Transitioning CEO Leadership in Family Businesses: How to Navigate the Emotional Minefields.
One third of fortune 500 companies are family owned. At some point along the way, they’ve had to consider transitioning leadership to a non-child or non-family member. The same thing has happened to thriving smaller family businesses. Maybe your son or daughter is a fine business team member, but you think your nephew or niece would make a better CEO. You also might be looking at a new CEO who isn’t a member of the family, which is the case for about 25 percent of recently surveyed family companies. How do you navigate these potential emotional minefields?
Be transparent about things, but get outside help to manage expectations. The best solution is to have a third party consultant assess all CEO possibilities using measurement tools. Those tools can help define what each person’s leadership competencies are or their potential for developing those competencies.
Using a third party can save the family a lot of acrimony. How you are going to do this might be something to discuss and explain at a family retreat. The current CEO and their management team should outline a fair and objective process, and help identify key leadership criteria for the next leader. Then get the buy-in of the family governance council. The earlier you start, the better prepared the business will be in case of unforeseen events impacting leadership transitions.
As you evolve from a start-up to a thriving enterprise, the company will evolve and this process may have to evolve as well, so that you have the right leader, at the right time, in the right place.