Passing the Torch in Family Business Can Be Seamless

Entrepreneur's Notebook
by Ernest A. Doud

In a perfect world, a successor to the leader of a family business would inherit a supportive staff, dedicated family members with a shared vision and an organization committed to continuity and excellence. The current leader's foresight would lead him or her to design an effective leadership transition plan, and to commit to training and mentoring in order to develop a thoroughly prepared successor.

Frequently, however, leadership succession presents difficult challenges, and the next generation may question whether it's worth the family and business conflicts that often arise during a leadership transition. There are, however, steps successors can take to try to make it work when the time comes.

Successors should not try to imitate their predecessors, and predecessors should not expect their successor to be their clones. Get comfortable with the fact that each individual has a unique personality, brings different strengths to the job and approaches decision-making differently. If a successor has been well chosen, he or she will have the skill set the organization needs from a leader. The successors' identity will take shape as that person applies his or her specific strengths and interests to the leadership role.

Access to assets

Unless mandated by death or disability, a leadership transition does not mean the current leader is going to simply disappear. This would not be good for the successor or the business. Today's top executives have years of valuable experience, stature in the community, important customer contacts and knowledge of the industry and competitors. The successor and the business should have access to all of this. Part of the leadership succession planning process should include discussions about how the predecessor will make those assets available.

Most people know from experience that no two people are going to agree on the right approach to every business issue. Nor is a predecessor going to always agree with the successor's approach to leadership or towith his/her decisions.

Decide in advance how to handle disagreements. In most family businesses, the predecessor and successor are also parent and child. Remember that the relationship in the management succession is not a parent-child relationship, but a business relationship. The goal should be to resolve disagreements privately and provide a unified voice to the business. Don't lobby other employees (family or non-family) to support a particular point of view.

Keep the proper perspective. Your parents didn't build this business in a day, and you probably won't destroy it in a few months. As a successor, don't feel pressured to prove your worthiness as the new leader overnight. Don't make quick decisions simply for the sake of proving you can be decisive. Seek advice when you need it. Don't be afraid to admit you don't know it all. The person whom you are succeeding didn't know it all, so why should you?

To be a good leader one must be a master of change. Change is inevitable in any business. Resistance to change on the part of a predecessor can cripple a business. A successor's failure to embrace necessary and reasoned change for the sake of "honoring" the traditional business methods established by his/her predecessor can be equally damaging. On the other hand, change simply for the sake of change, i.e., to "flex your muscles" as the new leader, is not a very good idea.

Taking inventory

What kind of leadership does the business require to keep it operationally sound and strategically well-positioned? What are your leadership qualities? Where are the gaps between what you have and what the business needs, and how do you intend to fill them? What are your predecessor's positive qualities that you most appreciate and want to sustain? What negative traits should you avoid? Take an honest inventory of your strengths and weaknesses. Self-evaluation may help you assemble a more effective management team and support system, thereby enhancing the quality of your leadership.

Your predecessor didn't build a successful business completely by accident. Perhaps yyou have heard your predecessor's wisdom many times before. After spending some time in the driver's seat yourself, perhaps those words will carry new meaning and significance.

Approach leadership with a staunch belief in the importance of life-long learning and a hunger to continue personal improvement. You may have ascended into a position of leadership, but that fact alone doesn't mean your need for personal growth haves vanished. You and your predecessor should keep in mind that learning often involves making mistakes. Having your predecessor available to help you learn from those mistakes can enable you to grow as a leader.

Appreciate the very real possibility that other relatives or long-time employees may be facing a dilemma. They hitched their fortunes to the "old regime," and now that the founder (or current leader) has stepped down they may feel insecure about the future. Make an honest effort to address those concerns. Don't take it personally; this kind of insecurity in the face of leadership change comes with the territory.

For those managers who have a future in the business, helping them understand their futures will earn their trust. If the business is best served by replacing certain managers, do so carefully and compassionately.



Ernest A. Doud, Jr. is a co-founder and the managing partner of DoudHausnerVistar, a firm of family business advisers based in Glendale. Doud is also the author of the family business book, "Hats Off to You: Balancing Roles and Creating Success in Family Business."

For reprint and licensing requests for this article, CLICK HERE.