A new study titled Don't Lock Me Out: Life Story Interviews of Family Business Owners Facing Succession, by Alexandra Solomon, et. al,1 analyzes life-story interviews obtained from 10 family business owners regarding their experiences with the goal of understanding the complexities of business succession. Succession planning for family business owners has two primary components: business and human.
A new study titled “Don't Lock Me Out: Life Story Interviews of Family Business Owners Facing Succession,” by Alexandra Solomon, et. al,1 analyzes life-story interviews obtained from 10 family business owners regarding their experiences with the goal of understanding the complexities of business succession.
Succession planning for family business owners has two primary components: business and human. Business components relating to successful family business succession include having a proper business strategy, effective management succession and a tailored estate plan, including a buy-sell agreement. These business factors occur within the domain of human relationships. In particular, the human factors associated with existing owners constitute an important predictor of the success or failure of family business succession.
According to the authors of the study, although research has been done on how the leadership styles of owners correlate with succession (for example, the “steward,” whose leadership style is to watch over a business, has a better chance of succession than the “monarch” or “general” whose style glorifies the power of leadership), there's little research focusing specifically on why owners won't “let go.” The study's purpose is to remedy that gap in family business literature.
Participants were asked to describe their thoughts and feelings about the following succession themes distilled from a review of existing succession literature: creation and evolution of the business, the meaning of the business, the family of origin, the involvement of spouses and children, family/business interface, issues of legacy, the business and the larger context, choosing a successor, gender issues, retirement and organizational issues.
The authors found that the most significant influence impacting the success or failure of succession was called “the business within.” Repeatedly, participants approached the topic of succession not by describing the business “out there,” but rather by an internalized construction of the business; the so-called “business within.” The concept of the business within is made up of two separate, but related concepts: differentiation and trust. Differentiation refers to how connected or attached participating owners were to their businesses. Trust refers to how little or how much participating owners felt a sense of control over the future, while valuing and accepting outside influences. The authors categorized the participants as low-differentiation (very connected) or high-differentiation (less connected) and low-trust or high-trust, as these qualities impacted in meaningful ways how owners approached succession.
Low-differentiation participants exhibited: (1) attachment to the business, (2) fusion of personal and business identities, and (3) control as personal expression. First, although participants across the board commented on the massive time, as well as the financial and emotional resources demanded by their businesses, low-differentiation participants exhibited a more entangled emotional and psychological attachment. Second, at times, low-differentiation participants' business attachment became so powerful that participants' identities seemed fused with the business. Third, low-differentiation participants seemed to fuse their identities with the business by exercising a very personal control over it. The seduction of personal control seemed so powerful that the participants were loath to give it up, for fear, it seems, of losing themselves.
In contrast, high-differentiation participants didn't express the same entanglement with the business as the low-differentiation participants did. For example, high-differentiation participants described control as simply a necessary part of business. A more clearly differentiated boundary between their business and their personal self-concepts seemed to facilitate high-differentiation participants' comfort with relinquishing personal control. As such, the authors speculated that the high-differentiation participants will more easily be able to hand over control of their businesses, in comparison to the low-differentiation participants, whose self-concepts were more intensely attached, or even fused, with their businesses.
Regarding the role of trust, the authors found that although businesses naturally require owners to be discerning in whom they trust, trust varied greatly among the participants. Trust themes emerged in three domains: (1) participant's worldview, (2) co-worker relationships, and (3) presence of rules.
First, the responses of low-trust participants were marked by passivity, pessimism bordering at times on paranoia, vulnerability and isolation. In contrast, participants with high-trust responses felt optimistic, proactive and connected. They viewed themselves as “blessed” or grateful recipients of special treatment.
Second, high-trust participants embraced the involvement of others in the business. Contrast these attitudes with low-trust responses, in which coworkers were often portrayed as incompetent and unreliable.
Third, high-trust participants were transparent about the rules governing family members' entry and involvement in the business. These participants trusted that family relationships, as well as the businesses, would survive and thrive through honest discussion about rules and expectations. Low-trust participants, on the other hand, didn't include information about expectations, rules and evaluation of performance. Low-trust participants also reported stories of troubled relationships with family members who had worked in the business. As such, the authors speculate that the high-trust participants will have an easier time with succession than the low-trust participants.
This concept of “the business within” is an important step forward in our understanding of the human aspect of family business succession planning. Rather than understanding succession as an event “out there,” the participants all captured it as a struggle within themselves. Whereas participants with high-differentiation and high-trust stories were more able to allow others to have access to this internal world and influence it, those with low-differentiation and low-trust stories seemed trapped in their own reflections. Having this internal dialogue in isolation seemed to amplify their struggles with differentiation and trust perhaps to the point where the dialogue precluded space for healthy succession planning.
- Alexandra Solomon, Douglas Breunlin, Katherine Panattoni, Mara Gustafson, David Ransburg, Carol Ryan, Thomas Hammerman and Jean Terrien, “Don't Lock Me Out: Life Story Interviews of Family Business Owners Facing Succession,” Family Process, Vol. 50, Nov. 2, 2011, at pps. 149-166.
Sounds of Summer
“The Little Tambourine girl,” from 1884, (119.5 cm. by 84.5 cm.) by Francis Alfred Delobbe sold for £30,000 ($47,914) at the Bonhams 19th Century Paintings sale on July 13, 2011 in London. Delobbe, a French artist, studied at l'École des Beaux-Arts and the Imperial School of Drawing. Delobbe was said to have painted only what was considered fashionable for his time.