Succession Needn’t be Like “Succession” - Part 2
How these successors kept family business transitions from destroying the family or the business.
For families ready to transition a business to the next generation, the recently concluded Max series “Succession” is a near-perfect example of what not to do.
Fortunately, most family business transitions are not this contentious. However, one thing the show certainly gets right is that family business transitions do carry risks – to both the business and the family.
Nonetheless, I’ve seen many generational transfers that have been healthy for both the business and family. I interviewed a dozen executives from both generations who have made successful transfers. I shared real-life insights from the “parent” generation in a previous article. Today, the successors take the stage.
Brian Cox as Logan Roy and the cast of “Succession.”
Treat Succession as a Serious Business Risk
It’s not possible to overstate the risk involved in a family business transition, as it is an existential threat both for the business and the family. For the business, its stability, economic value, workforce and families, position in the community, and very existence is at stake. For the family, its bonds of love, trust, happiness, cohesiveness, and stability, as well as its position in the community is at stake.
Starting from open-eyed acknowledgement of these risks, these members of the “child” generation shared some of the ways that others walking this path can minimize risk and increase reward.
Make a Conscious Choice
Choice played a large role in nearly every conversation I had. I only interviewed members of the next generation who did choose to enter the family business, although it would certainly have been interesting to talk with children who chose not to.
For those who did join the family business, all agreed that choosing to join the family business, rather than simply defaulting to it, yielded huge benefits.
“This is what I chose,” reflected the daughter who succeeded her father in a retail business. “I love the people, the business, the industry. Others feel that.” Independently, another daughter described the benefits that accrue to the next generation when other employees feel their commitment. “The people around you want to help,” she shared. “They’ll give you support; more than you ever expected.”
Of course, choosing to be there at the company brings all the personal sense of commitment that we humans get when we make our own decisions – this is an individual reward to the next-gen member. But these conversations pointed out the additional power when employees know you want to be there with them; when you demonstrate a passion or love for the industry, business and employees. This plays a key role in motivating other employees to teach, help, or support you in your development along the way. No matter what parents or other family members might prefer, the choice to join the business or take a different path is yours alone. As one daughter in retail pointed out, “You have to be you.” A committed choice in either direction will be an important boost to your life. Make it consciously.
Clarify Expectations
Assuming the next generation is on the cusp of leadership, the parent generation has the lead here – and I wrote extensively about this in Part 1. But you, the next-gen person, are not a passive bystander. This is your life too. Are you clear on the parent generation’s expectations? What do they want from your leadership of the business?
If you don’t know, it’s quite possible they don’t know either. They likely haven’t faced this situation before. Conversation might be in order to help both of you reach clarity. If you are concerned by the answers, discuss those concerns and consider possible amendments.
If you’re unsure where to start the conversation, here are some prompts:
What do you expect of me? (Love the business; grow it; make no changes?)
For yourself, what do you want? (Continued involvement; guaranteed income; board role; something else?)
If down the road I think the business should be sold, how will you feel?
If multiple roles are being adjusted, what can be done to construct win-win solutions, so others (including family members) have roles that play to their strengths?
How will compensation and ownership interests work?
During the transition, what authority will each executive have?
Allow Time to Grow Into the Role
Common family-business wisdom was that children should go work elsewhere. It was thought that this exposure would give the children both a broader perspective of their options and a better appreciation of the family business. There may be benefits to this, but it wasn’t the reality for the executives I spoke with. Most were already working in the business while in school, moved directly into the business after school, or moved into the business within five years of entering the workforce.
These children, by their parent’s design or their own, did not start at the top. One daughter, starting at the bottom in a subsidiary’s customer service department, said,
“The way I came through is an excellent way to go. Don’t be scared of it. Build the relationships. They will be there later.”
Generational Transition is “evolution, not revolution.” Parents emphasized that the next generation needs time to mature, to grow, and to develop themselves. The children in turn emphasized the value of starting at the bottom of the businesses they eventually came to lead. Work for other people besides the parent, they recommend. Melt in. Do real jobs, eventually and ideally, jobs of service for others – either employees or customers. Initially, you aren’t ready for managerial duties and the employees aren’t ready for you!
One daughter told the story of how an opportunity opened for a training role and how that led to knowing and supporting nearly everyone in the company. Another son literally started sweeping floors before moving into Customer Service. Your co-workers can’t pretend not to know who you are, but these early roles offer the opportunity to gain a different perspective and earn a different kind of respect. Both served these successors well when they did grow into leadership.
In addition to perspective gained through these early roles, they also recommend connecting with non-profits, mentors, trusted advisors, coaches, industry organizations, and peer networks. You are learning on the job, but not only on the job.
The Center for Creative Leadership coined the 70/20/10 formula for leadership development. 70% is due to challenging work assignments. 20% is through exposure to the right people (e.g. coaches, mentors, advisors). 10% is through educational learning. Make use of their model.
You will grow into future roles through successive learning experiences. Both the parent and next generation should work consciously to make this happen.
Maintain Connection
In varying words, these successors highlighted the special gift of working with a parent – bumps and all. Your parents have been with you your whole life, but of course this won’t always be the case. The connection you have while you overlap in the family business is precious. Give it the respect, time and investment it deserves.
One next-gen executive spoke of the value she received from going to lunch every day with her Dad. The predictability of it, the ease, the naturalness of the conversation were invaluable to her development.
As important as these family connections were, these next-gen executives also spoke of the importance of having independent, supportive, trusting relationships outside of the business. One daughter spoke of an outside intermediary who knows her and her father well. “He could say the same thing as my father and I could hear it from him.”
After transition, a number of the next generation spoke about their desire to have their parents continue to have some level of connection to the business. This might be a formal role, but was more often simply an advisor and sounding board. One said, as if speaking to her father, “Don’t disappear. Find a connection point. Not every day … but I still appreciate connection, knowledge I don’t have, and your support.”
Succession doesn’t have to be like “Succession.” And for these successful businesses, it wasn’t. But passing the torch with minimal burns requires care and work from both generations.
Do you have your own experiences you want to share? Would you like some help working through a succession of your own? Feel free to reach out.