A Family Affair – Hand Over
Amongst the most significant challenges in the lifetime of any business is when the baton is passed from the current leader to their successor. Succession naturally comes with complications and an inevitable, but hopefully temporary, sense of instability for all parties. Employees, current management, previous management, buyers, suppliers and customers all need to possess a certain degree of willingness and confidence in ensuring successful succession, and the best way to ensure this is by creating a carefully tailored succession plan.
This process can be more complicated when succession is a family affair. Of course, there are obvious benefits to handing over to, literally, the next generation, the most obvious of which is the sense of trust and solidarity which is naturally intensified by blood-ties. However, the issues family-business may face could be exacerbated by the familial structure.
In this blog, we look at the process of succession planning, and how CMC Partners can help you to plan and execute a successful inter generational succession by addressing some of the key areas in which problems may arise.
A Family Affair – The Predecessor’s level of continued involvement
This is an area to consider during any succession process, but within a family business it can be a delicate topic. The parent/child (or older/younger generation) dynamic re-enforces a sense of maturity/inexperience which may not be so strongly felt within a non-familial succession, even if the successor is younger.
A predecessor wishing to remain a part of the business is fully understandable: they may have worked an entire lifetime to get the company where it is, and after years at the helm are still not quite ready to fully relinquish total control. It is especially important within a family business to ensure the predecessor does not feel redundant, or excluded from the family-business and perhaps, in some cases, by extension feel excluded from the family. It is essential to address the new remit of the predecessor within the succession plan. Will they remain part of the company in an advisory capacity, or in a less hands-on managerial role? Will it be a gradual transition or new management coming in with immediate effect? All these details need to be worked out prior to the succession taking place and agreed upon by all parties. Lack of communication or understanding about the previous management’s new remit can result is frustration for both predecessor and successor. Especially within a family, the emotional response to feeling redundant on the part of the predecessor, or patronised on the part of the younger party, can be highly exacerbated.
If the company and all parties are looking for a total succession with the predecessor entirely stopping their involvement within the company, it is wise to consider factors such as how to establish independent revenue streams so that predecessor is financially, as well as actively emancipated from the organisation. If their livelihood still depends on the company, it is natural for the predecessor to maintain an active interest in its running, which may not suit the new generation’s style of management. This is one of many issues your CMC Partners consultant can a) identify and b) skilfully incorporate into your succession plan.
A Family Affair – Establishing the Successor’s Strengths and Weaknesses
The criteria for finding a business successor in a non family-run organisation are based on entrepreneurship, professional experience and business acumen. When the role is inherited, however, the successor may still be lacking some of the requisite knowledge and experience. In many cases, the younger generation will have been prepared to take over the family business; they may have grown up working within the company or closely watching how it is run. Other successors may not have been closely involved, and be ill-equipped for a full-on take-over. Failing to acknowledge that a successor may need to gain more experience before stepping into the older generation’s shoes can have a negative impact on the company. A leader who is inexperienced may not be able to confidently or wisely manage the business, make executive decisions, or inspire the confidence of the management team, wider workforce, and associated parties. Similarly, over-confidence in one’s ability may lead to complacency which leads to poor business judgement and loss of respect from employees and clients.
The successor’s level of business experience must be compared with the level required for a successful hand over. It is essential that any wanting areas are addressed and diplomatically identified. Acknowledging that the new leader may not yet be best placed to take over is not tantamount to admitting defeat or disqualifying the individual as a potential successor. Creating a succession plan that is tailored to the strengths and weaknesses of the individual will ensure the process is smooth, and that the successor gains the requisite experience and skill whilst not being pushed out of their depth to an extent that is detrimental to the company. CMC Partners can help you to tailoring your succession plan to the individual’s strengths and weaknesses, and highlight various options when more experience is required, such as: deciding on a gradual take over; employing the successor for a time ‘on the shop floor’ to gain experience; sending the successor to gain experience within an external organisation; retaining the predecessor in an advisory capacity.
A Family Affair – New generation technologies in traditional companies
Having the younger generation at the helm can be a double edged sword when it comes to a business’s relationship with new technologies. It is likely a younger generation successor will be keen to implement the use of new technologies or software, or update communication strategies to incorporate social media platforms or professional online applications which they feel the older generation may not have properly utilised. Even without specific training or in-depth knowledge of online marketing strategies, people who have grown up using social media platforms and being exposed to online marketing and advertising, tend to have a more intuitive understanding of what having and online presence involves and how best to create one.
