Why do so few family firms successfully make the transition between generations?
The research is actually much clearer on what those who survive have in common. So we tend to take a positive spin. Those who transition well have an appropriate governance structure. They are operating with a board of directors that includes outsiders. These outsiders are business people who understand business challenges. Successful family businesses also do strategic planning. That means the financial expectations of the owners are well understood. Then we can turn to management and ask them what they need to do to fulfill those expectations and, at the same time, protect the family’s values. That sends a clear message to the next generation: “If you want to be CEO, you need to know how to do these specific things.” Then the next generation knows what they need to do, and it becomes self-evident who’s going to be the next CEO. The whole process slays a lot of the bogeymen. Q: How do you resolve conflicts between kids who are working in the company and those who are not, but are stil
