Leadership Transitions: Storybook Ending Or Fractured Relationship?

Alongside succession, transition ranks among the top challenges any enterprise will ever face.  If not properly planned and executed the damage can be irreparable.Of the many client engagements I’ve had over the years, the most difficult have not been those that were in need of ‘repair’ or ‘turnaround’ but those facing transition management. I include in this category passing the baton from a CEO or founder to a successor, internal or external or, from a parent to a daughter or son. Some that I have experienced have had storybook endings; others have ended in fractured relationships never to be completely healed.

If there ever was a need for a well thought out plan…

Someone’s got to be alpha! Here are three examples that show you why.

1. Without a plan, the founder of a multicity high-profile retail chain passed the reins to a son who had worked in the business since graduating college. He continuously yielded to the alpha son as the latter embarked on a major geographic expansion. The business became imperiled through a combination of excessive leverage and under performance, the father offered to jump back in and help. He was refused.

2. Following a well-intended plan, the president of a closely controlled company with a thousand plus employees was following in his father’s footsteps. The two had complementary skills and were transitioning well. Not anticipated was the severe conflict that erupted between the president and his mother, a senior officer of the company, over the new direction being set by him. The father sided with the mother. The son, who would be alpha, left abruptly, vowing that his parents would never again see their grandchildren.

3. At his father’s urging, a successful manager left his Fortune 100 job to work in the family’s small specialty mail order business. The business had been spawned from the father’s hobby and survived as ‘boutique’ for years. The father most enjoyed product selection and distribution; that’s all he wanted to do. The son had no interest in the day to day logistics but brought with him well practiced sales and marketing skills. Their plan forward allowed each to lead with their strengths. Managing the warehouse the father would brag about his son to anyone who would listen.

Alongside succession, transition ranks among the top challenges any enterprise will ever face.  If not properly planned and executed the damage can be irreparable. Even if properly planned and executed the damage can be irreparable and, there are no guarantees. Why – ego, legacy and the alpha factor.

Think of it; you successfully built a vibrant enterprise and eventually turn the reins over to a successor who may even have been a disciple.  Doesn’t take long, your successor has his/her ideas and begins to make changes.  Some of your loyalists begin to call and ask ‘do you know what’s going on?’ Others have their responsibilities realigned, often diminished. And so begins the shadow you can cast if you chose to do so; unhealthy for you and not at all helpful to your successor.

What to do?

• If practical, let the organization know ahead of time that there will be a change in leadership.

•  If there is ‘housekeeping’ to be done, do it before you depart and in the alternative, support your successor in doing so if that is where the burden falls.

•  Ensure oversight by your board of directors which hopefully includes outsiders who have been through such transitions before.

• Clearly document authority and responsibility.

• Don’t serve on the board if your successor does; a recipe for a shadow no matter how good your intentions.

•  Stay away from the premises for at least 60 days; give everyone a chance to resettle and, refer ‘concerned’ loyalists to your successor.

As to the examples cited, the first was sold in bankruptcy and the second was sold at market value but at the expense of a fractured family and legacy. And the third…within ten years the business gained national prominence and ultimately sold to a preemptive bidder, ensuring the financial wellbeing of the family for generations to come.

Lessons learned.

Read more: Avoid The Potential Pitfalls Of A CEO Transition

Fred Engelfried
Fred Engelfried is Director/Chair of North Coast Holdings, Inc. and its subsidiary Lewis Tree Service, Inc. He has been a member of the board of directors of Lewis for over 20 years, and for 10 years prior to that worked with the company intermittently in various consulting capacities. He also is President of Market Sense Inc., a participative management firm that has served more than 100 regional clients over 35 years.