Losing the Company Leader

Losing the Company Leader

Through a CEO’s death or incapacitation, a family business can be thrust into a vulnerable state if it lacks a well-conceived succession plan.

We don’t linger on thoughts about our own or a loved one’s death. Nobody expects to die prematurely. Sudden death or incapacitation of the entrepreneur in the family business is doubly devastating because it shocks both the family and the business.

Several of my clients have suffered such crushing events. Yet families who own businesses seldom have the time or inclination to prepare early for the loss of an entrepreneur who is often the head of the business as well as the family. They’re left with no succession plan, no emotional safety net, no sense of potential financial or relationship effects.

I’ve been part of several situations like this and have seen whether business families were ready and how they reacted. Each coped, yet their range of responses offer valuable lessons that can help prepare for the unthinkable. I offer three examples from my own practice; I’ve changed people’s names and the details of the scenarios.

The Horwath family: Avoidance and competitiveness

Mr. Horwath was the heart of the company, a larger-than-life personality, the keeper of important relationships. But suddenly he was gone. His grown sons vied for his business chairmanship and position in the family. Each believed in his own capacity to help the business survive, and they were not mean-spirited. Mrs. Horwath, who now owned the company, was caught in the competition between two sons she loved.

Family dynamics and business disruptions add special stresses to a family business. The unexpected loss of Mr. Horwath’s presence and leadership isolated family members rather than brought them together. They avoided talking about the loss, acted as if nothing had changed and did not acknowledge the grieving process. Nothing was resolved in family meetings; instead, everyone channeled their grief individually. This went on for several disruptive years.

I was brought in to help the family become a team again, work through their sense of vulnerability and help them understand their reactions as well as how to be more collaborative. I took a powerful lesson from the Horwath family: Do not grieve alone. Share feelings and the experience.

The Carlsen family: Open, honest discussion

Mr. Carlsen knew he was dying of cancer and prepared by creating a trust for the benefit of his wife and their four children. It also was designed to influence business factors after his death because he thought none of the family members were ready to run the company. He was planning for a stable leadership succession with his wife as a trustee, as well as a board of directors that included family members and other professionals. The transition seemed to be carefully planned, but then reality set in.

Mrs. Carlsen chafed under the trust restrictions. She went to the company every day. She caused conflicts with the non-family president. Family members didn’t communicate well with each other.

I helped the family move forward by guiding them during family meetings, helping assure them about professionalism on the board, and encouraging the review of regular company financial reports to show the company was being well run. Also, one of the sons was being mentored to become company president. A family participation plan would have helped the Carlsens discuss, define and grow into their new roles.

The key lesson I took from the Carlsen family is: Conduct candid, open family meetings about succession long before it is expected so that everyone can share their feelings and expectations.

The Peterson family: Overcoming differences

The Peterson patriarch recruited his son to join the business. The son was successful in a parallel business, but the pair quickly clashed over business operations. The son was ambitious and wanted to grow the business. The father had become more risk-averse as he aged. The risk issue became a father-son conflict and their close relationship deteriorated.

I was asked to address this strained relationship and help them resolve their differences. It took years before they implemented many of my business recommendations. I suggested they create a board of directors with outside advisors, develop a joint approach that respected both parties’ needs, consolidate a business plan and complete leadership training for the son.

Then the father died unexpectedly—but the preparations were in place. The son had already become company president and led the business and family through the emotional loss. The company reached out to employees, customers and financial partners to assure all of them of the company’s stability and commitment to the future.

The Peterson family joined with the community in a memorial ceremony to honor the father’s life and legacy. More than a tribute to the entrepreneur, it contributed to the healing process of the community and the family. This example demonstrates how important it is to share experiences and continue emotional support for the long haul. The lesson I took from the Peterson family is: Healing does not happen overnight and usually takes longer if feelings are suppressed and business preparations are delayed.

Bringing it together

  • Contribute to the growth of others.
  • Know and encourage their expectations.
  • Reach out with generosity, trust and love.
  • Make the way they live a demonstration of support and interest in others, their triumphs and worries.
  • Bring everyone in to consult on succession plans, business roles, family-role participation and transition processes.
  • Prepare for the unexpected by understanding the impact of loss. Don’t avoid or subvert grief or vulnerability—embrace it.
  • Acknowledge and resolve conflict.
  • Participate and share as a family.

Tom Hubler (tomh@thehublergroup.com) is president of Hubler for Business Families, a family business consulting firm.

Related Stories