Warren Buffett calls it “the lucky sperm club”: the heir apparent, selected at an early age to take over the family business, regardless of ability or desire to do so.

Joachim Schwass of IMD, a Swiss business school, says that the most common characteristic of failed successions in a family business is that the family marks out the eldest son for the top job from an early age and hands it to him regardless of ability.

An article in The Economist (Dec 5, 2015), entitled “Reluctant Heirs,” points out that inheritance is a process, not an event. Key to the process is giving potential heirs a chance to prove their worth.  If that proving ground is outside the family business, it can also boost self-confidence and the individual’s reputation.

Another important element is a strong family that convinces the younger generation that taking over the family business is an opportunity, not a burden and provides an informal educational atmosphere that teaches the upcoming generation not only about how the family business works but also why it matters.

On the other side of the equation is the “letting go” by the senior generation.  Sometimes called “the sticky baton syndrome,” senior generations can hang on too long or come back to “meddle” as the next generation is trying to test their leadership skills.  Helping the exiting generation to find a new mission and meaning is critical to a smooth handoff.

So, what can you do to prevent dropping the baton?  Some key elements are:

  • A family charter or constitution
  • A family employment policy
  • Leadership training for the upcoming generation
  • Helping the exiting generation to find new meaning
  • A well thought out success plan with goals and milestones for both the upcoming and exiting generations
  • An engaged board of directors to support the process before, during and after the transition

It’s not too early to start planning for succession!


Photo credit: Quinn Dombrowski on Flickr