NEW YORK, NEW YORK - MARCH 20: Sarah Snook, Alan Ruck, Brian Cox, Jeremy Strong, and Kieran Culkin ... [+]
Succession is the popular HBO series that follows the power struggles and efforts to control Waystar Royco, a fictional dysfunctional family-owned conglomerate. The series, which ends on May 28, continues to mirror the challenges and issues that face many real family-controlled businesses.
One of Succession's many parallels with real companies is the failure of Waystar Royco to have a succession plan. As I noted when the series ended its third season in 2021, “The inability to have and implement a plan can create a crisis situation that simmers for years, then explodes without warning into a full-blown disaster, scandal or other corporate emergency.”
More Similarities
There are other important similarities worth pointing out before the series concludes—and for owners of family-owned companies to keep in mind. The parallels focus on efforts to keep a company’s leadership and ownership within the family—and being able to discuss the topic with family members in the first place.
This is especially important, considering that 85% of recently surveyed family-owned businesses said it was very or extremely important that their business remains in the family for at least another generation.
Succession Issues
According to the results of the inaugural Private Business Owner Survey of 400 family-owned businesses by Brown Brothers Harriman’s Center for Family Business that was released today.
- 43% said it’s a challenge to choose a successor, knowing it will cause conflict within the family.
- 84% of respondents said that a business decision or discussion has led to severe disagreements or resentment within their family.
- 75% of these business owners say the family members’ roles are either not well defined or not fully communicated.
Business owners of private companies said there were important reasons that could make them hesitant to discuss business with close relatives.
Wrong Priorities
- 41% said family members make decisions based on personal benefit rather than what’s best for the business.
Heated Discussions
- 36% indicated these discussions tend to become heated or emotional.
Bad Experience
- 35% said they’d had previous bad experiences trying to have these discussions with family.
Art Imitates Life
NEW YORK, NEW YORK - MARCH 20: Sarah Snook, Alan Ruck, Brian Cox, Jeremy Strong, and Kieran Culkin ... [+]
Just as Succession’s patriarch Logan Roy often expressed doubts about the ability of his children to manage the company, the survey found that owners of many private businesses lack confidence in the next generation of leadership.
Concerns
- 75% of respondents cited leadership-related concerns as a reason they might consider selling some or all of the business.
Lack Of Strong Leaders
- 36% said there was a lack of strong leaders to take over their company.
Apathy
- 26% said their children aren’t interested in running the business.
MADRID, SPAIN - MARCH 29: British actor Brian Cox attends the HBO Max premiere of "Succession" at ... [+]
Preparing The Next Generation
“For a family business leader, a pivot in mindset is eventually required to head off becoming a real-life Logan Roy,” Ben Persofsky, executive director of the of the Brown Brothers Harriman Center for Family Business, said in a statement.
“For decades, entrepreneurs often find enjoyment in making great tough decisions in the business (“calling the plays”). However, succession is equally a challenging task. Elders must work continuously to mentor the next generation to navigate those same hard decisions.
“In the process, the elders then look to situations where the next generation has wrestled the issues well as the primary source of enjoyment,” he observed.
Liz Kislik, writing in the Harvard Business Review, suggested the following steps to help prepare the next generation for leadership positions in a family-owned company—assuming, of course, that they want to take the helm at some point.
- Move family members through the organization gives them the opportunity to learn all aspects of the business.
- Gear explanations about the importance and value of building the business, its financing and its mode of operations to the ages and acumen of each generation.
- Know your long-term intentions for the business so you can plan appropriate career development for the next generation.
- Leaders of family businesses should assess the skills, talents, and desires of their children at all stages and give them as many opportunities as possible to learn about the business today and how to ensure its successful future.
About The Survey
Brown Brothers Harriman’s Private Business Owner Survey queried 400 U.S. private business owners, excluding institutionally owned businesses or those owned by a fund. The research was conducted by Wakefield Research between March 14 and March 26, 2023, using an email invitation and an online survey.
For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 4.9% from the result that would be obtained if interviews had been conducted with all persons represented by the sample.
