Succeeding before Succession

Succession in a family business is critical to its survival. The fact that 85% of businesses fail to survive to the third generation is a testament to how difficult succession is.

Managing a family business is challenging, particularly at a time of generation change, as the CEO needs to not only be a competent business leader but also balance family members' needs. So often, we hear that there are no plans or processes for succession. Unfortunately, this contributes significantly to the chances of failure. Whilst lack of planning is usually the main reason for this failure, we have listed below the top 5 behaviours that make succession planning more challenging. By addressing these behaviours, you can align the hopes, dreams, and expectations of the family members, giving you a head start on your successful succession.

5. Indirect communication

Issues and conflicts are discussed with a family member who is not in the business or with non-family members working in the business. Inevitably, this leads to a triangle where the person in question is excluded. Direct communication is the route to resolving the issue.

4. Poor management of expectation

The mismanagement of expectation invariable results in conflicts around roles, money or control. It is essential to listen to one another, be open-minded and be prepared to discuss what you expect financially and emotionally.

3. Control

Change is challenging, and stepping away after years of managing a business is a big ask. However, having control is the very thing that has created success, so change needs to be supported with sympathy and understanding. We need to take responsibility for what we contribute to both the success and the problem of succession.

2. lack of forgiveness

Family arguments happen, and relationships sometimes break down; forgiving and forgetting are crucial to working together.

1. Lack of appreciation

This is the big one for both the senior and next generation. In family businesses appreciation is often implicit but rarely expressed. We are all great at telling our teams what a fantastic job they are doing, but how often do we tell each other? Even family need to know they are doing a good job and you are proud of them. A little recognition goes a very long way.

Family businesses have some unique benefits: loyalty, labour pool, value, patience, financial reward and motivation to create. These businesses also promote economic and social development and employ many people globally. So, we all must promote successful succession.