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Healthy Motivations For Family Business Succession

Talking about succession planning for family business is a challenge. It's a rich topic, there are few clear rules, and each family's view of succession is illuminated (or obfuscated) by the family's values and capacity for self-awareness.

I believe that any succession plan starts with developing self-awareness, perhaps with discussions to clarify what is being created or having its life extended through succession. At the surface level, there is likely the stated value of keeping the business going and keeping the family in the business. (This is also the level at which it's relatively easy for consultants to roll up their shirt sleeves and develop strategies.) I think that in our society and especially in our family business culture, this value is taken as a given. Somehow the family has failed if the business is not passed on.

My belief, however, is that there are deeper, less discussed, less conscious, but more emotional and energizing motivations at work. These motivations arise from the personal, interpersonal, and family-wide hopes, fears, norms, feelings and core beliefs of the family members involved.

By my values, some of the healthier motivations might be:

  1. A desire by the younger generation to consciously take on the complex tensions of a family business.
  2. A shared passion for the work across the generations.
  3. A coincidental congruence between the skills of the younger generationwith the future needs of the company.
  4. An overarching goal for the next generation to grow into full, independent human beings, with family business succession as one action to consider in service of that goal.
  5. A deep love within the family that creates a desire to work together.
  6. A family culture that accepts differences and the conflict that naturally grows from differences, and recognizes that the family business will accentuate and create more differences.

Less healthy motivations might include:

  1. A desire for immortality or affirmation by the older generation.
  2. A desire by the older generation (and possibly the younger generation) to avoid dealing with the difficult emotional issues connected with developing an exit strategy other than family succession.
  3. A desire to keep the younger generation entangled or dependent.
  4. A desire by the younger generation to avoid dealing with the existential fear of independence.
  5. A desire to use the family business as the glue to repair unresolved divisions or conflicts in the family.
  6. A desire by the older generation family members to maintain their self image by avoiding outsiders in the business and by keeping the younger generation from gaining business experience elsewhere.
  7. A desire by the older generation to care for some siblings through the efforts of others. (“From each according to his abilities, to each according to his needs.”....Karl Marx)
  8. A desire to use the business to resolve unresolved family needs for attention, power, etc.

Regardless of whether you agree that any particular motivations are healthy or not, I think the danger lies in having them remain unconscious. As motivations become conscious, several things occur:

  • Conflicts will come into the open now rather than lying in wait for the future.
  • Impossible motivations can be looked at and mourned. The older generation is not going to gain immortality through the business, for example. It's better to recognize that now.
  • As the true motivations emerge, the range of alternatives increases, both within family succession and outside of family succession.
  • In general, the succession discussions will be more “real,” rather than being one or more steps removed from the core issues.

I think it makes sense for a family member to work elsewhere before coming to work for the family business. Part of our life's work is to differentiate ourselves from our family of origin. The tendency is to take the assumptions we developed in childhood out into every new relationship and job. It takes work to outgrow those assumptions, but it tends to occur as we meet more and more people who behave differently. In a family business, the task is made all the more difficult because one really is working with one's family of origin. You aren't just imagining that the critical boss is your father, he is your father. You're not imagining that one of the VP's is your sister, she is your sister. The deadbeat shareholder you are supporting is not like your deadbeat brother, he is your brother. Getting work outside the family business can be one way of aiding personal development in early adulthood by gaining new experiences on the job. It is also an opportunity to build confidence, gain skills and could be transferred to the family business, develop a career track record that demonstrates one's value to the family company, and reduce one's dependence upon the family business.

I also believe that the older generation's willingness (or lack thereof) to let go of the business and not have it continue in the family is one of the key determinants of the family “field” in which the next generation is raised. If the older generation has not emotionally prepared themselves for letting go, they will, unconsciously, in thousands of small ways over a lifetime, transfer that burden to their children. What happens to the parent's appetite for asking “what do you want to do when you grow up,” if only one answer can be accepted? What happens to the parent's interest in supporting academic interests that lead in unacceptable directions?

This leads to a crucial question. Do the parents want to raise heirs, or do they want to raise great kids? It also leads to one of the paradoxes of family business. If you focus on raising great kids instead of heirs, you might decrease the odds of family succession (they might go elsewhere), but you will increase the likelihood that any succession will be healthy because of your children's independence and maturity. If you focus on raising heirs, you might increase the odds that they enter the business, but put at risk the process they need to go through to be effective leaders. My bias is to focus on raising great kids. Not much of a downside, if you ask me.

These are my ramblings about a small segment of family business succession. I am by no means an authority, have no statistics to back up my conclusions, and I haven't had experience putting my opinions into action.

I enjoyed the opportunity to get some of my thoughts down on paper and I hope they have been helpful. I need to go back to figuring out how to sell more mustard, though. The Plochman Family has been producing and selling its delicious mustard since 1852.

 

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