There are many stories in the family business world of leaders struggling to let the next generation take the reins. Or of leaders who pass on the leadership, but then undermine decisions and hang around not fully letting go. It is a complex situation as leaders that have founded the company or lead it to immense success may struggle to visualise anyone else running the business, even if it is a well-prepared heir.
For example Rupert Murdoch, now age 88, still chairs News Corp and it seems he’s had several power struggles with his eldest son, Lachlan. Lachlan joined his father’s empire in his 20’s but quit working for News Corp in 2005, reportedly due to feeling that his father undermined him in management disputes. Then last year Lachlan was named chairman and CEO of Fox News but it’s been reported that his father is still struggling to let him take the lead, getting involved in Lachlan’s management decisions and ultimately undermining Lachlan’s leadership.
It is not uncommon for leaders like Rupert Murdoch – who have founded or led the company to success – to find it difficult to yield their power to the next generation. Leaders that find it hard to let go do so at the expense of the company. In delaying succession, the next leader might arrive unprepared, or is undermined if the ex-leader hangs around in the capacity of chair or senior advisor. All this can lead to waning company performance and criticism of the new CEO who may either step down or be fired. Relinquishing power can be made easier by having a strong succession plan and nurturing heirs to the point where they should feel comfortable letting go.
But succession and yielding power to the next generation can be done well in more than one way. In the LVMH group chief executive and chairman Bernard Arnault’s children each head different brands in the company, allowing them to demonstrate their leadership skills without being in the direct shadow of their father. This should build trust so that when Bernard is ready to step down he does so with the knowledge that he has successors ready to take the lead.
In the UK, family-owned bakery chain Warburtons took a clean-cut approach when transferring from the fourth to the fifth generation. When the fourth generation of leaders passed on the leadership of the company, they did so all on the same day. The fourth generation of brothers who managed the company together decided to put in place a robust succession plan and then all left on the same day, handing full leadership over to their children, without trying to hold on or hang around. The company’s experienced team of managers then supported the new generation while they got used to the role. While this is an unusual approach, it does show the huge amount of trust they had in their heirs which in turn should give the new leaders the confidence to make decisive decisions.
While each taking different approaches to succession, what I suspect both LVMH and Warburton’s have in common is proper communication. Successful succession happens when the leading and next generation have an open dialogue and talk about plans and expectations.