Ownership Transitions

Secret Weapon to Successful Generational Transition

Published: 2008 06 30 | Views: 4881

There is an epidemic about to occur in Canada and the United States as the baby boomers begin to retire.  Many of these baby boomers created businesses as a means to support their families and have been very successful at doing so.  But now, as they reach retirement age, many of their businesses are going to be changing ownership – a process that has proven difficult for most.  Typically, it was the patriarch of the family who started the business, though the mother often worked by her husband’s side performing many of the daily tasks, especially in the first few years.  As his family grew and the business became more profitable, his children likely also came to work in the business.  Now,  as the patriarch reaches the age of retirement, he not only needs to consider what that means for him but also what that means for the business to which he has devoted himself for the majority of his working life. 

Many professionals recommend creating a succession plan to successfully deal with this issue.  Succession planning is the creation of a plan that considers the many scenarios of how a business can be transferred.  The transfer could be to the owner’s children, to management or to a third party, or any combination thereof.  The succession plan then determines which outcome is the best for that particular business and how to achieve that outcome.  For many family business owners, the decision will be to transfer the business to the next generation, for example from father to son.  However, as Michael Higgins suggests, “(f)or family-owned business, continuing on isn’t easy.  More than 70 percent don’t survive the transition from founder to second generation” (49).  But businesses that successfully make the transition to the children have a secret weapon: the mother.  Though the mother may not have been actively involved in the business for a number of years, she still plays an important role in the succession planning process. 

The mother acts as a business associate to her husband in the privacy of their own home, helping him to make important business decisions.  She is also a mentor to her children as they grow up and become adults, teaching them how to be successful in business.  And the mother acts as a buffer between her husband and her children when conflicts arise in their business or personal relationships.  These “hidden” roles of the mother are integral to the successful transition of a family business from the parent generation to the children generation.

The roles of the mother may be so hidden that she in fact does not recognize them herself.  She has become so accustomed to listening to her husband talk about the business and providing her perceptions that it has become second nature.  However, her role is crucial to the succession planning process.  The decision of who should be the next leader of the business is an important decision.  The mother will be able to provide insights that the father may not have considered.  Once he has made his decision, he is unlikely to attribute it to his wife.  He may not even realize that his wife helped him come to the conclusion.  Therefore, it is impossible for anyone else to be able to recognize the role of the mother in this manner.

In a study of 9 different family businesses, Shaheena Janjuha-Jivraj found that husbands were not quick to recognize their wives’ involvement in the business decision making and that the children were completely unaware of their mothers’ contributions.  In one interview of a father-son team, she asked the father if the wife was involved in any way with the decision making.  He was reluctant to admit it but did concede that he sometimes spoke to his wife about certain business decisions.  When the same question was posed to the son, he claimed that the mother was not involved at all.  This example clearly exemplifies the “notion of the mother playing a hidden role during generational transition” (Janjuha-Jivraj 790).  In this case study the mother acted as a sounding board to the husband behind closed doors.  No one else was aware of her role, and the husband was even reluctant to admit it.  However, her ability to listen to her husband and provide advice is critical to the succession planning process. 

The mother’s hidden role as business associate is so effective because of the fact that it is hidden.  Kaslow argues that patriarchs of family businesses tend to be goal oriented and stubborn in their determination to succeed (Lore and Lure 5).  They are unable to acknowledge and accept their wives’ involvement in the decision making.  The idea of business associate is as an equal.  For this type of man, there is a lot of pride in being the leader of the family business and having all the control.  To admit that his wife, someone who is not even actively involved in the business, is assisting in making critical decisions would be detrimental to his ego.  For the mother, it is not a matter of ego that keeps her from realizing this important role.  It is more a matter of ignorance.  She has always been there to listen to her husband and help him make decisions and therefore does not realize the significance of this role.

The mother’s role as mentor is more recognized by the family, however not in relation to business matters.  The mother influences her children and teaches them right from wrong.  She instills the family values that her children will carry with them into adulthood.  The way a mother teaches her children depends on her own beliefs and personality (Kaslow Maternal Mentoring 17).  A mother’s mentoring is seen as a primary role of a mother in general and not specific to family business.  Therefore, the importance of her mentorship is often overlooked in the succession planning process. 

It is critical that the children have the proper business skills to effectively manage the business in the father’s absence.  However, what the children are taught as they grow up has a significant effect on how they conduct business.  A mother who teaches her children compassion,  generosity and determination will likely produce children who are more successful in business than those children who were taught to be deceitful and conniving.  Kaslow argues that “mothers want their adult children to like and enjoy their work as well as to perform well, be goal oriented, be aware of the bottom line issues and of upholding a fine family and business reputation in the community” (Maternal Mentoring 13).  The mother is aware that what she teaches her children will reflect on her family and the business; however, this mentoring is not recognized as having significance in the business or in the transition process. 

