Collaboration is the key to a successful transition of the Family Business

Transition of the family business does not need to be a fight.

Succession of a Family Business from the senior generation to the next generation must be planned for as a collaborative transition, not an event according to Steve McClure, a principal and consultant with the Family Business Consulting Group.

Traditionally business families pass the business to the next generation by ‘cold turkey’, or ‘delay and delay and delay’, or ‘here gone here gone’ which often ends up in two generations fighting for control. After 15 – 20 years the family members, employees, and customers are frustrated and the business suffers. McClure stated the model of leadership for the next generation will not work if it is modeled after the ‘way Dad did it’. As the business founder, he or she was the undisputed boss; with the next generation there may be siblings or cousins that need to learn to new processes and where there will not be one undisputed boss.

One way of determining a new model for leadership of the family business is to see what has worked for other families in similar generations and family structure. The transition must be approached as a long-term balancing act with the gradual transfer of power, roles, and responsibility. This long time frame does not mean there will not be issues, but the next generation will be able to tap the resources of the senior generation.

The secret of collaboration, according to McClure, is to determine what contribution each generation can make to build the family business and legacy. By collaborating on a period of continual adjustment and working together, the family can also focus on the fundamentals of running the business. A very positive tool for this transition is ‘invited accountability’ by way of an independent Board of Directors to help maintain role changes for family members.

According to McClure, the transition of the family business should be a time that yields gratitude and respect of the senior generation.

The Network of Family Businesses would like to thank Steve for presenting the on-line seminar titled:Two Generations Working Together to Transition the Family Business.