‘I am running the company now – how do I stop my parents interfering?’

Handing over a company to a successor is always a tricky time in business leadership, but when the owners are the parents of the successor, the transition can have additional challenges.

A common problem is that the outgoing leaders – the parents – find it difficult to let the business go. And often for good reason; the family livelihood is likely to be invested in the company so there’s a lot at stake if it fails. But if the new leader isn’t given the space to establish themselves it can be hugely frustrating for them, as well as confusing for staff who are unclear who is really in charge.

So how do you strike a balance? ‘It’s important to have a handover plan and sort out where the accountabilities are,’ says Terri Baker, Portfolio HR Director at People Puzzles. ‘When you have parents in a business, they have valuable knowledge, but it’s important to the person taking over that they set their own mark and signal leadership.’

Define your new company roles

Terri recommends having an agreement about how the outgoing leader will be involved in the business going forward. ‘Have a conversation and follow it up with a written agreement about ways of working,’ she says. ‘Be clear on the boundaries and the specifics of the incoming and outgoing person’s role.’

Ensure clear areas of responsibility

If the outgoing leader wants to stay involved in the business, it tends to work better if their role doesn’t crossover with the new one. Many outgoing leaders of a family business become a chair or board director and give up the day-to-day management to their successor.

‘This will often work better than them having an operational role, which could cause confusion for staff if they say something different to the new leader,’ Terri explains. ‘They could work on a specific project that relates to the business but not necessarily integral to the day-to-day; such as taking a part of the existing business forward for growth.’

Create space for the new leader

Terri believes the best way to do this is for the predecessor to base themselves away from the business premises. ‘Some people find this very difficult!’ she adds. ‘But staff have to be clear that they don’t go to them for decisions any more.’ Terri also advises that they stop attending senior management meetings. ‘It really is easier for the new leader to make their mark if they don’t,’ she says.

Be as honest as you can

Initiating an open and honest conversation about where the boundaries should be is tough for a new leader and this advice might be difficult for the previous incumbent to hear. ‘They are likely to still have a say in the business financially and there may well be a degree of parental deference going on,’ says Terri.

‘Plus, if you fall out, it affects your personal life as well as your work life – so it’s difficult to have those conversations.’

Agree when support is needed

But it need not all be negative; part of that conversation should focus on the value of ongoing parental support. ‘You don’t want them thinking they’re redundant,’ says Terri. ‘If things aren’t going well you need them to be onside, so you need to agree what their strengths are relative to yours and when they can be called upon.’

Communicate the changes

Once the new roles have been agreed, it’s important to communicate them to the rest of the business – this can have a positive effect if it’s presented as opportunity to recast the business plans. ‘New leaders get energised about putting together a new strategic plan and can also re-galvanise the leadership team around it,’ says Terri.

Allow time to adjust

A change of leader affects everyone in the business so it’s worth allowing time for it – not all the changes can happen at once. ‘The new leader may well have been in the peer group of the senior team previously,’ says Terri. ‘They need to have time to re-establish themselves as the leader.’

With clear boundaries and roles established, there is an opportunity for the business to benefit from the experience of the parent with the energy of the next generation: the best of both worlds; old and new.

Terri Baker, People Director

If you would like help with succession planning, change management or developing the leaders in your business, have a look our HR Services and HR Support, and give us a call on 0808 164 5826.