The need to start thinking about succession planning does not typically arise until the founder and his or her spouse enter their sixties. By this time, the last of the children will usually have left home, and the couple might be trying to adjust to the vacuum produced by the empty nest.
Unresolved marital difficulties that for years had lain dormant, masked by the continual pressures of child-rearing and business start-up, may well re-emerge during this period. The death or illness of the couple’s parents often exerts additional pressure.
The thought of growing increasingly dependent on others is especially difficult for couples who place value on managing for themselves.
Retirement and the changes of status that come with it exacerbate these difficulties.
Couples at this stage resort to emotional strategies, such as denying the need to deal with succession, refusing to relinquish power, and reasserting their authority and centrality in both the family and the business hierarchies.
For the children, this is also a time of stress and adjustment, as they themselves are adapting to the many demands of the adult world, including marriage (and for many, divorce), careers and parenthood. In addition, they are eager to establish their own financial independence and autonomy at this stage in their lives.
These conditions make it unlikely that the children will be patient and supportive of their parents’ attempts to assert their power over family members. On the contrary, they may resort to displacing their own difficulties with succession onto the founder, who is viewed as the only obstacle to their own advancement within the business.
Sometimes, those among the younger generation who most eagerly want to bring about the exit of the founder experience unconscious guilt, and this can cause them to sabotage their own chances of being effective successors.
Many of the developmental challenges of this stage interfere with the family’s ability and willingness to engage in an open discussion of succession issues.
For the founder’s spouse, the succession transition creates a complex set of challenges and uncertainties. Spouses may worry a great deal about the economic and emotional future of the family, and work hard to mediate conflicts that emerge between the founder and the next generation or amongst the siblings themselves. These spouses are often supportive of succession planning and in many cases encourage the founder to confront the difficulties of facing the transition.
Other spouses may have reasons to avoid addressing the succession issue. For example, the business may be an important source of activity or even serve as part of their identity.
Such a spouse may be extremely reluctant to ‘let go’ of the many roles and duties performed over the years, from running a part of the business or managing company finances, to helping employees with their family problems and organising social activities for clients.
At times, spouses discourage succession planning because they fear that a substantive discussion of the future of the agribusiness will disrupt family harmony. In one family agribusiness, the founder’s spouse played the role of emotional guardian, constantly shielding the family from the emotionally upsetting issue of succession.
By actively discouraging any of the children from engaging in discussions about the future of the family agribusiness, she enabled the founder to continue procrastinating on developing a succession plan.
Some founders who are particularly sensitive about family issues and emotions may resist bringing in an outside consultant, because this would violate the privacy of the family and expose the family’s dirty laundry to public view.
Other, more general family factors can prevent an open discussion about succession. For example, the parents can differ significantly in their preference for the children, based on gender, age, or any other reason.
These differences can have a powerful effect on each parent’s assessment of which child should be the founder’s successor, and increase the chances that the choice will be experienced as preferential treatment.
The family’s cultural background and traditions, as well as the configuration of family coalitions and the developmental stages of the key participants, are also factors deciding on who the successor(s) will be.
Whatever the approach, choosing a successor is often an emotionally loaded affair. In addition, many family members simply feel awkward about openly discussing the future of the family beyond the lifetime of the parents. This is particularly true of economic and financial matters, such as estate planning, an open discussion of which may be viewed by either or both sides as the younger generation showing a lack of etiquette, self-interest or economic opportunism.
Anxieties about succession and inheritance may also result from the fact that the stakes – financial or otherwise – are high for the founder’s heirs.
“What people will inherit or fail to inherit is not only something of financial value, but also an occupation, a status, and a place in the community. Families fear that an open discussion of these issues might only serve to fuel invidious comparisons among the heirs that could destroy the fabric of the family,” writes Ivan Lansberg, co-founder of Lansberg Gersick Advisors.
Irrational fear of loss
Finally, the younger generation sometimes avoids succession planning because it arouses strong fears of parental death, separation, and abandonment. In one case, an entrepreneur’s adult son said “deep down inside” he did not even want to think about what life would be like in the absence of his parents. He feared that addressing succession would be so upsetting that it might actually bring about the death of his father, who, incidentally, was in very good health.
Given the anxiety that the succession transition generates, it’s not unusual for family members to harbour highly negative expectations of what would happen if succession were to be openly discussed in the family. While it’s unquestionably true that families differ in their ability to cope with the stress brought about by succession planning, such fatalistic expectations often prevent even the healthiest of families from confronting the need to plan.
Trevor Dickinson is CEO of Family Legacies, a family business consulting company.