“I still want to take the lead, but I also want to empower my children to make major decisions. Is it possible to do both — to step back but still be involved without overriding their decision? What if they commit major mistakes?”
The statement described a founder in a dilemma as he goes through an extremely difficult period of change. He is forced to a corner where he has no other choice but to decide—to hold on, to let go or to share power with his children. One day it suddenly occurs to this “emperor” that the time has come to start thinking about retiring as the owner and founder of the family enterprise but many fears prevent him from doing the right thing and these are the following:
a. Fear of the unknown
b. Fear of losing power
c. Fear of failure of the next generation and
d. Fear of doing nothing when he decides to step back
According to Prof. Joseph Tapies, “Fear in the mind of a founder is one of the greatest obstacles in planning for succession in a family business.” In an interview by James Beech of Campden FB, Tapies added important points: “If the generation in command doesn’t trust the next generation, then they don’t give them opportunities to learn and prove otherwise. A good idea here would be to invest time and energy into incorporating next-generation members into the company, as well as providing them with structure and support to help their development.” The owner’s unfounded fears reinforced by a mindset that he is indispensable creates panic, agitation and anxiety and thus becomes a real challenge for leaders to move forward. He may have set a retirement timetable but knowing when to do it is quite different from knowing how to do it. The latter poses the most daunting task.
In my experience helping families navigate through a challenging succession process, eight out of 10 business owners have time and again expressed their desire to hand over leadership—but are notoriously stalling and delaying the inevitable. This procrastinating behavior is a complete turnaround from what entrepreneurs typically do when there is a problem—fix, resolve and waste no time in confronting issues related to business. When they are indecisive, the family struggles. Out of sheer exasperation and dismay, some members literally jump ship (leave the company, migrate or set up their businesses) while others will just stay and suffer in silence.
This “do nothing” period marks a sensitive phase in the life of the family enterprise. Leaders resisting this “power sharing mentality” are going through some form of psychological turmoil. The fear of the unknown (what do I do next?), the spouse constantly nagging him to allow the offspring to step up, the dispirited, confused adult children (“glorified” managers that are economically beholden to the parent/founder) and the order taking employees having to deal with so many family members issuing conflicting mandates. Put it this way, founders and business owners have never experienced life outside work and they are scared of what it is like on the other side of the fence.
Reinforcing these unfounded fears, is their paranoia of what they incessantly hear from their friends: Will they still be respected when they relinquish and share power, will their money be taken out from them, will they beg for it, will they be cut off by their children from the business that they cared for and nurtured since its inception? To them work is life and life is work; it is as natural as drinking water and for many owners, it is even more important than family and friends. Anything in between is a distraction. These people have never imagined what retirement is nor have a picture of how to step back. Out of survival, many owners started working in their teens and now that they are in their 60s and 70s, stepping back is unthinkable as they are absolutely clueless as to what their future holds if they stop working. They dread the feeling that the business will collapse without them holding the fort and if they are not around to lead the charge, who is capable of making those critical decisions? They also use the pandemic as an excuse to delay the succession planning. All these fears can be avoided if leaders start planning now.