The kids are alright - how are the seniors?
8th April 2016
There is a lot of excellent information available for everyone who is interested in helping the next generation of a family enterprise to prepare for succession. This is great news, but as was explained to me by a next generation member of one business family it is only addressing half of the challenge.
She asked me, “why is succession planning always about us?” and then continued, “let’s face it, no matter how well educated I am or how many next gen courses I’ve attended, succession isn’t going to happen until the seniors are ready to let go. So, at worst, my generation is only half of a problem.”
She has a point. We tend to overlook the challenges facing the seniors and think that succession is all about preparing the next generation. Letting go, however, is an emotionally tough task and how a family deals with it will have an enormous impact on how and when succession takes place.
We need to start offering the senior generation the same level of information and support that the next gen already enjoy. As a starter here are 3 challenges facing the seniors that could affect a succession plan.
- Financial security.
- The effect of unfinished business and new opportunities.
- Leaving a shadow.
The seniors will find it difficult to let go if they do not have their version of financial security independent of their wealth (shares and income) that is is tied up in the business.
If this situation exists, item 1 on the succession planning agenda should be how to harvest wealth from the business in order to give the seniors whatever they think is enough to enjoy the life that awaits them.
The way that this wealth is extracted will affect the business going forward, so planning has to combine personal financial planning and business planning in order to balance what the seniors need with what the business can afford.
The effect of unfinished business and new opportunities (or threats)
Reflecting on life’s achievements is a natural part of aging, but it can bring to mind things that the seniors chose not to do in the past or were unable to do, for example due to lack of time and money. This might propel the seniors into activity like buying or selling a business or other assets, developing new products, or opening up new markets, and the drive for all this action is partly the seniors’ desire to do these things now, which of course requires them to stay involved in the business.
Equally, the possibility of missing out on a new opportunity for the business can impede the process of letting go, as can what some would perceive as the threat of retirement and empty days without the buzz of being involved in the business.
These absences, whether looking back or forwards in time, can block succession. They are tough issues and I hazard to suggest that they are not going to be resolved by sending the next generation on a course, even if that includes information about the challenges facing their parents.
Leaving a shadow
How many next gen either believe or have been told, ‘you will never be as good as [name of ancestor]’?
No doubt this is sometimes true although it is not always helpful to remind the next gen of their limitations. However, seniors who are dealing with the psychological effects of the loss of status, power and recognition as part of letting-go, need to be aware of the risk of becoming a continuing presence that casts a shadow over the next generation that makes it difficult for them to create their story of success, the way that they want to do it.
These and other challenges facing the seniors cannot be solved by spending more time and money preparing the next generation to take over. At least as much effort needs to be invested in helping the seniors face up to the tough emotional and financial challenges that await them.
How about some senior generation development and training courses then?