When a qualified son or daughter decides not to join the family business it can cause confusion, resentment and emotional distress for the entire family. So why would an individual turn down what others perceive to be the “perfect job?”
- The long shadow. It is sometimes difficult for even the most qualified family successor to follow in the footsteps of a father or mother who has become a business “legend.” Trying to measure up to what is sometimes perceived as perfection can simply be too overwhelming for a young adult to handle. Why would a successor subject themselves to such comparisons? In such circumstances, this young person may develop a strong desire to strike out on their own, set their own goals and explore alternatives to the family business.
- A lack of real authority. When a current leader approaches retirement it is not uncommon for them to struggle with their decision. While they may look forward to more time away from the business, they get caught up in satisfying their need for both control and influence. As this tendency manifests itself, it has the potential to become a real “turn off” for a young successor. Why would they assume such a responsibility if the authority they need is being withheld? We discussed in our previous blog how this potential “deal killer” might be remedied.
- Lack of a decision-making structure. This refers to both “who” and “how” decisions about the family business will be made. Many family businesses are comprised of two types of owners: those that are active in the management of the business and passive owners who may show little interest in the business. If there is no clearly defined decision-making process there likely could be concern about the potential for meddling by uninformed passive owners in key management decisions. Why would a successor voluntarily subject themselves to such family conflict and stress?
To construct a business transition that best serves the needs of the entire family, it is important that (1) very early on the “post-retirement” issues of the current leader are dealt with and satisfied, (2) a family governance structure is put in place with mutually agreed upon guidelines that serve as a road map for business decision making, and (3) a formal training process exists that adequately prepares high-potential successors for leadership and provides them the opportunity to gain the self-confidence needed to fully discharge the responsibilities of such and important position in the family.