Leadership or Ownership Succession Difficulties?
Effective succession planning in family enterprises requires guidance during two equally important transitions:
Ownership Changes – Many family enterprises attempt to address this need, often in conjunction with just their financial and tax planners--in particular their accountants and estate attorneys. Unfortunately, many owners stop here, never truly making plans for an equally important transition---the transfer of leadership to a new generation.
Leadership Changes – Often the forgotten or overlooked component, and often the more difficult. Selecting, training, and ultimately letting go of executive leadership and control of a successful business is difficult for any firm---as evidenced daily in papers like the New York Times, Wall Street Journal, Fortune and Forbes. When the firm is family-owned, succession becomes all the more difficult.
Unique Challenges of Family Firms:
Letting go of the executive reins to a son or daughter has unique challenges for the CEO, the successor, other family members, non-family employees, customers and suppliers, and often other stakeholders. Two particularly difficult decisions family leaders face are:
- Choosing one offspring over less qualified siblings or cousins
- Turning to outside leadership rather than a family member