This enthusiasm and knowledge is, of course, an asset to a business previously unwilling or ill-prepared to engage with new online technologies. However, more than other changes new management may be immediately keen to introduce, adopting new technologies risks being a real generation divider. Long established employees, or members of senior management may be naturally distrustful of new online initiatives which they may perceive as undermining their previous working methods or making their skill sets redundant. Family businesses, especially small ones, tend to place significance importance on employee loyalty and develop strong bonds within the professional team. Jeopardising the harmony within a business by immediate changes to the use of new technologies is ultimately detrimental to the ‘familial atmosphere’ which may be a defining characteristic of your small business. Few things serve to damage employee satisfaction more than feeling left behind or incompetent. However, the rapid changes in online marketing and communication strategies mean it is imperative to be willing to engage with new technologies in order to succeed in a competitive environment. CMC Partners can work with your business to: a) establish whether new generation technologies will prove a help or an unnecessary hindrance; b) plan a time frame for the introduction of new initiatives; c) establish a strategy for minimising inter-generational discord.
A Family Affair – Blurred lines between the work and domestic environment
During a succession both parties will, understandably, have plenty to talk over and think about. Both successor and predecessor will naturally wish to discuss issues which arise as soon as possible or allay niggling concerns at the earliest opportunity. However, when the earliest opportunity is at the dinner table or a family occasion, lines begin to blur between the work and domestic environments. Not only does ‘talking shop’ outside working hours prevent you from properly switching off and getting much needed rest-bite from stressful situations, but it also jeopardises the harmony of the family unit as a whole. Constant business talk will be tiring for other family members who, despite probably having a genuine interest in the family business, would like to spend time with you in your role as parent, sibling, son/daughter, rather than manager or CEO. As well as home being a place you can disconnect from work stresses, your personal life is likely to present its own challenges and issues which require your attention. If the focus is always on the family business, the family itself may be neglected.
Getting a work/life balance is difficult anyway, but in terms of family business those blurred lines can mean that you fail to distinguish between the two. By helping you incorporate an agreement about what constitutes work time and what constitutes family time into the succession plan, and sticking strictly to it, your CMC consultant will ensure you reduce the risk of causing yourself and your family undue stress. By firmly compartmentalising work and home, even when it seems the two overlap, your family life becomes something you can fully escape to and concentrate on.
A Family Affair – Keeping things professional
In some ways handing or taking over from a family member is easier because we tend to be able to say more to family members. We are able to disagree or bring up issues more candidly because bridges between relations are inherently less flammable than between those with no blood ties. There is also likely to be a better understanding and knowledge of one another’s personality traits so you can tailor approaches to decision making and strategy planning according to how you know one another will work. This sense of familiarity can go both ways, however; when the personal becomes professional the professional risks becoming personal. It is possible that personal disputes or unrelated issues may arise within the work sphere, or that a sense of familiarity means one or other of the family members can overstep the mark, even in some cases making personal remarks in place of constructive criticism. There is also the risk of missing or extending deadlines, as family members of naturally more lenient, or a sense of general complacency or lax attitude to efficiency when it there is only a close relative to answer to, can inhibit a smooth and secure succession process. A non-professional approach could result in highly charged emotion which not only damage your relationship, but are also detrimental to the company and succession process.
Furthermore, suppliers, customers, current employees and senior management will expect a professional manner during the succession process, anything less may result in loss of confidence or a sense of frustration. Within the work space it is essential to strike the right balance between the familial tone which may be a cornerstone of the business’ identity, and professionalism, which ensures credibility and confidence.
It may be worth agreeing on what constitutes a professional approach, in terms of both language and conduct, within the succession plan. Having a mutual understanding of how to interact will ensure a smoother ride during the succession.
A Family Affair – Summary
Each succession is unique, as is every family business and successor/ predecessor relationship, and a ‘standard template’ succession strategy is unlikely to focus on all of the challenges your small family-business will face. In ensuring successful succession, CMC Partners will work closely with your business and help you create a plan and strategy suited to needs of a business as unique as the family which runs it.
If this sounds familiar and you would like discuss succession planning please contact CMC via the form below.