When succession can go wrong (part 2)

THE two main enemies in the survival of family businesses are patriarchal control for the senior generation leaders and a sense of entitlement for the next generation family members.

Here is a common case I am always confronted with in my coaching work: “Father consciously facilitates son’s entry but subconsciously needs to be stronger than his son. Son seeks increased responsibility and authority but finds that his father refuses to cede authority, or continues to call the shots from behind.”

In part 1 of the same title that came out in my column two weeks ago, I emphasized the importance of understanding the founder’s dilemma clouded by a three-dimensional process after a successor is designated.

READ: When succession can go wrong

In a Harvard Business Review article written by Ciampa and Watkins, the authors highlighted three distinct phases:

Phase 1: The founder feels pleased with having “done his duty” by installing a replacement. But in the same light, when the successor starts shaking things up and initiates changes in the organizational ecosystem and more often than not touches or encroaches on the culture that the father/founder painstakingly built, the founder goes to a second phase.

Phase 2: He feels a growing discomfort and gradual resistance. He is also confronted with the reality of handing over important decisions to someone who can certainly run the organization well enough but who has a different style and different priorities.

As the founder struggles to retain some control, he also discovers that having a successor requires him to share the limelight in his interactions with the board or senior executives, the employees, and the business community. Additionally, the founder begins to confront several questions and the following issues makes them awake on most nights:

What to do once they retire

Leaving a position of power is like dying a little

Personal loss of identity

Fear of losing significant work activity

Jealousy, rivalry towards, or lack of confidence in the successor

For people who have devoted all their lives to the job for many years—and who delight in their identity as owner visionaries—this can be a difficult consideration. Many founders of successful companies are anointed heroes by grateful employees and as demi-gods by their respective industries. As a result, they come to believe not only that they deserve such praise but also that they are indispensable to the ongoing success of the business.

As they contemplate leaving, their heroic self concept, as the HBR article refers to it, revolts. They cannot live without the company that defines them, and they believe that the company cannot live without them.

In this context, many founders start to ponder the meaning and extent of their legacy. They ask themselves what they will be remembered for—and many realize that it might be overshadowed, or perhaps even diminished, by what the new leader is trying to do.

As co-author Ciampa and Watkins demonstrate, “the CEO/founder feels his power in eclipse, the successor’s impulse is to push for more and deeper change. The two sides enter into more open conflict, and communication between them falls off precipitously. Indeed, it is at about this time that phase three—active resistance—begins to emerge.”

What often happens next is a turning point from which there is no easy return. The CEO/founder calls for support from his troops—mostly members of his senior team. Many are willing accomplices. They are feeling overwhelmed by the successor’s changes and have strong personal ties to the CEO. For the key executives, this brewing conflict can be an opportunity to reconnect with the CEO/Founder but with personal interest as most glaringly highlighted in the following issues:

Reluctance to let go of personal relationship with the CEO/founder; and

Resistance to change – fear of losing power or even employment.

As soon as the CEO/founder shows disagreement with the successor’s style or direction, even subtly, the senior team feels free to operate around or without the designated successor—for example, going directly to the CEO/founder with ideas or plans.

Right around the time the successor should be getting ready to move up, he is facing the fact that the CEO/founder wants him to leave.

Meeting the challenge

Leadership transitions are high-stakes situations, but the fact is, most people aren’t prepared to meet them. The first step toward becoming prepared is understanding the dynamic that under-girds a changing of the guard. But such understanding is not sufficient—action is. And that action, is the successor’s responsibility.

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