Business Transition Planning

The Family Business Patriarch Breaks His Silence and Asks: “Why Wouldn’t we do That?”

by Chuck Meek

Even if you don't live in Illinois, you may have heard how dire the prognoses are for the state's five pension funds.  In this Sunday's "Chicago Tribune" was written an Op-Ed piece by Dick Ingram, Executive Director of the Teachers' Retirement System, the biggest of them. He took on the role two years ago, and since then has been speaking inconvenient truths to power: this notoriously gravely mismanaged pension fund today faces steep challenges that, unless overcome, will drive it to premature extinction. Hundreds of thousands of retired and active teachers will be cheated out of their promised retirement income by the pols and union bosses who for decades abused long term trust for short term votes.

As I read the piece, it struck me that in certain ways the situation is analogous to many family business transitions.  No, I don't contend that past patriarchs have abused the family enterprise, purposely stacking the deck against future generations. But by their inability or unwillingness to communicate with future leaders and stakeholders, they risk premature extinction of their family business.   

It's Not About Us

I'll paraphrase Mr. Ingram in a new context; he eloquently writes about the pension problem in a way that sounds eerily like conversations I have had with families.  Silence or miscommunication between generations of business owning families usually breeds misunderstanding and missed opportunities for a smooth, productive transition.  After his anger subsided, a once prickly patriarch asked "This isn't really about me, is it?  It's about my daughter."  The daughter who hopes to, and they all hope will, take on increasingly responsible roles - eventually taking the reins from her father and leading her siblings, cousins, and future generations to even loftier heights.  But unless this transition goes smoothly, she won't get off the ground.  "Can we fix it?" he asks.  Yes, I explained, we can.  But the solution may be painful and involve sacrifice.  He thought a moment more and posed a perfectly reasonable question:  "Why wouldn't we do that?" 

The Schizophrenic Patriarch

Here's why I think some don't.  Business patriarchs and family patriarchs share a title, but not necessarily traits.  The stereotype patriarch of business is a powerful, controlling, unemotional autocrat. In a family, the patriarch is a protective, loving benevolent leader who
is always in control.  How many family business patriarchs can be both?  But family business transitions seem to require the best of both personae, and finding them both in one person is exceedingly rare. For those many patriarchs who don't possess both, the common reaction to the thorny issues of transition is fear:  fear of losing control, fear of the unknown.  And rather than risk failure because of a decision without enough information, he sticks to what got him here:  his bold, mile-wide independent streak.  At times over the years it has cut a wide swath to be sure, leaving carnage in its wake. And that was OK, when it was business. But will it still be OK when the carnage is family?

Speaking truth to power -especially inconvenient, uncomfortable truth - is always hard, but as Mr. Ingram wrote, we are at our best when we think of the future instead of the present, especially when the present is challenging and difficult.  When we sacrifice for the next generation, we do great things for today.  Who among us would not strive, in lean times and good times, to make the future better for our children and grandchildren?

That is how we have to approach family business transitions.  It is not about us, it is about those who come after us. They might not even know or appreciate the sacrifice made for them, but what does that matter?  Business owning families can transition generational leadership - if we focus on the future.

Why wouldn't we do that?