Working in a family business, whether you are 18 or 80, presents many unique challenges that often signal a transition. Typically, we tend to think only of the most major transitions in our life – graduations, marriages, births, careers, and deaths.
Judith Viorst, in her best seller and highly recommended book, Necessary Losses (Ballantine Books, 1986), explains life as a series of continuous – big and small – transitions. In order for us to continue to develop in healthy ways, each of us must pass through certain key transitional stages. In the process, we say good-bye to the old and known and begin exploring the new and unknown. Thus the name: Necessary Losses. Viorst argues that understanding the benefits of transitions helps pave the way for a smoother, more positive future.
In some family businesses transitions are, at best, ill-defined, poorly labeled, secretive, denied, or non-existent. In healthier family businesses, transitions are acknowledged, planned and carried out in as orderly a manner as possible. Building a culture where healthy transitions are prized is a process that begins very early in the family business life cycle and remains throughout the life of the business.
Not without reason, most of us think of succession planning (i.e., how leaders will be chosen) as ultimately the most important transition. Even in the best of circumstances, leadership transition is difficult. Acknowledging and planning help, but do not guarantee a win-win transition. REGENERATION was asked to help with the succession and transition of a founder’s retirement. In our opinion, this family business was above average in sharing power, communicating, planning, integrity, understanding their industry, and so on. This was a family business that had done their homework and had taken the necessary steps to prevent a family or business crisis.
The two working children: a son, soon to be new President and Chairman and a daughter, soon to be Vice-President, felt very uneasy that their father was leaving the family business after 43 years without having any real direction or clear purpose. In private conversations, each of the children expressed concern that “Dad won’t have anything to do! What will get him out of bed in the mornings?”
Their concerns were on target. All the succession planning and transition development was directed at the business. None was aimed at the emptiness or insignificance that Dad might feel. It was assumed that Dad, with all his wealth, would happily step out and begin a very active retirement. Dad knew the time was right for this transition (his mission was complete) but privately expressed concern that he really had no other great interests in his life. His family and his business were, in his terms, “my mistresses.”
This father’s experience is fairly common to retiring CEOs. In fact, Jeffrey Sonnenfeld, a Harvard Business School professor, wrote a book on this subject entitled, The Hero’s Farewell, What Happens When CEOs Retire (Oxford University Press, 1988). This is an important read for anyone in a family business that will confront transition and succession issues.
The outcome of this family story is that the transition and succession plans were, at the eleventh hour, broadened to consider Dad’s personal interests. Fortunately, this family saw the caution flag and adjusted without a crisis. Dad has stayed positively connected to both his loves – family and business – while cultivating new interests. The children have the freedom to manage the family business and routinely ask for input and counsel from their father. The transition of succession in a family business need not shrink an individual’s accomplishments. Rather, this important “right of passage” should function as another step on an individual’s ladder.
If you’re an owner looking to transition or a family wanting to plan the next phase of your business, REGENERATION can help with these important transitions – learn more.