When Gen 1 Won't Let Go of the Family Business
Are you the next-generation leader ready to take the reins of your family business, only to find the current generation won't let go? Then this episode is for you! Andrea and Michelle tackle the number one challenge facing family businesses: navigating the transition of power.
Discover the unspoken fears and habits that hold the current generation back, from losing their identity to doubting the next generation's readiness. Learn the frustration of Gen 2, who feel disrespected, un-trusted, and stuck in a holding pattern. We reveal the ripple effect on employees, the chaos of "damage control" when Gen 1 swoops back in, and why open, structured conversations are vital.
This episode provides actionable strategies, including establishing clear decision-making authority and fostering a "consultant" mindset for Gen 1, ensuring a smoother, more respectful transition for your family's legacy.
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Family Business Succession: When Gen 1 Won't Let Go
Are you the next generation ready to lead your family business, but the current leaders just won't let go? This is a familiar scenario for many, and it often creates a complex web of emotions and challenges. Family business succession is a common and often deeply personal journey that requires careful navigation to ensure the continued prosperity of the enterprise.
At Revela, we believe that successful family business succession is built on collaboration, not contention. In a recent episode of The Leadership Hustle podcast, our experts, Andrea Fredrickson and Michelle Hill, jumped into the strategies for a smoother handover. Hear about their insights, helping both generations understand each other's perspectives and providing actionable steps for successful legacy planning for your business.
Understanding the Current Generation's Perspective
For the leaders who built the business, letting go isn't always easy. It's not always intentional; often, it has to do with deeply ingrained habits and overcoming resistance to change.
The first generation may have blind spots, not realizing they're still influencing daily operations, even with the best intentions. As Hill observed, "It's the habits, they don't even realize they're getting in the way they...feel like they've let go and they truly haven't."
Fredrickson noted that without realizing it, first-generation leaders can inadvertently shift the company's course. A simple comment, like "I'm not in love with that," can be perceived as a decision, with everyone falling in line. This illustrates why clear succession planning strategies are essential to prevent unintended control.
Another significant factor is a lack of identity because the business is their life's work. As Fredrickson noted, "...that first generation person doesn't know who they are. If they are no longer the CEO or no longer the president." They've dedicated their lives to building something, and the idea of stepping away can feel like losing a part of themselves.
And, sometimes, what's verbalized as "not quite ready" from the first generation can stem from an unspoken lack of trust or insufficient role clarity for the next generation. It’s not necessarily a direct accusation, but more a reflection of their own anxieties about the business's future without their constant direct involvement.
The Unintended Consequences
The first generation’s actions, even with good intentions, can have significant impacts on the second generation and the wider team. They might unintentionally undermine decision-making authority. A casual comment from generation one can inadvertently shift direction, leading to confusion among the team.
Employees might bypass the second generation and go directly to the first for answers, hindering experience and authority. When considering the employees' perspective, Fredrickson pointed out that they often perceive the second generation as incapable of taking full control, lacking trust, or not deserving of respect because they must constantly defer to the first generation. This not only erodes the second generation’s standing but also denies them the critical experiences needed for a successful leadership transition.
When the first generation "swoops back in" after being away, it can create duplicated efforts and frustration. As Fredrickson explained, "Gen two has to do damage control. And so the conversations…when did that get decided? And when was that? It's like, when were you going to tell me?" This constant back-and-forth ripples chaos throughout the organization.
Understanding the Next Generation's Perspective
While the first generation faces their own challenges, the next generation experiences a distinct set of frustrations that often go unaddressed in the context of family business succession. A common sentiment among the second generation is "They don't trust me."
This can lead to second-guessing their own decisions, creating an over-reliance on the first generation, even when they are perfectly capable of making independent choices. This directly impacts their ability to exercise their decision-making authority.
The second generation can feel a profound sense of deflation and disrespect. They might feel like they're pushing through until the current generation retires. The thought of "If I worked elsewhere, I'd be given more responsibility" often crosses their minds.
Fredrickson noted, "They start thinking well, until they retire until they go to the next thing until they do. It's like it's until then…it's just going through the motions and it feels really, really disrespectful." This feeling of being stuck is a significant hurdle in any leadership transition.
Being excluded from key conversations is another issue, which means the second generation isn't gaining the necessary experience to lead effectively. They are often out of the loop on critical decisions, which further hinders their development and ability to step into full leadership.
Succession Planning Strategies for a Smoother Leadership Transition
A successful leadership transition hinges on proactive and well-defined succession planning strategies. This isn't just about handing over the reins; it's about setting the stage for continued growth and prosperity in your family business. There are a few key approaches you can take that can help both generations navigate this crucial phase with confidence.
Shift Your Mindset
Frame conversations around legacy planning—building and securing the business's future. This concept resonates deeply with the first generation, as it acknowledges their contributions and shifts the focus from their departure to the continuation of their life's work. Fredrickson highlighted, "I don't know any one gen one group right now that isn't excited about legacy. That's a great word for them." This positive framing is crucial for overcoming resistance to change.
Create Crystal Clear Communication
Our guiding principle is "Unclear is Unkind." This emphasizes the need for direct and unambiguous discussions between generations during family business succession.
