Families, Success & Succession

“Succession is about more than the evolution of systems and structures. It is also about the continuous process of change in people’s lives, the development and maturation of individuals as they move through life”.  
                                                                                                                                 Ivan Lansberg

During my recent trip to Harvard, I had the opportunity to talk with Eva Hirsch Pontes, one of my coaching colleagues from Rio de Janeiro, on the subject of succession planning. Eva wrote a paper for the Hudson Institute of Santa Barbara entitled: “Coaching Succession in Family Owned Business”.

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Eva and Glenn relaxing on the balcony during their graduation dinner at Harvard University, May 2015.

Coaches are increasingly being called on to provide support and guidance with respect to leading difficult conversations around succession planning. In your experience, why are these conversations even more complex when it comes to family businesses?

Conservative projections indicate that between 65 and 80 percent of the world’s enterprises are either owned or controlled by families. Even if this relevant proportion includes small businesses that will not survive one generation, it does also encompass large and successful business operations around the world: it is estimated that 40 percent of the Fortune 500 are family owned or controlled. In spite of such significance, the study of family business is relatively recent. Although succession is the most discussed topic in family business literature, there is a tendency to focus on the ownership and business structures, whereas the family aspects often remain neglected.

If business thrives from an individual venture into a family enterprise, inevitably the natural process of aging of controlling leaders will result in the need to prepare for transfer of command to a new generation, family or non-family. In this process, family is often treated as a nuisance which must be kept at a safe distance. Even if it is clearly desirable – from the standpoint of all stakeholders – to protect corporate interests from family conflicts, any strategy overlooking the systemic impact of the family dimension on the business is likely to fail. This an important aspect to be considered for all stages of the family business life cycle, and it becomes even more relevant when preparatory measures are envisaged to preserve continuity of the business venture. Individual family members, whose relative ages and aspirations drive decisions affecting the whole system, require specialized assistance to face such major transitions.

In my experience, a professional coach can assist in helping assemble and coordinate the “succession team”, which often includes the accountant, lawyer, financial planner, etc. Where specifically do you think the particular skills and expertise of a professional coach are important, beyond the technical skills of these other advisors?

Coaching should be included in the professional resources on which family members count to deal with dilemmas typically present in preparation for succession, especially in two sensitive moments of the process, i.e., the so- called:

  1. “Entering the Business”, and
  2. “Passing the Baton” stages.

Coaching based on a developmental perspective is a powerful means to support transitions and to enhance purposeful planning of future life chapters and, as such, can prove of invaluable service to individual members and to the system as a whole.

You mentioned to me earlier that you use “systems thinking” in your approach to succession. I’m curious, could you elaborate?

Companies owned and managed by family have special and complex characteristics. On the positive side, family businesses draw their strength from the shared identity and values. However, this very closeness can work against the long term objectives of the business, and family dynamics can bear negative impact on corporate relationships, especially as roles in the family and in the business become enmeshed and, thereby, confused.

The influence of families on their businesses frequently goes unnoticed by the work of management theorists, which entails business education failing to differentiate the study of core topics of management education between family and non-family businesses.

The early classic studies of family business, published between 1960 and 1970, dealt with issues such as generational and sibling rivalry, nepotism and unprofessional management.

Gersick presents a three-circle model – conceived by Tagiuri and Davis – depicting the family business dimensions as a system composed of three independent but partially overlapping subsystems. Each of the circles has its own rules and value structures, and the model is a very useful tool for understanding the source of interpersonal conflicts, role dilemmas, priorities and boundaries in family firms.

Three Circle Model















The concept makes it apparent that the potential for conflict is built into the structure of the family business system and helps us recognize how the different roles can color a person’s perspective, stretching the understanding of the system beyond the simple notion of personality or generational conflicts as the source of diverging standpoints. Problems arise because the same individuals have to fulfill obligations in different circles, and the different roles may drive individuals moved by the best of intentions to have diverse agendas and perspectives on events.

Could you give me some practical examples of how those competing obligations may play out?

Sure. A shareholder who is a family member – but not actually involved in the business activities – will tend to prefer dividends over capital reinvestment. This may conflict with the position of those family members involved in company management, who see further capital investment as essential to growth and long-term survival of the business.

Grown-up children working in the business – and trying to establish their professional identity and competence – may resent their parents’/bosses’ authority. By the same token, parents may feel disrespected by the offspring who might be seen as overly challenging or independent.

Sons and daughters not working in the business may feel that they are not receiving equal benefits or attention as compared to their working siblings.

These are just a few examples to illustrate how the application of the model can be useful in clarifying the nature of conflicts that may typically emerge in this kind of enterprise.

How can business owners better deal with the need to traverse this intersection of personal and professional boundaries?

Family business literature contains recurrent recommendations on resorting to outside mentors, especially to accompany professional development of the younger generations. However, it is interesting to notice that no reference is made to support being provided by professional coaches to those young adults. Whenever coaching is mentioned, usually reference is being made to seasoned executives working in the business, who can coach younger family members to develop leadership and other sets of skills.

However, according to Lansberg, “all too frequently professionals get families to focus on the technical aspects of continuity planning (such as strategic, succession and estate planning) before helping the members to articulate their personal dreams and to examine the degree of congruency among these aspirations. However, until these dreams are made explicit and worked through, until their full implications for the future are explored by the family, the best laid plans will lack the motivational force necessary for their implementation”.

The process of succession planning thus requires the uncovering of these individual dreams as a means to enable their integration into a unified goal and course of action.

This is one of the areas where coaching can be of invaluable help to put in place a deliberate and sustainable succession plan, by assisting in clarifying decisions and anchoring action plans in values and purpose of the individual family members. This is an essential step that needs to be addressed before a shared vision can be established for the business itself.

Succession is not a single event that takes place when the current leader retires, but rather an ongoing intricate process predictably driven by a developmental clock. It involves preparation – at several levels – for passing the baton from the incumbent leader(s) to the next generational leader or team of leaders, pertaining or not the family.

In businesses controlled and managed by the family, the dynamics of succession are even more complex, since several individuals are dealing with specific and differentiated developmental challenges at the same time as they are playing sometimes conflicting roles. The three-circle model highlights the fact that not one, but three separate transitions are taking place simultaneously.

The concept of the Cycle of Renewal and the processes involved in life chapters and life transitions, from both the individual and corporate standpoints, is also a precious tool on which coaches can rely to assist family members to navigate the waters of succession.

About Eva Hirsch Pontes

Eva is a principal of Phoenix Coach, based in Rio de Janeiro, Brazil.

Eva brings to her executive coaching practice a distinctive combination of high-level executive experience, business acumen, academic understanding and leadership development expertise.

Coaching has been her deliberate choice, to apply her solid experience in the business and academic environments and her curiosity about the endless possibilities of the human being, as a means of facilitating the future of her executive coaching clients.

Eva is a licensed psychologist and holds a graduate certificate in Marketing.

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In this blog post we mentioned the following resources:

  • Book: Generation to Generation: Life cycles of the family business. Boston : Harvard Business School Press, 1997.
    Gersick, K.E., Davis, J.A., Hampton, M. M., Lansberg, I.
  • Book: Succeeding Generations: Realizing the dream of families in business. Boston : Harvard Business School Press, 1999.
    Lansberg, I.

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