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SMALLBIZ/VALLEY/1STJC/mark2nd Family-owned businesses contribute one-half of the gross national product and create one half of the jobs in this country. Most of the founders of these enterprises have worked long and hard to build an empire that supports a large number of family members and numerous employees, all of whom have depended on his drive, skill, instinct and creativity since the doors were first opened for business. In many cases, one important ingredient has been lacking the development of a plan for an effective leadership succession. This is critical to the survival of the family business as it moves through the transition of ownership and management from one generation to the next. It is interesting to note that less than 30 percent of all family businesses make it to the third generation. The founder is most often an optimistic and dynamic person, either male or female (for the purpose of this article, I will refer to the founder as a male), who has the ability to work with complicated ideas, create novel solutions to problems, has great intuition, is well-disciplined and focused, and has a clear vision of future possibilities. He works seven days a week, sacrifices family time when necessary to support the business and takes seriously his responsibility for providing for his family and the employees who trust and follow him. His employees know him as The Boss, and he knows everybody’s job and how it should be done. He can walk through the environment he has created and smell trouble before it is discernible to anyone else. He is the benevolent dictator of all he surveys. His employees feel close to him as he walks through the office or factory and speaks the workers’ language. The management style he projects is friendly and stern. A typical description of a family that is struggling with leadership succession is as follows: The founder (father) who is in his 70s and wants to slow down but doesn’t want to let go. He has an impatient wife who wants to spend the years left to them travelling together and spending some of the hard earned money they have accumulated. They have two sons and two daughters. One son is drawn to the business and has spent Saturdays and school vacations working in the company, while the other son and two daughters have created separate careers. The business-oriented son has learned the family business by osmosis but has also received the best education possible as he was smart enough to be accepted by one of the finest schools in the country. His MBA has thoroughbred quality. Now he is working full time for The Boss. The son has the ability to take charge, but a problem is brewing. The father will not relinquish authority but at the same time he gives the double message that the son should take charge. The Boss walks around slapping employees’ backs and collecting gossip, which he turns into critical attacks on his son’s management style. The son sees he can’t please the “old man.” They argue constantly with no resolution. Eventually the son becomes so discouraged he sees no other way but to leave the family business. Very often, the differences are a matter of style. The founder is a hands-on manager. He believes you come to work before anyone else and leave after everyone has gone home. He has no interests outside of the business. The son, in contrast, is involved in a variety of activities and takes an active role in parenting. He has no desire to make work his only endeavor. He believes strongly in delegating responsibility to employees and trusting that technology will replace hands-on management to a certain extent. Although his management style may be different from his father’s, his goals and dedication are the same. The first call made to me usually occurs when an argument between The Boss and the son has created a crisis. Upon close examination, the two protagonists have the same goals in mind and agree on their mission but have differing means of achieving them. Because this is a family relationship, other issues often emerge, and it becomes clear that taking a narrow view of correcting the business issues alone will not solve the underlying problem. The father and son have established a pattern of relating as parent and child, which complicates their day-to-day business relationship. If they were to seek therapy, there might be a series of individual and group meetings that could reveal unrealistic demands the father places on the son, and the son’s burden of living up to his father’s ideal of him. Or, in some cases, the original financial agreement may no longer be acceptable to the son as he steps into The Boss’s role. Or, simply, the father is unable to let go of the reins, wondering what he will do with his time and where he will get the emotional rewards he has received from being at the helm. Some of these problems can be resolved by counseling to clarify the father/son style of communication and relationship. The bonus, often, is a closer relationship between family members as an effective leadership process is established, which is so critical to the survival of the family-owned business. Lew Richfield, Ph.D., is a licensed family therapist in Los Angeles.

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