Observations
Generational transition (aka “succession”) and the retirement of one or some people that comes with it, is THE major cause of conflict in family business. 85% of my working life is spent trying to resolve the tensions that arise in business families through stalled and/or conflicted successions, and their many related issues.
“Retirement” means, literally: “to put out of use”. That’s a terrifying prospect for (former) driven leaders who cling to power for too long, contrary to their own long-term promises, family expectations, and commercial commonsense – much to everybody else’s dismay.
What’s going on?
Succession – the transition of leadership, management (and usually, ownership) of an entity – from one generation or group to another, is felt by some as an identity-loaded crisis; others rationalise it as an essential process of organisational change and renewal, and a lucky few relax into it as part of the natural lifecycle of humans, families and businesses.
Family Business Successees (incumbents transitioning away from power) often have their entire sense of identity invested in, and protected by, their own perceptions of their position and status in the business. This agitates an aspect of the Family Business Curse: “if the business is my life, not being in the business is my death”.
The profound insecurity this creates within leaders who have always looked and acted like impregnable rocks should never be under-estimated, because it can be a real show-stopper.
Some leaders appreciate that they’re past their natural use-by date, and are OK with that, as far as it goes. They recognise that they, and the business environment they used to dominate, have grown apart: their friends, colleagues and peers are retiring (voluntarily, or otherwise); they find themselves dealing with much younger people most of the time; technology has left them behind, and they no longer have the same fire in the belly that sustained them through the competitive challenges of their dynamic commercial past.
They “get it” intellectually, and make plans and commitments accordingly, but when it’s time for the actual baton pass they freeze – the mind says “let go”, but the spirit, driven by emotion, says “Nooooooooooooo”. They’re torn internally, both in the business and in the family, while outsiders and insiders alike struggle to understand and respond to whatever’s going on.
When next generation family successors, and loyal employees, see plans and promises turn to dust, and fear for the future of the business if it doesn’t receive urgent renewal, reinvestment, and new energy to re-establish competitive capabilities, the scene is set for resentment, disruption, factional fighting, and all-out conflict.
Solution
The old saw tells us: “Succession is not an “if”, it’s a “when”, and that it should be a process conducted over time, not an event caused by a crisis … or by a revolution”.
When properly planned, communicated, and implemented over a reasonable period of time, it is possible to avoid, or to at least minimise culture shock within the organisation, and the likelihood of future bounce back – where a fundamentally unconvinced successee feels compelled, due to internal emotional, or external commercial factors, or both, to return on their white charger to “save” the business.
Succession Plans seem to work better when viewed and executed as part of: (a) long-term Business Strategy and Continuity Plans AND, as entirely separate (b) Family Legacy and Stewardship Plans. Locating succession within larger plans provides a reasoned context that helps to make more sense of the process – by casting retirement as a reward for achievement, rather than as a punishment for getting old!
Don’t just focus on the needs of upcoming players, and the effect on the business of changing its leaders and managers. Help to make retirement successful for the outgoing leader, and try to avoid the iniquitous invisibility that attaches to many staff as soon as they announce their intention to leave the business.
Change the concept and prospect of “Retire” into “Re Fire” – where, rather than being put out of use, the retiring individual moves willingly onto the next phase of a productive and rewarding life, whether that means changing: day-to-day operational roles into special projects (with flexible timings), or into pure governance roles, or on to a life of leisure, study, recreation, family, or anything else that appeals. It’s largely up to the individual to make this work as they want it to work, and they will be able to call most of the shots – provided they take the time and trouble to create a new “rock” to inhabit that ultimately feels more attractive to them than their old rock, when the appointed time comes, if not before.
Of course, it’s hard to get a 76 year old with arthritis and no former external interests, hobbies, or buddies to get excited about taking up golf, or gardening – so the process of developing external interests and desires needs to start a long time before transition happens, if it’s to have any realistic chance of success.
Advisory Boards and Executive Coaches can play a big role in seeding and stimulating new interests in individuals who were previously so caught up in business activities they never even realised that roses smell!
Titles can become important, as never before. Sometimes the only way a person will release their title and role as MD, or CEO, is if they’re appointed Chair of the Board (an interesting move, if the Business Board hasn’t been taken all that seriously in the past!).
We observe that the transition process can encourage some formerly fiercely operational individuals to discover a surprising new passion to get into the sort of governance role they loudly declared to be a kludge on the business in their entrepreneurial heyday. Now why would that be …….?
Every Succession Plan should contain a specific leadership handover date, and the means to ensure that everybody knows what that date is. The handover should be dignified with a celebration ceremony to: (a) acknowledge the efforts of the past; (b) validate the actions of the present; (c) endorse hopes for the future; (d) provide closure on an important chapter in the life of the business and, (e) mark a critical generational transition point in the family.
Remember, the purpose of succession is to place new people, with fresh energy and new ideas, into the driving seat(s) of the business, and the family. Old leaders can leave a valuable legacy, or a total train wreck behind them, in their businesses and in their families. Succession, and the personal Retirement or Re-Firement process that comes with it, is or should be a choice, and the “last test of greatness”.