by Albert Jan Thomassen
Recently a family business owner asked me if he should step down now. “Why do you ask me this”, I replied. He told me he had planned his succession very carefully and was supposed to hand over the CEO seat to his successor. But he has since developed serious doubts because the recession is hurting the company rather badly.
There are pros and cons to handing over the reins in recession time.
Reasons to step down during a recession:
- A young successor has new ideas and a lot of energy which can boost innovative thinking and change
- The drive and energy of the incumbent might not be enough to take the company through yet another recession
- It may be too difficult to make some of the ‘hard choices’ after many years of building up the company – there may be a lot of baggage.
- There is no better learning opportunity for a successor than taking over in bad times
Reasons to stay during a recession:
- To leverage the experience with previous recessions to help navigate this one
- Staying on demonstrates commitment and strengthens loyalty of key people in the company
- To be able to leave the company in stronger shape for the successor
- To protect the successor from an unrealistic and unachievable task
What is wise to do depends on the specific situation. As I have seen families in business so often do, the owner in this particular case came up with an original solution. He decided to stay but realized that he wanted to control too much. He was worried that instead of giving his management, including his two children, more responsibility and freedom to take the measures they think are right he would become a real control freak. To counter this, he created a task force with the powers to decide and himself as an advisor to the task force.
We would enjoy hearing from others about how they have managed the challenge or opportunity that is a succession during this ‘great recession’…