Racing Toward the Handoff - Preparing for Your Succession
By Andrew J. Birol, President, Birol Growth Consulting
Having worked with scores of family businesses, I regularly assist in the transfer of leadership from one generation to the next. Coaching a business succession is as thrilling as watching an Olympic relay race. When the handoff is smooth, it's a joy to watch the business accelerate; on the other hand, if someone drops the baton the company struggles, often fruitlessly, to catch up with its competition.
Here are a few examples of flubbed handoffs that I have observed:
- Founding sisters, wanting to cash in on their firm's success, realize the economy has devastated their wealth. In panic, they plunder the company to salvage what they can.
- A father hands off his business to his son but hangs around the office second-guessing every decision the new "leader" makes. The company plunges into indecision and decline.
- A daughter, realizing her vision for the business is irreconcilable with her father's, grows impatient and walks out, leaving him high and dry.
Let's face it: most family businesses are equal parts family and business, and many are skewed toward the former. Decisions are often made as much for family reasons as for business concerns — particularly when it comes to succession, when expectations and aspirations often collide with reality and complex emotions.
All in the Family
So, what can you do to make sure your transition of leadership goes smoothly? Emulate the two best secrets of Olympic relay runners: preparation and commitment. Both of you, the incoming and outgoing leaders, must:
- Reconcile your personal goals with the needs of your business.
- Set, agree upon, and meet each other's expectations.
- Do whatever it takes, not just what's easy.
You've probably heard the adage, "Companies don't make decisions, people do." In the case of your family business, two emotionally, professionally, and financially intertwined individuals have to act as one. This is a tough challenge. The details of your obligation will depend upon whether you are the one stepping off the track, or the one whose race is about to begin.
Getting Ready to Hand Off the Business:
- Reconcile your personal goals with the needs of your business. Your business is your baby, but it's all grown up. You have created an entity distinct from yourself. Whether you are leaving the company in a state of survival, success, or significance, you must be willing to separate from it and let it go its own way. So make sure you have a separate way to go.
- Set, agree upon, and meet each other's expectations. Don't just pick your successor; plan what you need to do to prepare him or her for the role. Develop a series of milestones and a realistic timeline. Even Jesse Owens couldn't run a mile in 10.3 seconds, so don't set false hopes or unachievable goals that will delay the transfer of leadership, sap everyone's confidence, and keep your company in a state of uncertainty. On the other hand, you deserve a strong commitment from your successor before handing over the baton. The runner who doesn't show up for practice shouldn't get star treatment on race day.
- Do whatever it takes, not just what is easy. Understand that the business comes first. As the leader, don't ever confuse what your business needs with who your loved ones are. Just as you would when interviewing employees, determine what your successor can and will do, even if this means assessing the talents and foibles of your children. Get outside help if your company's success requires it.
Getting Ready to Run the Business:
- Reconcile your personal goals with the needs of your business. Whether you were born and raised for the role or called in at the 11th hour, be honest with yourself about why you are taking over the business. If you don't want to grow it, don't run it. Other people can supplement your missing skills, but no one can replace the passion necessary for strong stewardship. Too often, the next generation lives out a professional lifetime based on guilt, duty, and blind sacrifice. Make a conscious decision to do what you want, regardless of your last name.
- Set, agree upon, and meet each other's expectations. Running the family business doesn't have to be an all-or-nothing proposition; there are many ways to structure responsibilities, timing, investment, and ownership. The business is not yours until you have earned it in the eyes of your predecessors, employees, customers, and vendors, so be clear about defining these standards. If you can't reach agreement with the outgoing leader, move on. You and the family business are not each other's only game in town.
- Do whatever it takes, not just what is easy. Understand your Best and Highest Use® and objectively decide what you need to learn, endure, and accomplish to lead the business. Accept and accomplish company tasks that are not only critical but are the ones that only an owner would care enough to complete.
In any race, the handoff requires trust, commitment, and total coordination. When it occurs among family members, the professional, financial, emotional, and personal issues can make the baton a heavy one to pass. Before you race into the fly zone and exchange control, ensure you are both warmed up and ready. The most successful family owners have learned how to play and fight fair, and depend on communication, trust, and commitment to succeed.
Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:
© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080 , by email at firstname.lastname@example.org, or on the web at www.andybirol.com.