Managing Relationship Issues in Succession Planning
by Daniel S. Hess, ACSW, dhess@lmaconsulting.cc
It is a challenge for every business to think into the future, beyond the strategic plan for the next five or ten years, to the time when someone new will lead the enterprise. This is Succession Planning. For family businesses, this planning can be extremely difficult, because the business may represent the personal identity of the founder or current leader, the source of financial security and well being for the family, the family's standing in the community, as well as the aspirations of the oncoming generation. This list suggests some of the emotional weight that can impact the ability of a family in a family business to move ahead with the important work of succession planning.
Effective succession planning in a family business requires careful technical planning, and the use of appropriate professionals to do so. All of the supportive services - legal, financial and insurance - that are a part of operating a business successfully will assist in this part of the plan development. However, the best advice and technical plan for succession planning can be undermined if the relationship issues that are a natural part of life in a family business are not also attended to and addressed. This is where the family business consultant, who understands the business, and the family relationships, is an essential part of the planning process.
There are many emotional and relationship factors that challenge a family embarking on succession planning. When not addressed, these can lead to unfortunate results. Family members can become embroiled in conflict that not only interrupts working relationships, but can also cause bitter disruption in personal relationships. This disruption and conflict can impact to the family for years into the future. Energy and talent and the focus on meaningful and successful enterprise are diverted from the business. When emotional tensions lead to avoiding these important issues, a family may be faced with the loss of options at a critical point, since an opportunity has passed or there is a crisis for which there is no time to prepare. The longer these issues are left unattended, the more deeply individuals can become entrenched in opposing positions, making it increasingly difficult to find a plan that meets the needs of all concerned.
Here are just a few of the relationship challenges facing a family in a family business:
Identification with the business. The founder or the current leader may have invested so much of him or herself in the business, with good results and satisfying recognition, that it is difficult to imagine someone else being able to adequately fill the leadership position. This leader may not have any interests or involvement outside the business, making it difficult to see any options for meaningful life after relinquishing leadership.
Unclear and uncommunicated expectations. The parents in a family business may have always had the expectation that one or all of their children would be active in the business. The family may or may not have been able to effectively discuss these expectations, leaving the potential of a gap between expectations. The children may have come to expect that the business would always provide plenty of resources for them, and may not have clarified their own goals and commitments.
Sharing the accumulated wealth equitably. Some members of the family who have pursued other paths than working in the family business may be very concerned about how they share in the value of their parents' estate. Siblings who have been active in the business may be concerned about not realizing the rewards of the risks they have taken, and the energies they have invested. This issue can frequently be intensified by an undercurrent of sensitivity about favoritism in the family.
Reluctance to face death. Family members may be reluctant to discuss turning over the leadership and retirement, perhaps because these issues raise the uncomfortable prospect of decline, and ultimately death. If distributing responsibility and control to the next generation can be seen as a natural part of life, then families can have greater freedom to plan a meaningful and productive post-business phase of life.
Following are a few points important in managing the relationship factors, so that succession planning can be effective in your family business.
For more information about succession issues and family business planning, contact Dan Hess at 717.509.8889 or via email at dhess@lmaconsulting.cc.
Daniel S. Hess, ACSW, Director of LMA's Family Business Services, is a Senior Consultant with LMA Consulting Group. Dan has extensive experience in understanding human behavior at all levels and works with family businesses of all sizes to improve their performance in the workplace and within their family environment..
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