Say what you like about Sumner Redstone — the man loves his work. Ninety-three years old, bed-ridden, battling lawsuits seeking to have him examined to determine his competency, several billion dollars past financial need to work, Redstone refuses to step down from the chairman’s job at National Amusements, the theater chain he majority owns and which itself controls Viacom and CBS. The negative effects of his stubbornness are clear — among other signs, the plaintiff in the lawsuit seeking to force him to submit to mental testing is Viacom’s CEO, and when senior executives haul each other into court it’s as good a definition as any of dysfunction in the executive suite.
When it’s all over with, and given Redstone’s precarious health that could be any time, his most enduring legacy may be as a lesson in why it’s vital for family business executives to know when to pass the reins to the next generation. But the man himself, to be fair, is one of a kind. What worked for Sumner Redstone won’t necessarily work for the rest of us and perhaps vice versa.
So what does work? How do family business executives gracefully manage succession? There are many time-tested and well-proven elements to succession, including advance planning, disciplined preparation and openness to non-family candidates. One slippery factor, as demonstrated by Redstone, is that the family business leader has to be personally ready. How can that be encouraged?
A study of family firms published in 2015 in Journal of Small Business Studies examined leaders’ expectations of how they would like retirement, and how that affected the firm’s performance. What they found was that when aging leaders weren’t looking forward to retirement and the inevitable succession, the company didn’t do well.
Specific concerns leaders had included whether they were financially ready to retire, how retirement would affect family relationships, how well the succession effort was doing and how positive the company’s overall outlook was. Just as it’s difficult to draw sweeping conclusions from Redstone’s case, this study has limitations, mostly in that it looked only at Indian companies, which differ in significant ways from American and other family firms.
Still, looking at Redstone’s tumultuous family relationships as well as the study’s findings that family CEOs with healthy family relationships were more likely to anticipate happy retirement, it’s hard not to make some generalizations. One might be that it’s a good idea to have something to live for besides your business, such as family, or even some hobbies.
Perhaps the end result of Redstone’s business career will be that he becomes a verb — “The company was Redstoned when the founder refused to step down.” Whether you view Redstone as a fool or a genius, it’s clear that the business he loved and lived for is not profiting by his continued presence. And it’s also clear that for a family business leader to make a successful transition, he or she must first make peace with retirement.
