When Kevin Hancock graduated from the university, the family business was on his radar. A sixth general member of Lumber-one Hancock of the oldest family businesses in the United States, had it; He simply never consulted. “I was interested in teaching and training, and that is what I was still outside of college,” he says.
But life had other plans. His father, then CEO of the company, was diagnosed with cancer, and Hancock found himself doing a strong pivot. “I come to work in the company, Pent some first years, not really, surely I liked it or was a good movement.
The lonck lumber lumber is not the norm. Although family businesses are the backbone of the economy, representing 64 percent of the US GDP., Its survival rate through generations is surprisingly low: less than 30 percent reaches the second generation, and only 12 percent endures the third. With $ 83 billion in generational wealth that is expected to change hands in the next 20 years, the CEO of today’s family business face a critical question: how is the transition of leadership done without derailing the business?
To respond to that, we talk to leaders who have successfully sailed the challenges of succession. They sacrificed five lessons thesis.
1. Do not assume that your children will be -or should -to carry.
One of the biggest mistakes that a family business CEO can make is to assume that their children are automatically due to take care of the business or that are suitable for the role.
Matt Powell never expected to direct the family business. Growing up in Virginia, far from the headquarters of the west of the companies of the century, he had no plans to follow in his grandfather’s footsteps, instead of building a race in the investment bank in Wall Street, helping other families to sell their businesses.
But the more offers worked, the more tired it turned. “I tired quite fast from the 90 -day sprints and five -year -old turns,” Powell recalls. “I began to appreciate the companies that were Seijs in the long term. That is what led me to call my grandfather.”
—Kevin hancock, chair, hancock wood
For the CEO of Reynolds Machinery Parker Mays, a little reverse psychology could have been working. “I never felt any pressure from my father to join family businesses, so I wanted it so much,” says Mays, a third generation leader. “I just wanted the legacy and pride my father and my grandfather.”
Mays has three children, six years, four and two, still far from a job in Reynolds, but plans to treat them as their parents treated him. “They will have that opportunity if they want it, but I don’t want you to feel any pressure from me.”
In a nutshell? Not all the next general leaders grow by dreaming of work. Some will come to him in his own time, treatments will never. And if they don’t want the job, you don’t want them in him.
2. Require external experience first.
Having future potential heirs acquires external work experience before joining the family business ensures that the next generation brings new ideas, a strong work and credibility ethic.
Mays’s father insisted on him. “At that time, I thought:” Oh, come on, let me in. “But looking back, it was definitely the right decision.”
Rob Slight, who was the fourth generation CEO of his family’s furniture business for 22 years before selling it to Lexington Home Brands. “We had a rule in our family that I had to work first elsewhere. When people see that the family member returns, after having demanded abroad, they have more confidence in that person. But most scared, the family member has confidence in themselves.”
Without experience outside the family business, potential successors can lack essential perspectives and skills. “Too often, the new CEO has not really had a business education and has never worked in another business, so they literally have no knowledge they need,” says Renee Fellman, a management expert who specializes in family businesses.
You may want your adult son to get involved outside the school, and it is possible that you want the same, but it is much more likely that their other employees respect a successor that has been demonstrated in the world of outide instead of someone handed over a hand hand a hand with a hand hand.
3. Plan very ahead for the transition.
If there is a universal truth about the successful succession, it does not break during the night. It requires a deliberate and structured approach that begins before the change of real leadership.
May’s discussions about succession four years before the officers took over. “We started conversations long before any transaction was going to take place,” he says. “I am very grateful for a lot of time to work in feelings, questions and conversations that not only realize that you need to have.”
Billy Busch, from the famous Anheuser-Busch family, saw what happens when there is no solid plan. “You have to have a succession plan, and it has to be very black and white,” he warns. “If not, there is a lot of space for disputes and problems. And the only people who kiss well when they happen are the lawyers.”
Hancock’s disease forced him to leadership before what no one had anticipated. Fortunately, his father had already placed non -family leadership as a transition shock absorber. “There was a gentleman who had a leg manager in the company, and directed the business for a short time while my father was sick,” says Hancock. “That helped create a much softer transition.”
4. Clearly define roles, responsibilities and decision -making power.
One of the most overlooked but crucial aspects of succession is the clarity of the plan. “As your children begin the responsibilities, be sure to create a clear timeline for your transition,” says Thomas Samuels, president of Cardinal Expo. “I outline their roles and responsibilities, what they do and have no authority to decide, and what are their expectations at each stage.”
Powell learned this in the difficult way. “I worked for about a year in an acquisition, I obtained the recruited purchase and we were about to close. Then, at the last minute, someone else had the right to say no, and I knew a little that they had that authority. It was a great setback.” Your advice? “Taking decision trees. Who has the right to say no? Who has the right to give suggestions? Clarity is everything.”
That clarity is equally more critical in a family business, where blurred lines between roles can cause confusion and dysfunction. “In family businesses, there are often members of the cross -communication family who give contradictory instructions or a lower authority,” says Fellman. “That is why it is essential to explicitly define what the CEO can and cannot do, and establish basic rules for all others involved.”
5. The leadership of the company must be won, not only inherited.
Having the right last name is not enough; Leadership must be gained through hard work and demonstrated ability. “My grandfather always made sure that his successors knew the business inside and out,” says Busch. “They had to go through each department, understand each part of the company and put issues in the employee’s place.”
Slight, who is now a senior consultant of the Family Business Consulting Group, shares a similar philosophy. “When you are a teenager who works in the business, you have to be the first, take the shortest breaks, smile on your face and be the last to leave. People may not remember that you are good at work, but they will remember your attitude.”
Powell adds: “I don’t believe in coronations. If my children ever because to join the business, they will go through the same process as everyone else and will start from the ground floor.”
Work is the reward
Ultimately, leaders who have successfully sailed family business succession understand that it is not just about transmitting a company, but that it is a legacy. “I think I’m borrowing from my grandchildren,” says Powell. “So, when challenges arise, I remember myself, it’s not about me.”
Busch, reflecting on the lessons of his family dynasty, says: “If you want to maintain a business in the family, make the family your priority. Everything else drives from that.”
Hancock attributes the longevity of your company in part to the fact that no premium is granted to family leadership.
When he decided in 2023, after a quarter of a century like CEO, to make the transition to the presidency, he was a stranger, then Cfo Paul Wainman, who touched the reins, not the daughters of Hancock, which each pursued other races.
“You see that many people are trapped in family businesses where they felt it was something to do, but maybe it was never a really handsome path in life,” says Hancock, who points out that his daughters. “There are many different ways of being good administrators of the company. Our first approach makes each family member follow their own voice and do what will illuminate them. And the best thing to be CEO must be CEO.”
