Family Business Leadership Succession: A Matter of the Heart
Family Business Leadership Succession: A Matter of the Heart
M ost family businesses are in challenging times. Other than the COVID19 pandemic, many families are caught in the process of transition. After World War 2, many families, especially those affected much by the war, had to rebuild their lives. World War 2 was some form of great equalizer. Many people have to begin from scratch after losing virtually everything in the war. Families needed to recover economic activities to pick up from the merits of wartime peace at last. Not a few of these families started a business for the purpose of survival and leading towards security and sustainability. While many of these family businesses did not withstand the test of time, there are family businesses today who stood tall 75 years after war. All these family businesses are at the crossroads of another changing of the guards, another milestone - for the 3rd generation to be fully at helm of the family business. Make no mistake, this succession stage is more challenging than the first transition. This is the zone of the notorious third generation curse. With the global pandemic coming into play, most family businesses now have a lot in their hands and in their minds to deal with.
Family business transition and successions are never easy. If the transition from the first to the second generation was relatively a "walk in the park" for some, the coming and ascendance of the third generation will be a different story for most. By this time the socio-economic landscape has changed a lot; the succeeding generations are educated differently; there is a new cultural milieu. There will be gaps: cultural gaps and generation gaps. Misunderstanding and conflicts in the family spark more easily than before. Hence, every family business transition and succession needs adequate preparation considering the many forces present. Furthermore, the present global virus crisis may or may not have a positive influence on transition and succession preparations of the family.
What are critical areas for handing down the legacy of the founding generations? Knowledge and skills are to be transferred, yes. Preparation in business acumen should be in the mix. Identification and grooming of the next leadership is vital. However, would all these be enough guarantee for family business perpetuation across many generations?
Is family business wealth only about money, finance and assets? What are other treasures of the family that have an impact on the life and sustainability of the business? How about the values of the founders that were instrumental in building the family business to grow and flourish? Shouldn't the traditions and ethos of the family that guided the successful first transition be preserved and handed over too?
This is Emotional Wealth. Such wealth must be preserved, nourished and properly handed over to every next generation.
Together with Emotional Wealth is the preparation and transition of Emotional Leadership!
The next set of family business leaders must be equipped with Emotional Leadership. It is a process that leaders use to influence their followers toward a common goal. In the business of influencing emotions plays a crucial role. But a leader cannot give what he does not have. How can one manage the emotions of others for the best interest of the business and the family, when the leader cannot manage his own emotions!
Emotional leadership has direct correlation with Emotional Intelligence. Developing effective emotional leadership means developing a higher emotional IQ.
Emotional intelligence has two facets:
These competencies in Emotional Intelligence will help the leaders navigate the ups and downs and business, but more importantly, manage better family member expectations and sustain stronger family relationships. Strong emotional leadership will prepare the family leaders to face and handle more effectively inevitable family conflicts.
The mind of the leader will bring the family business to new heights but it is the heart of the leader that will bring the whole family together in unity to that wonderful destination!
