Transition for any business is tough … but it’s even more difficult for the current and next generation within a family business.
Clashes are common, feuds fester and resentment and ostracisation can be just some of the wounds that can often take lifetimes to heal.
The solution lies within planning, management and expectations of change, and the behaviours, for all that needs to be scoped and agreed during the transition stage. Studies show that family firms tend to exhibit a preference for the children over spouses, or siblings at the time of succession.
That in itself is fraught with challenges, as siblings or members of the wider family can often see themselves as more experienced and role ready, especially if they are currently working successfully within the family firm. Once the right talent from within the family has been identified, one that fits the transition role requirements and job description, there are a series of critical steps that must be addressed.
Start, stop and amend for both generations
For the current generation, this is often a real blocker, as asking exceptionally successful leaders to stop doing something can feel disrespectful, especially in hierarchical organisations where it’s been a top-down, permission flow structure.
However, it’s necessary and it’s needed. With good external professional support, aligned to a clear transition plan, effective results can be achieved in a comfortable climate.
For example, what kind of conversations do both generations need to start or stop having? What communication do you need to start having with your all your staff about the process of transition and what will be your measures of transparency?
What transition talks need to be started with investors, without alerting analysts and markets? Of vital importance is what type of measurement metrics need to start to be introduced to assess the effectiveness of the transition steps over the agreed transition timeline?
What words, actions, and references need to stop — particularly referencing personal characteristics or traits of the next generation, including avoiding stereotypes and assumptions regarding age, gender and experience? What methods of working and leadership are effective in the current generation, but may need to be amended to fit the personality, style, market and role requirements of the next generation leaders?
What leadership behaviours will build or bust profits in transition and therefore need to start, stop or amend and what board and business behaviours are creating issues and have therefore become hidden costs on your P&L?
Emotions and feedback first
That’s hard within a family and often requires an objective, impartial presentation of evidence in reviewing actions or behaviours within the family group. This is why an external, independent partner is vital for transition to be effective and for saying what needs to be said.
For example, direct performance questioning from the old guard can often be seen as interrogation to the next generation and trigger a myriad of mixed emotions on both sides, including frustration, disappointment, disengagement and straight out resentment.
It’s my number one requirement when working with a family; we scope out and agree the timings and mechanism for having difficult conversations, the escalation measures and the format for feedback. The feedback must be a joint contribution conversation. It’s about focusing feedback as development dialogue.
A simple way to clarify feedback is to separate it into three areas:
1. Coaching — Current generation family members need to learn fresh approaches to give feedback that builds a coaching culture that engages, energises and increases the capability and performance of the transitioning team
2. Evaluation — This is important to plan and prepare both generations to have strong evidence based discussions and effectively evaluate the other. It’s crucial that competencies are developed to deliver information and communicate challenges and change effectively
3. Appreciation — A vital component for success. How will you recognise progress? What rewards and motivation measures need to be implemented at all stages of transition?
Caution needs to be exercised here as family talent is often costlier than external like-for-like talent and this can be a major cause of resentment with existing non-family staff members during transition.
With a defined feedback structure and transition plan in place, succession becomes both effective and efficient.
The writer is a high net worth family business leadership succession strategist.
