Paul Karofsky on why transitions in family business work well only half the time; on why it’s sometimes hard for the older generation to let go; on what questions families need to ask themselves; and on why occasionally progeny shed tears of relief that they are not the right fit to take over.
Q: Generally speaking, how well do leadership and ownership transitions go in family enterprises?
A: Approximately 50-60% of the transitions go really well. The others have hitches that can vary from serious breaches of trust to confusion about how to do the transition. There’s often a lot of fear and anxiety on the part of the older generation around letting the younger generation take hold. Can the kids handle it? Can they take the company to the next level? And, if so, what am I going to do with the rest of my life? And what if the kids screw up?
Q: What types of problems do you encounter when counseling families on business succession planning?
A: I encounter older people with middle-aged “children” working in the business, and the owners either can’t or won’t let go. I encourage people in that situation to commit to a date to retire. Occasionally I run into someone who has brought their child into the business, and when the child surpasses the parent in terms of success or effectiveness, the parent feels proud, but also uncomfortable. One of them complained to me: “Look what it says about Continue reading