Succession by virtue of birth and family dynamics is a phenomenon that occurs quite frequently. We see it on the news or because it is happening in the organisation we work for, or simply because it’s happening in our family owned business. The successor is handed over the reins of the business, but can he or she run the business? What are the factors that determine the success of the succession? Can this be left to chance or “It runs in the blood” factor?
It’s time for millennials to take up the mantle
When it comes to the millennial generation, things have become more complex and convoluted. Most of this generation exists in a world of its own. They will know more about the world, because of their foreign/top notch education. Some know less about their own families and the business culture because they are cut off from the ground realities. This creates a paradox when they take over the business. These are people teeming with new ideas and different ways of doing things but may be unaware or apathetic to employees who have been working in the organisation for years.
Different people handle this transition differently. But a lot of the millennials are used to the ‘My way or the highway’ approach to most of these problems. Since they have been handed over things without having to fight for them, they feel entitled to get what they want without any struggle.
But if you dig deeper, there is a something more than mere entitlement. With the world becoming more connected and people constantly telling the social media followers about what they are doing, it leads to a “fear of missing out” in the millennial successors. For them, it was already decided by someone else that the business is what they are supposed to do. They have been trained and prepped for it all their lives. But what if they are not really cut out for it? What if they cannot live up to expectations? Others need to understand this. They also need to understand that it’s radically different from the previous generation, which placed a high value on family ties, relationships and compliance to social norms even if they did not believe in it.
The training of the successor
Most millennial successors come with fancy degrees from renowned institutions. Many families are letting their children work in other organisations before they come back to the family business. This gives a new perspective and makes the person more grounded and aware of the adjustments of life.
The successors must work with managers on the shop floor to understand how each cog of the business works and the day to day challenges. This also familiarises the employees with their future boss and helps in creating camaraderie. The more complex the organisation, the more time should be spent in knowing and understanding the business. Millennial successors must be aware of their strengths and weaknesses—this helps in taking informed decisions. Reverse mentoring opportunities help in both generations appreciate each other and understand where each one is coming from. It also helps to have to prepare them for unexpected situations and get them trained by professionals who are outside the company and accepted as experts.
The most important thing for millennials is to imbibe a sense of the family values and the business culture. They may do everything right (by the book) and still fail to transition and succeed.
The success of a succession—who’s responsible?
What can family owned businesses do about this? The foremost thing to remember is that it is not just the responsibility of one person to mould their ways. As a family unit, everyone must put an effort into understanding each other and bridging the generation gap. Respect for individuality must go up. Encouraging independence of thoughts, ways and actions in a safe space helps. Successors need to be empowered to have the path to achieve with a sense of purpose. There should be a commitment to have open and transparent conversations regarding the ground realities.
Ownership structure and management segregation helps too as there may be co-owners who are just figure heads, but will have opinions and advise and may stall changes and decisions. These voices, while important, should be carefully monitored and any signs of discontent needs to be nipped in the bud. A formal management structure helps the most in these cases—the co-owners can be given a board position, an option to sell their stake or an offer to join the workplace. This is where the elders of the family and their experience matters most.
Create a purposeful purpose
The positive thing about the current generation is that they have a certain sense of purpose already. This purpose shapes their lives and decisions, giving a new direction to the business. The elders must ensure that some threads of this purpose are aligned to the progress of the business as well as its employees. The reason this is so important is that it is easy for millennial successors to choose an alternate career when the family business doesn’t work out. When the inheritance comes easy, many are not prepared for the associated pressures and burdens—they are unable to deal with it. A purposeful purpose helps in keeping the successor connected to the business and its greater, overarching goal.
Factors for a successful succession
A successful succession requires effort and commitment. While leadership may come naturally to some, others require direction and guidance when taking up the new responsibility.
Have a carefully drafted plan of action. The timelines, training, ensuring that various stakeholders are satisfied and the million other things that come with handing over a business should be thought out and planned for as much as possible. Some things and issues will still remain open and they should be dealt with as they come and new context emerges.
Family members and employees should be observed. There will be people who are unhappy with the transition and it is the responsibility of the incumbent and the elders to keep an eye out for these dissenters and manage them. Reverse mentoring is a useful tool to use.
The ability to collaborate, communicate and openness to be collaborated with and communicated to will define the future of the leader. Mutual acceptance is key. When the incumbent leader, the successor and the management are able to communicate openly with one another, it will lead to a healthy, nurturing environment for the successor.
Successors should be given safe space to experiment, learn, unlearn and grow. Developmental experiences can be very meaningful. The family and business culture should be imbibed from early childhood. Visits to offices, customers, plants should be encouraged and made interesting as holidays.
Create a sense of purpose, something that is larger than ‘you and me’, so that the successor has something as an energiser to work for.
In the end, what matters is how we invest across generations in making the unfamiliar familiar. It works both ways—each generation must give up their preconceived notions and try to understand the each other. Mutual acceptance and respect is the key. As Viktor Frankl said: “Everything can be taken from a man, but one thing: the last of the human freedoms—to choose one’s attitude in any given set of circumstances, to choose one’s own way.”