My siblings and I worked summers in my dad’s concrete, restoration and epoxy business. It was an early introduction to business. I was a distracted teen, not very productive and my siblings and I certainly didn’t offer any engineering expertise. When my dad retired, he sold the business.
With an average life of 24 years, 60% of family businesses are not passed on to a second generation. There are many reasons for the lack of succession. However, most of the challenges are easily identified and addressed if leaders are committed to addressing both family and business issues together.
Don’t undersestimate the psychology of a successful succession
PWC’s 2021 Family Business Survey identified the characteristics of family-operated businesses that pass to a second generation: a common mission; high levels of trust within the leadership team; clear communication; and, effective decision making.
Families can also bring tensions to their businesses that cause “fault lines” to appear. According to Amy Castro and Fred Krawchuk in their 2020 Harvard Business Review article, four common fault lines are: lack of trust; lack of shared purpose; control versus care; and, cordial hypocrisy.
The 360-Degree Approach
When I engage with a family, I look for the positive and negative characteristics in each unique family and business situation. In my experience, successes and tensions happen for a reason. Getting to the root of challenges and opportunities is key to addressing family relationships as well as business issues.
Today, about a third of my coaching business involves leadership and systems coaching within family businesses. I work independently, as well as with a team of Family Enterprise Advisors comprised of Chartered Accountants, a Social Worker and Certified Life and Relationship Coach. This diversity of skills allows us to tackle all of the issues that typically arise in a family business.
Case #1: Avoidance, Accommodation and Eventual Demise
A father and his two adult children were operating a business together. Dad’s goal was to retire and cede ownership of the company to his two children. The son had a narrow role in the firm. He was known for outbursts and combative behavior which alienated colleagues and customers alike. His father and sister accommodated the behavior (cordial hypocrisy) because it was the result of an underlying mental health condition. The father eventually engaged business consultants to help with the ownership transition. But the brother’s behavior issues had become intolerable to the daughter. Instead of addressing it, the sister pushed the brother out of the business entirely (control versus care). The son was devastated by the move, trust was broken in the family and the siblings became estranged. In retrospect, dealing with behaviors directly and early, would have saved the sibling relationship and enabled the them to fulfill their father’s wishes.
Case #2: Pride, Awareness, Commitment
Another consulting engagement involved 2 company founders and their 5 adult children. The founders were aware that all 5 children wanted to move from summer work to a fulltime position after graduating from university. The business was a great source of pride to both generations of the family (common mission). When I was coaching senior executives in the firm, it became clear that there was trepidation about the next generation of company owners (clear communication) and who would do what. To mitigate risk, I suggested that the company founders lay ground work for the eventual transition (effective decision making). Each of the adult children participated in a battery of assessments (trust) to reveal their unique personalities, social perceptions, and occupational interests as well as their behavioral styles, motivations and stress behaviors. These assessments helped each family member identify their “best fit” in the company, eliminating competition and conflict. I am happy to report that onboarding of all five of the adult children has been seamless and successful.
The courage to address family and business dynamics head on will dictate succession success
Family business relationships are complex. Trauma, sibling relationships, disabilities, mental health, and communication and power dynamics inevitably work their way into a family-owned business and are reflected on the balance sheet. Consulting interventions that focus on business at the expense of the family or vice versa, mask the true source of challenges. Families that successfully transition their business from one generation to the next have the courage to address family and financial opportunities together.
About Aileen Crowne, MSW, CMF, ACC
Aileen Crowne is an accomplished mental health and wellness expert, family business advisor and certified executive coach. Aileen’s executive coaching practice focuses on working with leaders to address complex workforce challenges, unlocking professional potential and turning around individuals under-performing in their careers. Educated as a medical social worker, Aileen leverages counselling techniques, recognized assessment tools and conflict resolution strategies. She is frequently called upon to help clients understand trauma, long- and short-term disability as well as normal anxiety and depression, post-traumatic stress, or substance misuse as it impacts professional performance.
More about Aileen:
Crowne Holt & Associates http://www.crowneholt.ca/
EdmondsRose Family Business Advisors https://www.edmondsrose.ca/