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Setting the stage, identifying successors and addressing conflict

by:  Gerald Pulvermacher, Ph.D, Senior Advisor

Change, be it large or small, can be a source of tension in an organization.

Levels of conflict can vary from mild strain to heated warfare, severely affecting family relationships and business sustainability. Whether it involves introducing a new process or implementing a succession plan, decisions need to be carefully navigated to minimize fallout.

In this article, Gerald Pulvermacher, Senior Advisor at PulvermacherKennedy & Associates (PKA), outlines some of the common conflicts that arise during the selection and transitioning of a successor. By highlighting key areas and identifying potential mitigation measures, he provides patriarchs and matriarchs with a helpful starting point for recognizing and resolving conflict around succession.

Chess pieces

Setting the Stage for Sucession

The most important competency that patriarchs need to ensure a smooth succession is to mentor the next generation effectively. Mentoring can develop individuals and bring about change both in the business and beyond. (LIU, 2019). Balancing business needs with family dynamics during the succession process requires leaders with well-developed emotional intelligence. The mentorship process needs to be conducted in a frank and honest manner. Not explicitly voicing concerns, hoping that a problem will go away rarely yields positive results. If left to self-resolve, issues often worsen. By providing honest, fact-based feedback through the mentoring process, patriarchs can ensure that potential successors have a realistic view of their strengths and development areas. This approach prevents future successors from operating under an idyllic picture of their readiness to run the company.

Identifying a successor

An important factor when choosing a successor is establishing what qualifications and experience you expect them to have. However, making that decision based on academic merit or IQ alone could have a potentially disastrous impact. Business success requires having both good management savvy and excellent interpersonal skills.

A key characteristic to look out for in a potential successor is whether they have an appetite for constant learning. Do they have the humility to recognize that they may still have a lot to learn? Development is an ongoing process, and business leaders need to constantly adapt and draw on the skill and knowledge of those around them. An important factor when choosing a successor is establishing what qualifications and experience you expect them to have. However, making that decision based on academic merit or IQ alone could have a potentially disastrous impact. Business success requires having both good management savvy and excellent interpersonal skills.

Dealing with Entitlement and Strained Family Relationships

Conflict around succession occurs amongst next-generation family members where there are underlying issues impacting family cohesion. Friction within a family organization is often a result of the absence of a shared purpose (Castoro and Krawchuk, 2020).  Each potential successor may believe that they can run the business and pursue their agenda. Further complications arise from factionalism when spouses or other family members pick sides, believing their candidate is entitled to a role.

Business decisions may be a source of conflict that impacts family relationships, but the reverse also happens. Family tension, which has no business basis, can end up affecting the organization. Bringing in a neutral party, with expertise in family succession planning, can maintain objectivity and facilitate clarity in decision-making.

Transitioning and Senior Non-Family Members

When next-generation leaders transition, the way they engage with senior non-family members inevitably changes. Non-family members can add tremendous value to an organization (Fernández-Aráoz, Iqbal and Ritter, 2015) and are more readily able to distance themselves from internal family tensions. However, if your goal is to avoid resentment escalating, the change of relationship resulting from succession needs to be handled sensitively.

For more than 40 years, PKA has worked alongside respected business leaders, helping navigate the process of transitioning their business to the next generation.

To find out more about how we can assist your business, be sure to reach out.

 

References

Castoro, A. and Krawchuk, F., 2020. 4 Tensions in Family Businesses — and How to Work Through Them. [online] Harvard Business Review. Available at: <https://hbr.org/2020/05/4-tensions-in-family-businesses-and-how-to-work-through-them> [Accessed 12 April 2021].

Kennedy, L. and Pulvermacher, G., 2020. Succession Planning – Building Business Legacy While Maintaining Family Relationships | PKA. [online] PKA. Available at: <http://pulvermacherkennedy.com/succession-planning-building-business-legacy-while-maintaining-family-relationships/ [Accessed 12 April 2021].

LIU, S., 2019. Why the Power of Mentoring can Change the World. [online] Ted.com. Available at: <https://www.ted.com/talks/shirley_liu_why_the_power_of_mentoring_can_change_the_world> [Accessed 12 April 2021].

Fernández-Aráoz, C., Iqbal, S. and Ritter, J., 2015. Leadership Lessons from Great Family Businesses. [online] Harvard Business Review. Available at: <https://hbr.org/2015/04/leadership-lessons-from-great-family-businesses> [Accessed 12 April 2021].

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