Who they are is likely who their kids become - and how advisors can help
Key Takeaways:
- Nearly 70 percent of family businesses fail to make the transition from the first to the second generation.
- The succession process can be a challenge in a family business because the leadership transfer to offspring is more often "assumed" than prepared for.
- In many cases, family business owners are good about explaining the mechanics of the business, but struggle to connect emotionally to their sons and daughters.
In
Part One of this article series we discussed the importance of emotional connections between family business fathers and their children. Here we'll discuss ways to prevent suffering when the family business leadership changes. The succession process can be a challenge in a family business because succession is more often "assumed" than prepared for. For the heir-apparent, there is not only the technical matter of learning the job, but also the emotional matters of generational loss, passing the torch and the need for validation. The family spends too little time and preparation on succession in the business. This is a powerful factor that contributes to the fact that nearly 70 percent of family businesses fail to make the transition from the first to the second generation, according to organizational dynamics experts Dick Beckard and Elaine Kepner.
Richard Rohr, O.S.F., an ordained Franciscan priest said, "Men know how to pass along the rules, the roles and the money, but they don't know how to pass along who they are as people." This is precisely the issue in succession planning. The father stresses the mechanics of the business and fails to connect emotionally with his son or daughter. In family-owned businesses, this deficit creates, or contributes to, most succession issues between fathers and their adult children.
The entrepreneurial founder carries the inevitable concern about the well-being of the business. "Does my son/daughter have what it takes to run the company? If they take over, what will I do with myself?" Just below the surface is Dad's secret expectation - never voiced - to have his adult children express some appreciation for what he has done for them and for the family.
On the other hand, adult children are eager to take over, ready to try their hand at running the business. They may have educated themselves in the business. They have invested years in the company hoping (waiting) to take over. They are eager to show their stuff, to demonstrate to their parents what they have learned. In their eagerness, they quietly feel that their parents don't appreciate what they have to offer.
Get the topic of succession planning out in the openThus, the kids secretly feel gratitude, but are woefully unable to articulate it. The parents feel vague misgiving and loss, but are unwilling to mention it. Both sides feel underappreciated, or misunderstood, or worse. Unable to discuss succession concerns constructively, openly, and directly they polarize on the issue. They blame each other for the reluctance to proceed. They have never expressed the emotional part of their expectations.
While Dad taught the rational, the child absorbed the emotional. While the child realized the rational, Dad ignored the emotional. Given these dynamics, no wonder leadership succession planning can become so volatile. How can the frustrations of the leadership succession planning process be avoided?
I advise my clients to create a leadership succession planning "task force" to address the issue. The task force consists of the entire leadership team - current and pending - including non-family managers.
Start early. Get the leadership team involved to explore, together, the options for leadership succession. Establish the family's criteria, skills, education, and expectations regarding the position. Interview the owner-entrepreneur about his/her expectations and plans. Evaluate and train the next generation so that they are ready. Use non-family managers to bridge any gaps while family leaders mature into their roles.
As you build a leadership team of the future, I also encourage you, as the original entrepreneurs, to build simultaneously the emotional equity of your father-son and father-daughter relationships. Make time in your busy schedule to nurture those relationships. Spend time with each other at weekly lunches, periodic nights out, and sporting activities, for example. Use these shared times to explore your relationship and your expectations of each other. As Neil Chethik mentions in his book,
Father Loss, take the time to share the words you always wanted to hear: "I love you, I appreciate you and I admire the life you are leading..."
In the same way, adult children can take the initiative and act on their expectations. A friend of mine recently lamented that his relationship with his dad was not affectionate enough. When his dad was diagnosed with the early stages of Alzheimer’s disease, he realized that he had to change the relationship. Now when he greets his dad, it's Dad who initiates the hug.
ConclusionOffer your own hugs. Reach out to each other. Let other family members know what you want emotionally. Demonstrate involvement. A dad who is emotionally engaged is invaluable to a successful family-owned business. In other words (for those dads who don't like mushy conclusions): Get involved with your kids. It makes good business sense.