Defining Decision-Making Authority: Clearly delineate who is responsible for what decisions (e.g., CEO vs. President, Chairman of the Board). This requires moving beyond vague responses like "it depends" to concrete answers.
Scheduled "On the Business" Meetings: Implement regular, dedicated meetings (e.g., monthly, off-site) to discuss the transition, not just day-to-day operations.
Establish Clear Roles
Visualize the first generation transitioning through Revela's pyramid. This provides a clear path for role clarity.
Technician → Management → Leadership → Consultant
In the consultant role, generation one provides insights and asks questions ("Any blind spots I should pay attention to?") but does not make decisions. Generation two maintains decision-making authority. This structure allows the first generation to stay involved without undermining the second generation.
Build the Second Generation’s Confidence
Generation one should actively provide positive feedback and acknowledge the second generation’s good decisions and thought processes. This is crucial for building confidence. Hill urged, "Let them know. Hey, I noticed in this meeting or I noticed this, that you did this really well. I'm really proud of you for that decision." This positive reinforcement helps with overcoming resistance to change on both sides.
Create Transparency with Employees
Both generations must be on the same page about the leadership transition and communicate changes proactively to the wider team. This reduces employee uncertainty and prevents a lack of respect for the second generation. As Hill highlighted, "It's making sure we're on the same page…Because let's not pretend, they see stuff. They hear stuff and then they make assumptions."
Consider a Third-Party Facilitator
A neutral third party can be incredibly beneficial for an effective succession planning strategy. They offer an objective perspective, helping to bridge communication gaps and address sensitive issues that might be difficult for family members to tackle on their own during a leadership transition.
Neutrality: A third party helps both generations avoid interpreting conversations through personal biases ("dad ears" or "son/daughter ears").
Clarity Provider: They can identify areas of ambiguity and ask clarifying questions to ensure true role clarity and understanding.
Keeping Momentum: A facilitator can help keep the succession planning moving forward, aiding in overcoming resistance to change and potential roadblocks. Hill described this role as a "...referee…in a way, right? That's helping balance things out, but also stopping. Let's regroup…What was said here? Let's get clarity. Okay, let's get back on track now."
Securing Your Family’s Legacy
Family business succession hinges on understanding both generations, fostering clear communication, and a shared vision for legacy planning. Approaching this leadership transition with empathy and collaboration can make all the difference, ensuring the business thrives for years to come.
At Revela, we believe a well-planned leadership transition isn't just an exit; it's a powerful growth opportunity for your entire family enterprise. To gain more practical insights into effective succession planning strategies and overcoming resistance to change, listen to the rest of The Leadership Hustle podcast!
About the Hosts
Andrea Fredrickson
Andrea Fredrickson is a thought leader and consultant at Revela, an organization based in Omaha, Nebraska specializing in the development of leaders, culture alignment, and business strategy for private and family businesses of all sizes. Revela is one of the region's most experienced thought challengers, helping individuals and companies find their greatness. Andrea has built an amazing team by believing that fundamentally people want to be successful and become better versions of themselves.
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Andrea has degrees in education, management, and business. She is the author of Insight Unseen; How to lead with 20/20 business vision. She helps people see things differently, self-reflect, and never stop looking for ways to improve themselves on a personal and professional level. Andrea has spent more than 30 years researching and developing methods to help people communicate and lead more effectively.
When Andrea isn’t working with clients, you’ll find her spending time with her family & friends and making memories by exploring new cities.
Michelle Hill
Michelle Hill is a master facilitator and coach at Revela, an organization specializing in the development of leaders and aligning the culture of privately held and family businesses of all sizes. Revela is one of the region's most experienced thought challengers, helping individuals and companies find their greatness.
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An ambitious leader, Michelle has the natural ability to create forward momentum to build teams and get results. She inspires others to look within themselves and to challenge the status quo. She helps create high-performing environments. Michelle brings a diverse background: operations, employee development, and sales in the steel, hospitality, and consulting industries.
Outside of work, you will see her competitive side engaged in her daughter’s sports and ISU athletics. She loves life, her four-legged companions, and captures all the moments through her camera’s lens.
TRANSCRIPT
Andrea Fredrickson: Are you part of the next generation who's looking to take over leadership of your family business? In this episode of The Leadership Hustle, we'll discuss strategies so we can guarantee a smoother transition. Hello, and welcome to The Leadership Hustle for executives whose companies are growing fast and need leaders who are ready. Welcome back to The Leadership Hustle. I'm Andrea Fredrickson. All right, and we're here today.
Michelle Hill: and I am Michelle Hill.
Andrea Fredrickson: Talking another episode on the family business. We decided that we were going to sprinkle a few of the family business specific topics into our routine here. So today we're bringing up a subject that I would say is the number one question that we get from family members. And it's always Gen 2 that comes to us and says, what do do when the current generation typically Gen 1 is in charge and they won't let go. I always had to go, funny you should ask. Because it's almost always Gen 2 is ready to take over. They've got the title, they've got a team they've created, they've got expectations that are going on, and what they're doing is they're managing but waiting to lead.