Earning Trust and Taking the Reins: Navigating Succession in Family Businesses

by Jean Santos | Apr 11, 2024 | Family Dynamics

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Navigating succession in a family business is a complex and delicate process, typically fraught with challenges and tensions. For rising generations within the family business, gaining the trust and confidence of the generation in control is essential to successfully assuming leadership and ownership roles. Proving readiness for such responsibilities requires more than just competence and qualifications—it demands a deep understanding of the family dynamics, effective communication, and a commitment to the long-term success of the business. In this article, we’ll explore what rising generations need to do to earn the trust of the current generation in control and demonstrate their readiness to take on leadership and ownership in the family-owned business, with scenarios illustrating strategies for rising gens to consider implementing.

Understanding the Family Dynamics

Before rising generations can earn the trust of the generation in control, they must first understand the intricacies of the family dynamics that influence decision-making within the business. Family businesses are often characterized by complex interpersonal relationships, emotional ties, and generational differences that shape attitudes towards succession and ownership.

Successful rising generations take the time to listen and learn from the experiences and perspectives of the generation in control. They actively seek to understand the values, traditions, and vision that have guided the family business to its current state. By demonstrating respect for the legacy of the business and a genuine interest in preserving its heritage, rising generations can build rapport and credibility with the current generation.

Scenario –  Sarah, a member of the rising generation, recognized the importance of understanding her grandfather’s vision for the family business. She spent time engaging in meaningful conversations with him, listening to his stories about the company’s history, and gaining insight into his values and priorities. Through these interactions, Sarah demonstrated her respect for her grandfather’s legacy and earned his trust by showing a genuine commitment to carrying forward his vision.

Demonstrating Competence and Commitment

Earning the trust of the generation in control requires rising generations to demonstrate competence, professionalism, and a strong work ethic. It’s essential to show that they have the skills, knowledge, and capabilities necessary to effectively lead and manage the business.

Successful rising generations proactively seek opportunities to develop their skills and expertise, whether through formal education, professional development programs, or hands-on experience within the business. They take initiative, tackle challenges head-on, and consistently deliver results that contribute to the business’s success.

Moreover, rising generations must demonstrate a long-term commitment to the family business and its continued growth and prosperity. They show dedication to the business’s values and goals, prioritizing its interests above personal gain or ambition.

SCENARIO –  James, a member of the rising generation, recognized the importance of gaining practical experience outside of the family business to broaden his skill set. He pursued internships and employment opportunities in relevant industries, gaining valuable insights and expertise that he could apply to the family business. Upon joining the family business, James demonstrated his commitment by spearheading initiatives to modernize operations and expand into new markets, showcasing his leadership potential and dedication to the business’s success.

Building Effective Communication and Relationships

Effective communication is essential for building trust and fostering positive relationships between rising generations and the generation in control. Clear, transparent communication helps bridge generational divides, align expectations, and mitigate misunderstandings or conflicts.

Successful rising generations prioritize open and honest communication with the current generation, actively seeking feedback, input, and guidance. They listen attentively to the concerns and perspectives of the generation in control, demonstrating empathy and understanding. By maintaining regular communication channels and keeping stakeholders informed of developments and decisions, rising generations build trust and foster a sense of collaboration and mutual respect.

SCENARIO –  Emily, a member of the rising generation, recognized the importance of building strong relationships with her older relatives who were still actively involved in the family business. She regularly scheduled meetings and informal gatherings to connect with them on a personal level, discussing both business-related matters and personal interests. Through these interactions, Emily fostered trust and camaraderie with the generation in control, laying the groundwork for future collaboration and succession planning discussions.

Proactively Engaging in Succession Planning

Proactively engaging in succession planning is critical for demonstrating readiness to assume leadership and ownership roles within the family business. Successful rising generations recognize the importance of planning for the future continuity and sustainability of the business, even if the current generation may be hesitant to discuss or formalize succession arrangements.

Rising generations can initiate conversations about succession planning by approaching the topic with sensitivity, empathy, and a focus on long-term strategic goals. They collaborate with the generation in control to identify potential successors, assess their strengths and development needs, and establish clear roles and responsibilities for transitioning leadership and ownership.

Moreover, rising generations may leverage external expertise, such as family business advisors or consultants, to facilitate succession planning discussions and provide objective guidance and support.  Successful rising gens also focus on life after they are no longer working in the business for the generation handing over their leadership roles.

SCENARIO –  David, a member of the rising generation, recognized the need for formal succession planning discussions within the family business. He initiated conversations with the current generation, emphasizing the importance of planning for the future continuity and success of the business. David worked collaboratively with family members and external advisors to develop a comprehensive succession plan that addressed key leadership transitions, ownership transfers, and governance structures. By taking a proactive approach to succession planning, David demonstrated his readiness to assume leadership responsibilities and earned the trust of the generation in control.

Earning the trust of the generation in control and proving readiness to take on leadership and ownership in the family-owned business requires rising generations to demonstrate understanding, competence, commitment, effective communication, and proactive engagement in succession planning. By building strong relationships, developing their skills and expertise, and prioritizing the long-term interests of the business, rising generations can navigate succession challenges successfully and pave the way for a smooth transition of leadership and ownership within the family business.

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Jean Santos is the President of Business Consulting Resources, a company that Jean and her husband and co-founder created over 40 years ago to help family owned companies achieve to their full potential and truly thrive.

About the Author

Jean Santos is the President of Business Consulting Resources, a company that Jean and her husband and co-founder created over 40 years ago to help family owned companies achieve to their full potential and truly thrive.