“Succession is an age-old practice – take politics or royal families, for example – where thoughtful, systematic, and careful consideration is given to choosing and grooming the successor,” says Richa Singh of The Family Business Consulting Group, a management consulting firm serving the multi-generational family businesses. “However, that is not the case with many business families, though most of them realize the need and importance.”
“There’s rarely a single reason preventing family businesses from preparing clear and documented succession plans,” notes Liz Kislik, a management consultant and executive coach. The most common reasons are:
- Human Nature. The deepest is in our DNA. It’s human nature to resist change when it feels like a threat. Order and predictability feel safer. The irony is, of course, that change is inevitable, and chaos can occur without a plan.
- Competing Priorities. “We’re too busy, and it’s very hard to focus or to put in the time and resources on something that doesn’t seem urgent—particularly in comparison to all the current demands,” Kislik explains.
- Procrastination. “The trouble is, you think you have time.” Though often attributed to Buddha, this is actually a quote from author Jack Kornfeld. Regardless of its source, it’s the most common reason Singh hears for why family businesses don’t plan their transitions to another generation.
- Ego & Entitlement. If the older founder or current leader has a command-and-control leadership style, Singh says it can be difficult for them to plan for letting go of day-to-day operations. If their identity is tied up in their role, they may not even want to think about not being in it. Conversely, some in the younger generation “have feelings of entitlement towards the empire, estate or family wealth,” she notes. They don’t think a plan is necessary because the business will magically transfer to them.
- Dynamics. Kislik has seen some leaders avoid naming a successor out of fear their retirement announcement will “shift current interpersonal dynamics and the balance of power in ways that can affect today’s business,” she says. In other cases, leaders are stymied if there are no obvious candidates for succession. They think, “Why should I bother to work on this if there’s really no one ready to pick it up after me?”
How To Get Past The Barriers
Breaking down the barriers to planning takes work. But a small first step can get you on the path.
“Just doing the thought exercise of considering what you might choose to do 5 or 10 years into the future and how different the business and the world might be by then can get you from the pre-contemplation stage of succession planning into the contemplation stage,” Kislik counsels. The process also makes “mental room” for others to take a larger and more significant role in the business. “All of that is prep for an effective succession eventually.”