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Tips for taking over the family business

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Leadership change is always stressful, but it's multiplied exponentially when it takes place at a family business. Issues of business continuity are certainly at play, but the unique dynamic of maintaining personal relationships is also at the forefront of this difficult transition.

Much has been written about how family business owners can best handle the changing of the guard to the next generation, but it's just as important to focus on the successor's attitude and perspective throughout the process. An “heir apparent” faces challenges that business school education can't totally prepare them for, since they're often dealing with fragile emotions as they seek to lead a smooth transition.

Numerous times as a family business consultant I have witnessed the frustration of a successor with the senior family member whose role he is slated to succeed. More often than not it is related to an owner's unwillingness to make innovative changes. The mantra “that's not how we have done always things here” can be deafening to the next generation who are trying to find a respectful way to get their voice heard.

Those tapped as successors have a lot to consider before any shift in power takes place:

Are you taking over by choice or default?

Do you want the role? Why?

Is it your passion?

Are there other family members involved — and if so, what is their reaction to your new role?

Do you possess the three important “C's”?

Clarity — of vision for the company's long-term direction;

Courage — to embrace the leadership role and learn to be a strong and influential leader; and

Commitment — to the company's mission and goals.

In addition, it's important to ensure there is a target date set and steps in place to make the transition. Many successors suffer from a lack of trust, fearing they'll never really hold the power while the current leader is alive; they're afraid of being stuck in what I call the “Prince Charles effect,” having responsibility with limited power.

Making a leadership change in a family business takes time — perhaps five to 10 years to gain the support and confidence of current clients and staff members. The transfer of knowledge can be slow and painful, especially in businesses that lack formal governance.

Even in the best of situations, when the successor has worked for years at the business and has gained the trust and respect of the current leader, the transition process can be filled with angst. The bottom line is that it takes tremendous courage for a current leader to abdicate his or her role in a proactive, focused manner.

Letting go of a company you have created and nurtured is tough in the best of circumstances. The more aware a successor is about the issues impacting the leader's reluctance to move on, the more likely the chances for a smooth transition. A successor should consider the following three tips to enhance his empathy and to help make the process easier:

Recognize the fear and uncertainty of the future and next steps for the current leader.

Acknowledge that entrepreneurs are often successful because they don't follow rules — so the current leader may not be resisting the transfer of power, but may not know how to transfer the knowledge in his head gained through years of experience.

Create strategies for a “brain drain” so you can understand the business from the current leader's perspective.

The process of transitioning power from one generation to the next in a family business is complex. I've seen it end successfully for businesses and families, and I've seen it negatively affect businesses and rip families apart. By being patient with the current leader and empathetic to his situation, successors can earn their first leadership “stripes” by making the transfer of power far more comfortable for everyone.

Denise P. Federer, Ph.D. is founder and principal of Federer Performance Management Group. She has 27 years of experience working with key executives, business leaders and Fortune 500 companies as a behavioral psychologist, consultant, coach and trainer. Contact her at: [email protected]


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