Passing on Business Leadership to the Next Generation
The single most vulnerable time for any family business is the point at which one generation prepares to hand over to the next. With the best will in the world, this can go wrong, and one of the most common reasons for that is that the next generation simply isn't ready to handle leadership. To compound this, despite formal agreements, the person who is handing it over isn't always fully ready to let go of that lead role. Without a proper process of adjustment the business can be left in limbo, so getting succession right is essential to continued business success.
Staging SuccessionAlthough the formal handover of leadership has to be made all in one go, there's no reason not to stage other aspects of succession, thereby making sure that the next generation of management has time to acquire the appropriate skills. The simplest way to approach this is to start by shadowing, so that your children can observe the full range of things you do, and to proceed to letting them take over one task at a time. Start with simple things such as managing your incoming paperwork, identifying what should be prioritised, and gradually move up to more serious decision making.
Once you're confident that your children understand all the day to day business you do, you can start taking breaks and leaving them alone to manage things by themselves. Keep a mobile phone on you so they can call if you're needed for a big decision, but encourage them to try and get by without using it. At first you can just take a few afternoons off, not leaving much time for things to go wrong, and if they handle that successfully then you can move up to taking weekends or even having a proper holiday. This process will help to build their confidence whilst a safety net remains in place.
The main danger with staging succession is that the generation waiting to inherit may sometimes become frustrated, feeling that you're dragging things out and it's all taking too long. If this happens, try to agree on a fixed plan for making the transfer, with clearly stated aims and dates.
Making IntroductionsIt's important to remember that managing a successful succession isn't just about internal procedures - it's also about how your business interacts with the outside world. Whilst you're introducing your children to the mechanisms of managing the business, take the opportunity to introduce them to your trading contacts, too. Let it be known that they're preparing to take over from you and make sure they have the chance to develop the personal relationships which are so important in business.
As well as introducing your children to external contacts, take the time to re-introduce them to business employees as their future manager. Make sure that all your employees know when the transfer will happen and take the time to talk to them about any concerns they may have about the new management. Encourage your children to take their concerns on board in developing an appropriate management strategy.
Letting GoWhen you're used to taking the lead, sitting back and watching your business being run by somebody else can be difficult. You're bound to notice all sorts of tiny mistakes and things you could have done better - but it's important to realise that, in some cases, these will really just be things you would have done differently. You must give the next generation leadership time to develop their own style. They'll never be able to do a good job with you constantly hovering over them, potentially undermining their authority in the eyes of employees and business contacts, so it can be better to get yourself out of the way by taking a holiday.
In the longer term, you're bound to experience the same problems as anybody entering retirement - suddenly having a lot of time on your hands that you don't know what to do with. Don't be tempted to try and return to the business unless your children take the initiative and offer you a role. It can be too tempting to try and interfere in management if you're working in another position. Instead, try and develop hobbies and explore social opportunities. Having spent much of your lifetime devoted to building up the business, isn't it time you took some time for yourself?