When the fall is all that’s Left, it matters a great deal.
Family businesses fail, fall down.
Bad Succession Planning? A PricewaterhouseCoopers survey listed 10 reasons why Family-Owned businesses fail.
1. Poor succession planning.
2. Lack of trusted advisers.
3. Family conflict
4. Different visions between generations.
5. Governance challenges.
6. Exclusion of family members outside the business.
7. Unprepared next generation leaders.
8. Poor strategic planning.
9. Not using their ‘families’ advantage.
10. Fundamental principles of business are not applicable.
The Lion in Winter is a 1966 play by James Goldman, depicting the personal and political conflicts of Henry II of England, his wife Eleanor of Aquitaine, their children and their guests during Christmas, 1183. There is one scene where Richard and his sons are in prison.
Prince Richard: [the sons – in the dungeon – think they hear Henry approach] He’s here. He’ll get no satisfaction out of me. He isn’t going to see me beg.
Prince Geoffrey: My you chivalric fool… as if the way one fell down mattered.
Prince Richard: When the fall is all that’s left, it matters a great deal.
According to a number of experts, just over 30 percent of family businesses survive into the next generation. Only about 12 percent survive into the third generation and less than three percent continue to exist beyond that. Nat Wasserstein an attorney from New York writes,” The death of a company founder creates many challenges for the surviving family and business. The newly widowed faces the most dramatic upheaval possible in her household and very often assumes the new responsibility of running the family business. She possibly held a position in the company prior to the founder’s death and has knowledge of the day-to-day business activities, or she might know very little about what makes the business run. In either case the position of leading the company is a new challenge in difficult circumstances.”
Many businesses, particularly entrepreneurial businesses, are driven by the personality and business acumen of the founder. When that individual dies, it’s important for the company to find a new equilibrium with the surviving spouse at the helm. Reestablishing client relationships, defining the chain of command and even ensuring day-to-day operations continue without interruption are all important during the transition to new leadership.”
One way to avoid the crisis is to plan, and discuss what if…planning eliminates the Alexander Haig, moment. In 1981, following the March 30 assassination attempt on Reagan, Haig asserted before reporters “I am in control here” as a result of Reagan’s hospitalization, indicating that, while President Reagan had not “transfer the helm”.
A key to successful planning, succession planning must rest with the current leader. One of the most critical points in succession planning, to aviod a Family Business Fail, is to ensure the founder entrepreneur know it’s their job to plan for an orderly succession. Many leaders at fortune 100 firms are graded in performance reviews on whether they’ve retained and advanced their most talented employees. Leadership succession is too important to ignore, and demographic trends make addressing the issue even more compelling today. When the fall is all that’s left it matters a great deal.