1. Ten Pitfalls to Avoid with
Your Family Business Succession Planning
by Jeremy S. Lurey, Ph.D.
Succession planning in any business can be
challenging. Finding a qualified candidate to replace
yourself; being ready, willing, and able to let go; and
ultimately orchestrating the many handoffs with
your customers and staff takes not just personal
commitment but also significant perseverance.
2. Saying One Thing, But Continually Doing
Another – Succession – and the associated
retirement process – can be a very emotionally-
charged and sensitive journey. Because of this,
it is quite common for a leader in transition to
say he/she will do one thing and then do
something completel diffe ent Fo e amplesomething completely different. For example,
saying “I’m going to retire when I turn 65” and
then remaining in office well after that. Holding
up a mirror and providing constructive feedback
to this leader, though, can be difficult when
he/she is not only the CEO of the company but
also your mother/father, aunt/uncle, cousin, etc.
It is an emotionally-trying journey that can break
down in any number of ways Now add to that the
3. Successor-driven Process – When the next-
generation leader is the primary driver of the
process, it can suggest that there is little
executive buy-in for the succession plan. I’m not
suggesting that the matriarch/patriarch in the
family business needs to have all the answers.
I’m also not suggesting that increasing next-down in any number of ways. Now add to that the
complex dynamics and often competing priorities of
a family business! Succession planning in family
businesses is riddled with countless traps and clear
points of failure to watch for. See below for a list of
ten common pitfalls to avoid when you are planning
for the succession of your family business leaders.
Whatever you do, don’t let these happen to you.
I m also not suggesting that increasing next
generation leaders’ responsibilities in the
business is a bad thing. To the contrary, I’m
offering that if that leader in transition is not
actively promoting his daughter or slowly
transferring her management responsibilities to
her nephew, then it could be a sign of resistance
to the whole process. Younger-generation familyWhatever you do, don t let these happen to you.
1. “Trust Me. We’re family!” – When the reason
for not developing a formal succession plan or
broader legal agreement is because the belief
“We’re family”, you may want to rethink your
approach! This less formal approach will
eventually bleed into other areas of the
to the whole process. Younger generation family
members are more likely to miss these subtle
cues as they often are so focused on assuming
greater roles in the business and, in general,
making the transition work – for themselves and
for the family.
4. “We Can Handle It Ourselves.” – Based ony
succession process and overall business. When it
does, this excuse for not being more rigorous
and disciplined can be very dangerous. While
some may claim “love is enough”, your industry
partners and key suppliers would never manage
their relationships with you this way. Why should
you let your family?
the first three points of failure alone, we have a
recipe for disaster. A family leader who won’t
commit to a formal succession plan. Someone
who says he/she will do one thing but
continually does something else. And a next-
generation leader who is doing the best he/she
can given the circumstances but clearly is not in
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© 2015 Plus Delta Consulting, LLC. ● www.plusdelta.net

2. Ten Pitfalls to Avoid with
Your Family Business Succession Planning
charge. This is why having external consultants
or at least a Board of Advisors involved in
facilitating the process is so critical. Without
these third-party influencers, the family leader is
likely to continue doing what comes naturally to
him/her, which quite often is not in the best
interests of the business or family This may be
The fact that people have competing values is
OK. It is quite normal and actually to be
expected. The succession process and this
transition in leadership, however, often brings
these competing values and personal differences
from the past to the forefront as everyone,
incl ding the in la s co sins etc all potentiallinterests of the business or family. This may be
how he/she has made decisions and run the
company over the years, so it is quite common
for him/her to believe he/she can manage the
process and not want to invest in outside
support.
5 Keeping It A Secret It is a rare company
including the in-laws, cousins, etc., all potentially
step forward to claim their “fair share” of the
proceeds from the family business. If the
process is not well-managed with clearly defined
decision-making criteria and open lines of
communication, it is quite common for these
competing family values and unresolved
grievances to create doubt for the family leader5. Keeping It A Secret – It is a rare company
that follows the principles of open book
management and shares detailed financial
information and operational details with its
employees. In the case of succession planning
though, it’s important everybody – including
family members and staff alike – knows what’s
going on at every step of the way Even the
grievances to create doubt for the family leader
and generate great animosity between family
members as the leader tries to treat his/her
children and other family members fairly.
