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Bottom-Line Behavior

Why next-gen leadership transitions fail

Planning for a smooth succession in a business is a good idea. Trusting that plan? Even better.


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“The best-laid plans of mice and men often go awry,” wrote 18th century poet Robert Burns in his famous poem "To a Mouse." And there’s a good reason you still hear the phrase today. No matter how meticulously you plan something, there are always uncontrollable variables that can derail your efforts. The same holds true for succession planning. A good succession plan is just that—a plan. Of course, without a comprehensive, long-term plan, a succession will usually fail. But even the best, well, you get the drift. 

After decades as a family business consultant, I have seen time and time again the most common reason for a failed succession plan is a lack of commitment by one or more of the key people in the process—and it’s usually one single person. There are a variety of reasons for lack of buy-in from some individuals, but one of the biggest is a fear of self-reflection. Looking inward at your behaviors and motives can be an uncomfortable process. And in a family business, there are often more factors at play — family dynamics, personal relationships, uncomfortable discussions about money — that can make addressing these issues even more difficult. But an honest look in the mirror is necessary for the type of growth required to become a successful leader of a company. 

The reluctance to commit to the process can come from either generation, but it is most damaging to the future of the business when it comes from the generation next in line to take the reins of the company. Generational divide is a big reason — the younger generation thinks differently than the older generation, as has been the case across human history. This leads to inevitable stubbornness, with each party falling back on their own dogma. In these cases, a breakthrough is needed before the real work can be done.  


Break through

A succession plan is essentially a coordinated transition of roles, responsibilities and authority over a predetermined period of time (I always suggest a period of at least five years). From a technical standpoint, this can all be planned in a thoughtful and meticulous manner. The process though, should begin with a readiness assessment. As a family business consultant, I spend a good deal of time assessing each person in the process — both family members and non-family members on the leadership team — to uncover potential issues that may hamper the process. After my initial assessment, I design behavioral strategies that will help guide everyone to overcome any challenges that lead to reluctance to engage with the process. 

Developing trust is a big part of this process. When family members truly trust each other and others who help to manage the transition, it’s easier to break through the barriers that prevent a smooth succession. The goal in this effort is to understand organizational and family dynamics at the business and within the family, to identify the succession goals for the current owners and to clarify some of the potential roadblocks to achieving a successful transition of the business. It is important, however, to go into these assessments with clear vision and an understanding that family dynamics are powerful and must be addressed. 

After the initial assessment, setting up a structure is key. When everyone involved agrees on the way forward, it sets up a solid framework. I like to include defined KPIs, milestones with solid dates and ample time for meetings with both individuals and the group. When a succession plan is structured in this way, any personal issues that need to be addressed can be handled in a grounded manner, as they are measured against the plan. 

Transparency is also paramount, and not just with the family, but with the entire company. When the plan is in place and ready to go, a successful transition plan should be announced, with a timeline, to the company so morale is retained (hopefully) and the team has a chance to get used to the change over time, as it happens.  


Bottom line

As I’ve discussed, full buy-in and commitment to the plan from everyone involved is mandatory for a successful transition. In fact, without it, I refuse to move forward with the plan — because I know it will ultimately fail, which is not the result my clients are looking for. Getting buy-in requires hard work. In my position, that work entails helping the reluctant party practice behavioral techniques that will aid them in overcoming any roadblocks, earning their trust and cooperation along the way. For next-gen leaders, the work is being honest with yourself, looking in the mirror and having the hard conversations. It may be painful, but it is entirely necessary. And when everyone commits to the process, the future holds success. 

(This story was updated to reflect the correct name of the author of "To a Mouse.")

 

author

Denise Federer

Denise Federer is a contributing columnist to the Business Observer. She is the founder and principal of Federer Performance Management Group with more than 30 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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