Shifting the paradigm on family business successions

Many family business succession plans don’t work — a harsh reality. 

It’s not that they can’t work. I’ve helped dozens of clients implement a successful succession plan in my decades as a family business consultant. The issue is the “plan” part of succession plan. Oftentimes, there really isn’t one outside of the “Mary will take over when I retire in 5 years” variety. 

There are a variety of unforeseen forces that make this type of plan fall flat on its face. Perhaps the biggest is the failure of the younger generation leader to gain the trust of the family, the employees and clients. But that’s not just a younger generation problem, it’s an everyone-involved problem. Here are some reasons why trust is hard to come by:

They’ll never be you

The younger generation is, well, different. And though it seems obvious, your children (or other younger family members) are not the same person as you. They have different ways of doing things, different habit and perhaps a different work ethic (perceived or real) than you. This fact almost always impedes a successful succession plan. 

You’re just not sure

You may think you’re ready to hand over control of your family business, but are you? I have found many times the outgoing leader lacks a certain amount of trust in the successor. That’s not a good place to start a succession! If that sounds like you, start by asking yourself “why?”

Poor visibility into the plan

Whether it’s other family members, the employees or leadership, a lack of clarity on the succession plan and what, how and why certain decisions were made can create an information vacuum that quickly fills with doubt. Be open and clear with your plan. 

The generation chasm

The gap is real, and it’s wide. One of the biggest issues I see in my work is a clash of styles and beliefs around work. It can be a real issue, but it’s table stakes for any succession plan. 

Change the paradigm

The challenges of succession planning are consistent and common. The best way to overcome them is a mindset change. Stephen Covey calls paradigms our mental maps — how we see the world and act in it. They’re shaped by our values. These are not reality — just our version of it. But the more they align with our principles and real needs, the better they work. 

Here’s a (somewhat hypothetical) example: The new owner of a construction firm strolls in every day at 9:30 a.m. — a time he is used to going to work. But the team starts at 6 a.m., common in construction. The new owner inevitably loses the trust of the team before long. In this case, the new owner was living in a different paradigm before he bought the company, and had to shift his mindset and behavior to meet the moment. If we look at the challenges in the section above, there are a variety of tactics to overcome them. But the most powerful solution is shifting the mindset of both the existing leader, and the successor. 

Change is hard. But it’s all in the mind. By learning to shift your mindset, you can shift the paradigm and execute a seamless succession plan—and give yourself the best chance at future success.