7. No Referee – As stated in #4, it is imperative
to have outsiders involved in guiding and
directing the succession process in a familygoing on at every step of the way. Even the
family members who are not directly involved in
the business need to be informed about the
succession plan to minimize any confusion or
tension down the road. If the family leader tries
to withhold information from these key
constituents, and especially if he/she prohibits
the next-generation successor from discussing it
directing the succession process in a family
business. At times, this takes the form of an
advisory board or other trusted advisors, like
accountants or attorneys, who can serve as
referees throughout the process. Someone has
to be able to listen to both sides of an argument
and determine whose solution makes the most
sense for the business and the family. Withoutthe next generation successor from discussing it
with others, then it can be very difficult to create
a smooth transition. Worse than that, it makes it
that much easier for the family leader not to
honor his/her “behind-closed-doors” agreements
or otherwise alter the plan. Remember #1 and
#2 above?
sense for the business and the family. Without
these professionals present, the family leader’s
partner (i.e., husband/wife) often gets put in the
middle of any arguments and is expected to play
this part whether or not he/she has any business
knowledge to do so. When there are more
contentious situations like this, then a family
counselor can add tremendous value beyond the
6. Competing Family Values – The goals and
objectives of diverse family members are rarely
100% aligned. Some family members want to
work in the business, and others do not. Some
want to invest in the business for a more
sustainable and prosperous future, and others
want to maximize their distributions near-term.
y
role of other advisors. How would you like your
mother to have to vote on something this
significant between you and your Dad?
8. Undefined Timeframe – There are those
people in this world who like to pull off the
Band-Aid all at once. Others who remove it very
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© 2015 Plus Delta Consulting, LLC. ● www.plusdelta.net

3. Ten Pitfalls to Avoid with
Your Family Business Succession Planning
slowly, piece by tiny piece. Succession planning
cannot be rushed overnight, but it also cannot
last forever. Part of the reason for a more formal
plan is to define an appropriate timeframe –
maybe 12 or 18 months – for the entire process
to be completed. When the process is drawn out
too long people are far more likely to retreat totoo long, people are far more likely to retreat to
something more comfortable rather than
continue forward and endure the acute pain of
this emotionally-trying process. In addition, life-
altering changes like having children or
becoming severely ill can impact people’s
personal interests, priorities, and individual
behaviors as it relates to succession when the
“retirement” became just as nasty and offensive
to many as those four-letter profanities in the
English vernacular If you consider the familybehaviors as it relates to succession when the
process lasts too long.
9. People Change – Possibly one of the most
common pitfalls of the family business
succession planning process is that people
change. Who your son or daughter was as a
teenager 10 or 20 years ago may not be who
English vernacular. If you consider the family
leaders who have been in their roles for 10 to 20
to 30 years or more, they often define
themselves more by their professional
accomplishments and the success of their family
businesses than any other facet of their lives.
Getting these family leaders to embrace their
retirement – what one colleague and authorteenager 10 or 20 years ago may not be who
your son or daughter is today. Within a family,
children typically defer to their parents to act like
leaders. When we fast-forward into the current
family business though, we expect these same
children to grow up and act like more mature
leaders, as if they are their parents’ peers. Why
is it that so many family business leaders still
retirement what one colleague and author
calls their “third act” in life (see
http://the3rdact.com/) – then is no easy feat. In
fact, it may be the most complex and
challenging aspect of the succession planning
process! If the family leader doesn’t have a
vision for his/her future beyond work, he/she is
far more likely to resist letting go and sabotageis it that so many family business leaders still
treat their children like children then? The same
is true of the opposite, by the way. If these
next-generation leaders continue to relate to
their parents as matriarchs and patriarchs in the
office rather than more functional executives,
then they may never show up as leaders capable
of running the business. If, however, they begin
far more likely to resist letting go and sabotage
the succession process.
About the Author:
As the CEO and Chief Architect of Plus Delta
Consulting, Dr. Jeremy Lurey is a talented leadership
coach and organizational change specialist withg , , y g
acting like the different leaders they now are
and disagree with their parents about almost
anything, it can create great tension and conflict
in what is often already a very stressful
situation.
10.Death of One’s Professional Identity –
g g p
particular expertise in succession planning and
performance improvement. You can reach him by
calling +1.310.589.4600 or sending an email to
jslurey@plusdelta.net. You can also visit Plus Delta
Consulting online at www.plusdelta.net.
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© 2015 Plus Delta Consulting, LLC. ● www.plusdelta.net
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