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When it comes to family business succession, pain is unavoidable. Even in the happiest, most loving families, there will be moments of disagreement and dissension. It’s unavoidable. That’s because the goal of a family is a loving relationship. But in business, goals must always include results, even if hard-fought.
So the acknowledgement implicit in family business is: there will be pain. But suffering is optional.
That is the key message InterimExecs CEO Robert Jordan sends in this lively 7-minute video about family business succession conflict:
Who Needs to Understand Family Business Succession?
This is something that all of the organization’s leadership has to understand – owners, founders, board members, management team, and potential successors, whether they are family members or non-family executives.
Beyond understanding, all of those stakeholders need to agree and actively manage the succession plan. That was a key finding of PWC’s 11th Global Family Business Survey.
“Consistency across documents and agreement among stakeholders should be evaluated continually and families and boards must act in concert. A shareholder agreement that says one thing, and wills and trusts that say another, is a problem,” PWC said.
Family Relationships Matter
In the webinar, Jordan noted that how the family relates now will impact the level of business succession conflict that arises.
A Loving Family
Even when all members of the family love and respect one another, it can be hard to get succession exactly right and everyone will have their own concerns, Jordan says.
He tells the story of a loving family that runs a successful business in the western United States. “When the subject of succession comes up, everyone gets a little hitch in their thinking.”
One of the sons came to InterimExecs seeking help navigating these unfamiliar and uncomfortable discussions over issues such as how equity will be transferred and at what pace, how control will move over, how to deal with people who are active in the business vs. people who are not?
A Family Already Dealing with Some Conflict
This use case is personal for Jordan; it involves his cousins. The family owned a well-known worldwide company. When it came time to transition from his parents’ generation to his contemporaries, it dredged up all kinds of issues over which family members had voting rights and the concerns of those who did not but still wanted to weigh in on the transition.
“It was ultimately successful, but they spent years getting there,” he says.
A Family Already in Open Warfare
Jordan tells the story of two families that co-owned and co-controlled a company and had reached out to InterimExecs for a consultation over Zoom. There were nine family members on the call, a virtual Hollywood Squares of animosity.
“If they could have killed each other over Zoom, they would have,” he says.
How to Overcome Family Business Succession Conflict
To win the game, you need to field a full team, Jordan says. Historically that meant your lawyer and accountant. But in the modern age business is much more complex and so the resources necessary to ensure harmony along with great outcomes needs more robustness, more firepower.
Thanks to the burgeoning gig economy and a proliferation of battle-tested executives eager to take on new challenges, it’s easy to find all of the expertise you’ll need to avoid, or at least minimize, any family business succession conflict.
Regardless of company size, there is an experienced executive willing to work for a short period as an interim executive or part-time over a longer period as a fractional executive to help guide the transition so companies can do it in as peaceful a way as possible.
Questions to Ask Yourself
If your family business is facing any succession issues, ask yourself these questions. (Or call us at 847-849-2800 for a confidential discussion to determine if an interim or factional executive from the RED (Rapid Executive Deployment) Team can help.)
- Are your family members in agreement on succession?
- If the next generation of leadership isn’t yet ready (whether family members or non-family executives), how will you get them up to speed?
- What happens if the unforeseen happens?
- What needs to be fixed right now?
- Where do you see opportunity, but have not had the resources to seize it?
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InterimExecs RED Team is an elite group of CEOs, CFOs, COOs, and CIOs who help guide organizations through turnaround, growth (merger, acquisitions, ERP/CRM implementation, process improvement), or absence of leadership. Learn more about InterimExecs RED Team here or call +1 (847) 849-2800 for a confidential conversation about how we can help you.
More Resources:
*Preparing Your Company for a Sale and How to Get the Help You Need
*Business Exit Strategy Guide for Owners