Countertops Magazine Archive

Set up to Succeed: Transitioning Leadership in a Family-Owned Business

As predictably happens in the wake of economic downturns, the ensuing recovery prompts many small business owners to hand over the reins of power to the next generation and retire. Or maybe not. Although convinced they’ve placed their life’s work in capable hands—the new CEO may have grown up working in the shop—the now-former CEO may feel it necessary to hang around to help out. What happens next can drive the creative juices, and potentially the new CEO, right out the door. Young people today prefer to learn as they go. And they want to be treated as adults.

Think about it. The Millennial Generation, or Millennials as they’re known, is the population demographic coming of age at just the right time to take the controls of your business as we move past the Great Recession. This is good, because the cohort, born between the early 1980s and early 2000s, was brought up teaching themselves to master information technology, the Internet and smart phones. The previous generation introduced the remote control; this one knows intuitively how to use it.

Trouble is, those considering retirement may balk at handing over their business to one who’s not finished learning its many intricacies. At the same time, for the new leader, having mom or dad looking over their shoulder can be, well, annoying. Some liken it to a flashback to childhood. They’d prefer to communicate adult-to-adult rather than parent-to-child. And from a few retirement communities away. Intergenerational conflicts like these need to be addressed up front by clarifying and separating key ownership and CEO roles and responsibilities. And get it in writing.

The CEO should be granted complete control of business operations, albeit subject to the direction of the owner or ownership group. This gives the CEO space to operate but within the framework of the owners vision for the firm. For its part, the ownership group should be responsible to set the direction for the organization, hire the CEO and monitor his or her performance against quantifiable measures. Such separation of powers works well in large corporations. Bylaws grant the board leadership and oversight duties yet limiting the board’s role in operating the enterprise. Operational matters remain the realm of the chief executive officer. Small businesses should adopt a similar protocol.

Getting agreements in writing is important to a successful inter-generational leadership transition. But it doesn’t assure success. For all involved in a small family-owned business, nothing works better to keep the business—and the family—together than clear interpersonal communications. Communication, both formal and informal, is so important in relationships that it is wise to spend some extra time working on this aspect of the business. And don’t overlook that good listening skills play large in effectively communicating with others. 

Your high school English teacher was right: clear communication is vital to clear understanding.

About the Author

Jeff Schurman, CAE, is a leadership and organizational development consultant at Leading Causes, LLC.  He has served as adjunct faculty at the University of Pittsburgh and Duquesne University. Previously, Jeff served for a decade as the executive director of a trade association in the housing finance industry. He holds an MA degree in Leadership and Liberal Studies from Duquesne University a BS degree in Business Administration from La Roche College.