As a mentor, the mother also acts as a confidant to her children.  The act of being a mentor not only includes teaching, but also counseling.  A mother mentor is able to listen to her children and help them come to the conclusion of what is in their best interests without telling them what to do.  She lets them know that they can approach her with any sort of concerns, whether they are business related or personal.  As the children obtain more responsibility in leading the company, there are bound to be issues they will need to discuss with someone.  Sometimes, the best someone is their own mother.  She has been a confidential business associate to her husband for years, and as such has a general understanding of the business affairs and will be able to provide relevant advice.  If the mother has always been there to listen to her children and help them make decisions, it will be natural for them to come to her now as well, during the transition process.  Sometimes a mother knows just the right thing to say or do to encourage her children in the right direction.  This is normally seen as ‘mothering’, and the mother is not given proper credit for her role in assisting with the success of the transition.

Perhaps the most important role of the mother in assisting in a successful transition is the role of buffer.  The transition from father to children can be a constant source of conflict among family members.  The mother’s ability to step in and smooth out those issues is what will ultimately make for a transition that works.  She can use her other roles as business associate and mentor to broach the source of the conflict.  Most often, the primary source of tension between the father and the children is the father’s inability to let go of the control of the business.  The father may not have confidence that the children will be able to run the business in the same manner that he does.  He feels that they do not have the same drive and determination to succeed that he had when he started the business (Levitt 16).  He is afraid to see his business or his children fail.  On the other hand, the children feel that they are not being given enough control in order to be able to properly assert themselves in the business.  The father continues to meddle in the decisions the children are making, undermining their authority with staff and other business relationships. 

As confidential business associate to her husband and counselor to her children, the mother is bound to be aware of this and any other conflicts between her husband and their children.  She can use these roles to buffer out the issues and help resolve the conflict.  Often it will be the children to approach the mother first, using her as an ally in the dispute with their father (Janjuha-Jivraj 791).  In the private discussions of the mother and father, the mother is able to broach the issues presented to her by her children.  In this setting, the father can be open with his wife and present his own concerns as to what the issue is about.  In this capacity, the mother acts as mediator between her husband and her children to smooth out the point of contention.  The role of buffer is essential in the transition of the business, as there are bound to many conflicts that arise.  If the mother can keep the lines of communication open between the two generations, there is a better chance of success.  Again, the mother’s role in the transition process is often not overt and is more often overlooked as having any relevance to the process.  Janjuha-Jivraj argues that “the role of buffer between generations reinforces the hidden nature of maternal involvement in familial dynamics; as a result this is a status often not recognized by family members” (792).

Family businesses account for more than “90 percent of all businesses, employ half of the workforce, and create 80 percent of new jobs” (McCann 16).  Therefore,  they are a major presence in our economy.  However, as stated above, 70 percent do not survive the transition to the next generation.  This is a serious concern not only for those business owners who wish to see their businesses flourish into the second generation, but for all of society.  It is to everyone’s benefit that family businesses find a way to reduce the failure rate and increase the number of successful generational transitions. 

The mother’s role is but one factor in the transition process, albeit an important one.  It is necessary that the mother’s influence in the success of a transition be acknowledged and that it be encouraged.  Professionals advising family businesses in the succession process need to recognize the mother and use her strengths to encourage dialogue between the two generations.  It is often a misunderstanding or miscommunication that intensifies the disharmony among the father and children, leading to one or the other not being able to commit to the transition.  If the mother is able to play her role, she can often prevent or at least smooth out these conflicts before they put an end to the whole process.

Written by: Alison Madge

Alison Madge is an employee of Equitas Consultants Inc. 

Works Cited

Higgins,  Michael. “Passing the Torch.” ABA Journal 84.2 (1998): 48.

Janjuha-Jivraj,  Shaheena. “The Impact of the Mother during Family Business Succession:  Examples from the Asian Business Community.” Journal of Ethnic &  Migration Studies 30.4 (2004): 781-97.

Kaslow, Florence. “The Lore and Lure of Family Business.” American Journal of Family Therapy 21.1 (1993): 3-16.

Kaslow, Florence. “Maternal Mentoring: A Relatively New Phenomenon in Family Businesses.” Journal of Family Psychotherapy 16.3 (2005): 11-8.

Levitt, Donald. “Family Business Forum.” Journal for Quality & Participation 28.3 (2005):  16-8.

Mccann, Greg. “Part of the Plan: A Holistic Approach to Leading in a Family Business.” Leadership in Action 24.6 (2005): 16-8.

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