Avoiding pitfalls in a family business transition

Role readiness is probably the most important aspect of a successful family transition.

The transitioning talent has been identified, but what leadership behaviours need to be created — and crafted — to position the new incumbent as a fresh independent leader with a strong following? All the while maintaining the narrative and the established traditions of the previous generation?

One of the biggest hurdles to be overcome is stepping into a first time leadership role. Talent should not be identified based on a technical trajectory alone. Currently, junior family members might have demonstrable technical experience and proven expertise within their own areas of skill, but that’s not enough to transition into a leadership.

Stepping up from operational management to visionary and strategic leadership is one of the most difficult moves to make in business. Key leadership competencies need to be developed that provide the confidence and clarity to mature and deliver as a leader.

The transitioning member must be equipped with the knowledge, skills, inspiration and tools to empower and develop the founder’s mentality, which is the foundation of a family firm. Building a tailor-made leadership development programme for younger family members is a must.

When working with transitioning families, I work on a two stage development/build approach. I recommend that you identify the current capability gaps for the transitioning family member, while also asking the following questions:

1. How able are they to address and receive feedback on their own performance levels?

2. Do they understand the current business priorities?

3. What key relationships are they building with stakeholders, staff and influencers?

4. How curious are they? Can they scan their business environment internally and externally and identify signals displayed in their markets for change and opportunity?

5. How authentic are they? Have they found their own voice and vision?

The second stage is about equipping the transitioning member with the knowledge, skills and inspiration to create strategic, cohesive and consistent leadership behaviours.

This is the central mechanism in the formulation of successful transition. Historically, the current generation may have enjoyed vast amounts of trust from staff and stakeholders. However, each generation has its own preferences on what behaviours to build on or bust in their own proposition.

For example, long service and loyalty may be a trait that was previously rewarded by the earlier generation, but has less importance or relevance to a younger transitioning leader looking to develop new agile ways of working, bringing in new roles and updating the skills required in existing positions.

While transitioning into a leadership role, the identified successor should be mindful of the actions along the way. What they do and say and how they behave outside of the workplace has a direct effect on their positioning and perceived suitability as the next leader.

It impacts upon creating an enviable individual leadership brand and a following — internally from the current workforce and externally from suppliers, partners, investors and competitors. Some examples of trustbusting behaviours include: making promises that they can’t keep, over promising and under delivering, being inaccessible, being unreliable and cherry picking the aspects of the role that are attractive while deflecting others, or failing to address all aspects of the changes required within their new role.

Power and purpose

This is where the previous generation can cause mayhem. Often, they are becoming less visible on a day-to-day basis but still quietly pulling the strings behind the scenes and disempowering the transitioning member as a result.

What is the purpose of the new transitioning member? Is their purpose to lead with integrity and efficiency or is taking the top role a step towards ultimate power within the family? It is imperative that transitioning members really understand the responsibility that comes with their new role — title or lineage does not automatically equate to power as a leader.

The transitioning member must demonstrate great leadership in all areas of the business, from commercial processes to staff and communications. They must provide guidance and show integrity even when the old guard isn’t watching. These are just some of the final steps towards a successful transition.

The writer is a business strategist and specialises in high net worth family business leadership succession. She’s on Twitter as @Follow_Fiona