When founders in a family or closely held business have differing philosophies on succession planning, it can present a significant challenge. As a family business consultant, I have seen this situation play out multiple times, and have recently encountered a few situations that could be descried as “disastrous,” where one partner lacks confidence in the heir apparent chosen by the other—particularly when that heir apparent is the partner’s adult child. An even more difficult scenario can arise when one of the partners is ready to retire and wants to install his or her child as their replacement, while the other partner is not ready to retire and doesn’t want to work with a new partner whom they may deem unable to do the job. Needless to say, things can start to get ugly. But the transition of leadership and succession planning is a critical process that can shape the future of the business, so it’s not something that can be ignored. The job must get done. Resolving these differences requires careful communication, compromise, and strategic thinking to ensure the long-term success and harmony within the organization.
In many cases, the opinion of the partner who disagrees with the other partner’s choice is misplaced and sometimes wrong. The next generation will of course “fall short” of the current leader’s style. There are undeniable generational differences that simply make that a reality. And oftentimes, the next generation leader doesn’t ever have a chance to “prove themselves.” It truly can be a no-win situation for the heir apparent. But there are potential resolutions to this problem. And it starts with a shift in mindset.
First and foremost, open and honest communication is vital in addressing these issues. The founders should come together to discuss their visions, goals, and concerns regarding the transition and succession. This dialogue can help create a better understanding of each founder’s perspectives and allow them to find common ground. It is essential to listen actively and respectfully to one another, encouraging an environment that fosters collaboration rather than confrontation. When you start on common ground, the road ahead becomes much smoother. Bringing in a family consultant can help bridge the gap and bring a neutral third-party to the table who can help both partners “see the light.”
Potential Resolutions
In my approach to solutions like these, I often focus on the following topics to help guide founders through the process:
Understand that timing is everything
The founders must carefully consider the optimal time to initiate the process, considering factors such as the age and readiness of potential successors, market conditions, and the overall stability of the business. Acting too hastily or delaying the transition can both have negative consequences. Finding the right timing requires a balance between allowing sufficient time for proper planning and ensuring a smooth transition that minimizes disruption and maintains stakeholder confidence.
Explore viable options for the business
If founders are having a hard time agreeing on a succession, it’s good to explore other options for the business. One partner could buy out the other. Both partners could agree to find a successor from outside the family, until such time when the younger heir apparent is “ready.” (of course, they’ll have to agree on what “ready” means). Exploring every option available can help founders focus on the realistic rather than the emotional part of this process.
Understand your resistance and/or the resistance of your partner
Resistance can stem from various factors—fear of change or losing control, conflicting personal aspirations, etc. Founders must approach each other with empathy and seek to uncover the underlying reasons behind the others’ resistance. Engaging in open and non-judgmental conversations can help shed light on the concerns each partner may have. By actively listening and empathizing, both parties can gain a deeper understanding of the motivations and values driving the resistance—and ultimately find common ground and identify potential compromises. Acknowledging and validating the resistance can help build trust and foster an environment where collaborative problem-solving becomes possible.
Ask the question — “What stops you from moving forward?”
Partners must ask each other “what is your greatest fear if this option doesn’t work?” It’s a legitimate question that deserves probing. Sometimes, there’s a good business reason for the resistance and fear. But in many cases, the resistance and fear are driven by misplaced emotion. Whatever the answer is, it will clear the way for the next step in the process, whether that means reevaluating the succession plan or setting it on the path forward.
The Bottom Line
Navigating differing philosophies on succession planning in a family business requires a combination of open communication, compromise, strategic thinking, timing, empathy and understanding of resistance. It can be a delicate process, but with some patience and respect, all parties can come away from the process feeling more comfortable with the possibility of a successful transfer into the next generation.
