroy his prior self-image as the successful achiever. “It’s especially difficult,” Dr. Levinson explains, “because it’s your own children who are doing it to you. The kids feel as though they are murdering their father by taking his power away — a very burdensome event for both parties.”

Without discounting the intensity of this pattern, my experience in working with business families reveals that fathers are less reluctant to let go when they truly believe that their sons and daughters can take hold competently. That is, when they demonstrate to their parents their leadership and management skills, and when the business is in a profitable mode.

SPECIFY GOALS. So what are the “kids” to do? Step one: Understand what Dad is facing, and keep talking about the future. Have a sit-down session to discuss what the business means to him and explore his goals for the company and his own future. This not only sets the stage for further discussion around transition issues but also helps Dad prepare for the notion of change and allows the next generation of family members to adjust their expectations.

Agreement on specific measurable goals (revenue, debt levels, return on assets, etc.) comes next. This gives the next generation concrete performance targets and helps mitigates the parent’s “when I feel it’s time” response. An outside board of advisers can lend objectivity to the process.

A parent’s reluctance to let go may never fully wane, but the more the younger-generation members understand, take hold, and prove their ability, the easier the process will be.

Talk Back

What do you think that each generation can do to more effectively transition ownership and control of the business from parents to children? How might the younger generation handle the concerns of the incumbent generation? Share your thoughts and advice in the comments below.