Tips for Inter-Generational Leadership Transition
The original article by Tamarisk Business Advisors can be found HERE.
Transitioning leadership within a family business is both a pivotal opportunity and a potential source of complexity. As founders look toward the future, handing the reins to the next generation involves more than simply passing a title—it demands foresight, intentional development, and emotional intelligence. The following strategies offer practical guidance for navigating this important shift, from encouraging outside work experience to equipping future leaders with trusted advisors. These insights are designed to help families preserve both their business legacy and personal relationships throughout the succession process.
1. Require next-gen leaders to work outside of the business for a minimum of five years.
This tip is frequently shared by those who have successfully transferred leadership to a child who benefited from the experience of working outside of the family business. While this requirement may seem harsh, the benefits are many.
Growing up in a family business can breed entitlement. But when forced to reckon with the “real world” outside of the family business, life looks very different and there is an opportunity for maturity and a new perspective.
Also shared frequently is the regret of not doing so. We often hear business owners lamenting about how entitled their children have become. When life is easy, things are handed to you, and there are few “real-life” consequences, adult children essentially never grow up. And they don’t make good leaders.
2. Be realistic about the strengths and capacity of your future leader.
When assessing the potential leadership abilities of our children, we must be realistic. Not everyone should be in a leadership position. And a common last name should not be one of the decision criteria.
Seek outside information from objective, non-family members who don’t have an interest in the outcome. Leadership abilities present themselves throughout a person’s life. When your child’s grade school teacher is telling you about your child’s leadership in the classroom or on the playground, pay attention.
If your child is not called to be in a leadership position, don’t force it. Guide them into a role that is better suited to their natural talents. Not everyone can or should be the CEO.
3. Give your future leader opportunities to lead with your mentorship prior to succession.
There is often a window of time where a next-generation leader may be given some leadership responsibility before fully taking over. This overlap provides for coaching, feedback, and mistakes to be made without serious consequences.
Sometimes this window of time doesn’t exist. A next-gen leader may have to take over the family business, whether ready or not, if something tragic happens. These situations are extremely unfortunate. But they also serve to motivate proactive behavior for others who do have the luxury of time.
The worst thing a leader can do is to squander this precious opportunity when they could have taken steps to develop their next-gen leader under their guidance.
4. Surround your future leader with advisors and resources to support them.
Next-gen leaders are better equipped when they are surrounded by qualified advisors and helpful resources. This allows them to obtain the guidance they need without continuing to rely on their parents. And it allows the parents to more seamlessly move into retirement.
When issues arise, the parents aren’t dragged back into the business. Instead, advisors are able to come alongside these next generation leaders to help them avoid mistakes, guide them through difficult situations, and be a sounding board for making decisions.
5. Don’t ignore or discount the impact that succession in favour of one child will impact the rest of the family other children.
When a next-gen leader is taking over their family business, the impact on their siblings should not be minimized or overlooked.
Parents often assume that all of their children will get along just fine, when that may not be the case. Questions or concerns raised by their children are often discounted in their importance.
By listening to their children and diligently addressing their concerns, family relationships are more likely to remain intact during and after succession.
