Financial support and resources available for businesses impacted by COVID-19.

Support for businesses impacted by COVID-19.

Family successions: 5 tips for managing emotions and avoiding conflict

Read time: 3 minutes

Share

You’re about to retire, and the ambitious daughter you hoped would be an ideal successor announces she wants out of the business. Your brother jumps at the opportunity to run the company, but you don’t feel he’s got what it takes. Resentment boils over, and family turmoil threatens to sink your firm.

Unfortunately, this is a typical scenario at many family-owned companies. Emotional issues can create a volatile dynamic in these types of situations. In the end, those emotions can get in the way of making decisions that are good for the business.

Unresolved family issues, such as sibling rivalry, put a strain on business successions. According to the Canadian Federation of Independent Business, 33% of family businesses survive in the first generation and only 15% survive the second.

5 essential tips

Here are pointers to help business owners proactively manage emotional issues in family successions.

1. Give yourself lots of time to plan and execute your plan

You should give yourself at least two years. Family business transitions take much longer than many entrepreneurs realize.

2. Formalize your family succession plan

A formal plan will help you avoid disagreements down the road. It’s essential to maintain an open dialogue with family members as you prepare the plan and get them involved. Keeping them out of the loop can sow family discord.

3. Communicate how the plan will unfold

Once the succession plan is finalized and your successor chosen, communicate a clear action plan for the coming months and years to family members and employees. Reassure them that you will have the mentoring and training in place to develop your successor and that their interests will be considered.

4. Define roles and responsibilities

A family member might be a stakeholder in the business, but that doesn’t necessarily mean that he or she has the right to be involved in daily operations. By clarifying roles—especially in areas such as who is responsible for day-to-day management versus who has a say in the strategic direction of the company— you can avoid unnecessary misunderstandings.

5. Be sure you have clearly defined job description

Outline job responsibilities and what employees need in terms of experience, skills and education. Detailed job descriptions will help you address conflicts in the hiring of relatives. After all, you don’t want to feel obliged to hire family members to do a job for which you believe they are ill-equipped. At the same time, you shouldn’t pressure family members into accepting jobs that they aren’t suited for or interested in.

Share