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Avoiding Conflict When Handing Over A Family Business

By: J.A.J Aaronson - Updated: 9 Dec 2012 | comments*Discuss
Business Family Family Member Family

The decision to pass your business on to a family member is one which should never be taken lightly. Many business owners are intent on maintaining family control of their organisation after they can no longer work; indeed, this is a completely understandable point of view. In fact, it is often shown that family businesses can stand the best chance of long-term success as a result of a feeling of solidarity and family loyalty to the cause.

Ill Effects of Passing on a Family Business

However, the act of Passing on a Business to a Family Member can have famously disastrous effects. Many business succession managers speak of horrendous consequences, not just for the family business but for the family and the individuals concerned. It is all too common to find examples of businesses which have floundered as a result of an ill-conceived hand-over; many businesses find themselves crippled by internal rivalries, or by the incompetence of the incoming family member, or by the ceaseless meddling of the outgoing owner. Similarly, where there is more than one potential candidate within the family, it is sadly often the case that family relations become strained to breaking point as a result of the other individual feeling hard done by. These concerns should not necessarily put you off a family hand-over, though; as has been repeatedly seen, a well-managed family succession can do wonders for a family business. The key is good Planning and Excellent Communication.

Long-term Handover of a Family Business

In the first instance, you should always remember that business hand-over is a long-term prospect. There is absolutely no sense in leaving the arrangements until the last minute, and then making a bad choice as to your business successor in the family. You should make your intentions clear from the beginning, and ensure that the family member would wish to take up the post. It may well help to go over your plans with a business succession advisor, who will be able to guide you through the particulars of the process.

One of your major concerns will be reconciling your choice with the career aspirations of existing high-ranking, but non-family business members. It is always recommended that you discuss your plans with any such individuals, and make your intentions clear from the beginning. This will help to avoid any family conflict over the business at the time of handover - which is, of course, the period throughout which it is most important to have mutual support.

Qualifications For Running a Business

You should also remember that, regardless of whether they are a family member, your potential successor must be well-qualified for the job of running the family business. As such, you should ensure that they are trained meticulously in business before they take on the role. This will help to mitigate any ill-feelings within the business, in part because they will not leave themselves open to accusations of incompetency and, similarly, because their time spent working in the organisation prior to handover will help to immerse them in the social side of the business. This will almost certainly make their entry into the organisation easier, and less of a point of contention for other employees.

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