For most family business senior CEOs, the prospect of relinquishing control is a troubling one. It presents many fears—the fear of mortality, the fear of not having sufficient funds and the fear that one’s adult children won’t get along. These business leaders have put their hearts and souls into the business for all their adult lives; yet, as most seniors recognize, they must let go if the business is to make a successful transition to the next generation. In fact, they need to be thinking about giving up both the CEO role and voting control.
The process of letting go should begin long before the CEO’s retirement takes place, even before actual succession plans are drawn up. Ideally it should be the function of the board of directors to determine the appropriate time for the CEO to retire. While clearly the CEO needs to have a voice in this process, if they are the sole decision-maker on when they should let go, they may well be tempted to stay on longer than they should —past the time when they still are an effective leader.
In order to prepare for the challenging transition away from the leadership role, CEOs need to develop security and confidence in a number of realms. First, they need to ensure the company is sound enough to sustain itself without the senior CEO at the helm. In addition, they need to take steps to achieve personal financial security – so they are not financially reliant on the business going forward. Third, ensure the children really grow up by giving them the opportunity to succeed or fail without their parents’ protection. And finally, often overlooked is the importance of developing meaningful other interests that you believe will keep you engaged and excited to face every new day. The CEOs who are able to let go are those who know that even without the business, they still have value as human beings.
Entrepreneurs who truly retire and turn over authority can find joy in knowing that they have built a business that not only will outlast themselves but that also have been preserved for the next generation of their families. If you are interested in learning more about this subject matter I would like to suggest you read ” Letting Go; Preparing Yourself to Relinquish Control of the Family Business” by Dr. Craig E. Aronoff.