By Prof. Enrique Soriano
Family business succession is one of the most sensitive transitions in any family-owned enterprise. The handover from the founder to the next generation promises continuity but can also give rise to internal conflicts, especially when the new leader emulates the founder’s leadership style. These challenges can be further exacerbated by sibling dynamics, ownership structures, and governance issues. In this article, we explore the complexities of succession when the appointed successor begins to adopt the founder’s authoritarian approach and how such issues can be addressed to maintain both family harmony and business success.
During a recent visit to Vietnam, I encountered a similar scenario with a family business struggling through this very issue. The ailing founder, who retired after the pandemic, requested my intervention and mentorship for his son, the newly appointed successor. The son had been clashing with his siblings since he assumed the role of General Director (akin to CEO) due to his dictatorial management style, which mimicked that of his father. This story illustrates the universal challenges of succession planning, not only in Vietnam but across the world.
The Issue: Don’t Act Like our Father
In many family businesses, the founder’s leadership is central to the company’s identity and success. Often, when a successor assumes control, they believe that replicating the founder’s approach is the key to maintaining stability and continuing the legacy. However, what successors fail to realize is that while the founder’s leadership style may have worked in the past, it is not always the best strategy for the future.
This was the case with the Saigon-based family business I visited. The successor son, in his bid to fill his father’s shoes, started adopting a similar autocratic style. While he felt this was necessary to assert authority, it led to conflict with his siblings, who resented his unilateral decision-making. This situation highlights a common issue in family businesses: the successor’s attempt to lead in the same way as the founder, without considering the evolving needs of the business and the family.
Sibling Dynamics and the Role of Ownership
One of the key remarks I often hear in such transitions is, “He better not act like our father; we have equal shares!” This sentiment stems from a misunderstanding of the difference between ownership and leadership. In businesses where siblings hold equal ownership stakes, they often feel entitled to equal decision-making power. However, leadership and operational control are separate from ownership. Without clear governance structures in place, this can lead to friction, particularly when a successor adopts an authoritative style reminiscent of the founder.
Similarly, the successor son’s siblings felt marginalized, as their voices were being ignored in major business decisions. While the son believed that he was simply continuing the legacy of their father, his siblings felt excluded, leading to frustration and conflict. This situation underscores the need for a clear distinction between ownership rights and leadership responsibilities in family businesses.
Balancing Legacy and Leadership Evolution
While it’s understandable that successors want to preserve the founder’s legacy, it’s important to recognize that businesses evolve, and leadership styles must adapt accordingly. What worked for the founder during the startup and growth phases may not be suitable in the current context of the business.
In the case of the client family, the successor’s reliance on authoritarian leadership was undermining collaboration and innovation. It was crucial for him to develop his own leadership style, one that respected the input of his siblings while steering the business forward. Balancing the founder’s legacy with a more inclusive approach can help avoid unnecessary power struggles and ensure smoother transitions.
To Be Continued…
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