I was recently in a client’s office, and remarked on the photo of his young family.
“My boy is three,” the client remarked. “The dream is for him to take over this business.”
This gave me pause. I work with a lot of family-run businesses, and have seen the best and the worst of succession issues. The best: a client in the distribution business. The large office/showroom has an old-fashioned paging system, and during our meetings, both generations of owners literally pause in mid-sentence when the page system trills. The owners’ eyes flash, and their ears practically perk up when a customer calls.
All visitors know that meetings must pause as the principals eagerly pursue new business. It is refreshing to see.
The worst, perhaps, is the situation in a sales business — let’s call it a real estate brokerage — where four siblings and spouses work under a father/founder. This company’s structure is designed to maximize total shared income among the children — even making up vice president, middle management, secretarial, systems and other phantom positions. The children were expected to go into the business, have no real interest and hardly show up. There is only one competent businessperson among them. Executive decisions, if you can call them executive, are made by committee and are designed to maximize payouts, not maximize business value.
In one situation, the generations get along, the customers feel the excitement and there is joy in the bustle of the place. In the other, there is a lassitude and the grasping hope for a little more cash.
Yet in both businesses, the founder generation wanted the second generation to come in and eventually take over. There is no shame in that desire and one of the greatest pleasures in life must be in the satisfaction of a thriving business successfully transitioned. Bravo to those who make it happen.
It is therefore no surprise that many family businesses put “succession issues” at the top of their day to day concerns, even if the issue is not really pressing as much as, say, customer issues are. The question of succession combines all the real concerns of family pride, wealth management and business success.
Most succession experts agree that family business succession planning is a process. While the particulars change from expert to expert, most emphasize clear goal setting for both the business owner and the family members, as well as needs analysis of all the parties.
My personal process would be to first ensure that the would-be successor has had independent achievement in another career and has great psychological independence from the family. Then the candidate should prove competence in the business by starting at an entry level and showing mastery. And then, I would look them in the eyes. Is there joy of working in the family business? Or dread?
Before making plans for three year olds, I would look for some glint in the eyes in their school or music or sports or other joys of life … and only invite them to take a role after they show that the same sparkle can illuminate the workplace.
You will have not only passed on a business — you will have helped make a person come fully alive.
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