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Is the Leader a Statesman? Monarch? General?
At a conference on Succession Planning for Closely-Held Businesses, I heard Barry Greiff, MD, a psychiatrist and member of the faculty of Harvard Medical School, speak about managing family dynamics and conflict in business. In recounting statistics and stories, it’s clear that the “soft side” – the human and psychological aspect – is just as critical as the legal strategies for successful management succession.
Here’s a summary of some key points:
Succession has to be tailored to the reality of the people and their situation.
A logical and legally-sound plan may never be implemented unless it is tailored to the people involved and the implementation is carefully managed. The patterns of family dynamics build up over the years and can become insular and inbred. An outside perspective can help to raise awareness of the issues and facilitate the transition.
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What’s the role of the family in the business?
In a “Family Business” – control and privileges are reserved for family only, career opportunities are limited to family and there are family members on the payroll without regard to capability or performance. There is often a lot of resentment amongst family members and little receptivity to new ideas.
In a “Business Family,” on the other hand, the business is professionally managed with a clear plan. The family is in control but competence and performance are important, and outsiders are involved in key roles and through an advisory board. There’s openness to new ideas and periodic assessments such as SWOTT (Strengths, Weaknesses, Opportunities, Trends & Threats).
Needless to say, the “Business Family” is much more likely to make a successful management transition.
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Is communication honest and direct?
This means that the leader says what s/he means and then does what s/he says. It’s critical that the communication be direct – without any “triangulation.” This means messages are delivered directly, not indirectly though an intermediary such as another family member.
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What is the Leader’s headset?
The scenarios that Dr. Greiff described greatly influence the implementation of the succession plan.
The “Statesman” —
In this scenario, the leader departs gracefully, in a well-planned manner. This means that the leader is well positioned financially for retirement, manages an orderly transition and then acts as an “ambassador,” generating goodwill for the business.
The “Monarch” —
In this scenario, the leader is holding on (only s/he really knows the business) and disparages potential successors’ style, work ethic, etc. The leader’s financial security may be tied to the business, making it difficult to let go.
The “General” —
In this scenario, the leader’s identity is totally tied up in the business and stopping work is like death. The transition is likely to be crisis-driven, driven by poor health or financial decline.
In conclusion, succession planning is a complex process. While each business has unique characteristics, and each family has unique relationships, awareness of the patterns helps to facilitate the process. Using expert advisors can be invaluable. After all, the legacy for the family is a successful business. That’s how business owners want to be remembered!
Jean D. Sifleet, Esq., CPA
Business Attorney
978-368-6104
508-361-0916
Big firm expertise - Small firm accessibility®
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