Handing over the reins to a successor is always a tricky time in business leadership but when the successor is the previous owner’s offspring, the transition can have additional challenges.
A common problem is that the outgoing leader – the parent – finds it difficult to let the business go. And often for good reason; the family livelihood is likely to be invested in the business 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 a parent 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 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 regalvanise 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.