22 Apr Succession planning for family-run businesses: A journey that must be taken (Part 2 of 3)
“We are all faced with a series of great opportunities brilliantly disguised as impossible situations.” ~ Chuck Swindoll
Contradictions between ‘the family’ and ‘the business’:
Like unwelcome guests, disputes often arise when family members do business together. This is when the need for conflict resolution between family members is greatest. As challenging as it may seem, there’s much to be learned in resolving these conflicts, especially the seeming contradiction between ‘the family’ and ‘the business.’
Succession planning in family-run businesses involves a delicate balance between family dynamics, business objectives, and individual aspirations. Hence, family-run companies would do well to prepare for potential complications by being aware of the relational web created when family and business intertwine. Facing them with careful analysis of interests and possible pitfalls serves everyone’s best interests.
Striving for transparency while upfronting complex issues can seem scary or time-consuming, but they often make conflict and dispute resolution easier in the long run. Consulting a neutral mediator or trusted friend may help family members quickly get to the heart of their problems.
The ambitions framework:
Personal ambitions within family-run businesses can present unique challenges, particularly regarding succession planning. Encouraging Gen-Next to explore roles within the business through shadowing programs and internships fosters leadership development and engagement.
Upholding integrity and nurturing values within the organisation instils a sense of purpose and commitment, essential for sustaining the business legacy.
Sensitivity around succession:
Succession planning has historically been a sensitive topic in family discussions, often relegated to the back burner due to the fear of hard conversations and intergenerational conflicts. However, neglecting succession planning can lead to uncalled-for situations that could impact the business. Balancing the visionary qualities of the founding generation with the independence and aspirations of later generations is critical to ensuring a smooth leadership transition.
Resolving founder vs. gen-next perspectives:
The divergent perspectives of founders and the next generation present a significant challenge in succession planning. Finding a balance between preserving tradition and embracing change is essential. Combining elements of the ‘inherit’ and ‘merit’ models can set family businesses on a path to success. Recognising and addressing differences in perspective, experience, and emotional ties fosters collaboration and alignment across generations.
To summarise the typical differences in the perspective of the outgoing v/s incoming generation:
- Preservation vs. Change Orientation
- Business experience vs. a novice approach
- Loss of control and responsibility vs. gain of both
- Strong emotional ties to the business vs. weak ties
- Value judgements based on past personal efforts and achievements vs. judgements in terms of future financial opportunities and risks.
More preparation assures success
As we move into the last part of this series, stay tuned as we uncover valuable insights and actionable strategies to help family-run businesses succeed and thrive in today’s times. We’ll explore practical ways of securing the legacy, proven models of success, trust-building with employees and customers and ways to ensure digital readiness. We’ll also uncover how some of India’s most prominent family-run enterprises have navigated the complexities of succession planning and embraced innovative strategies to thrive in today’s dynamic business landscape.
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