Does the title ring a bell? One of the oldest problems in
business is when and how to accomplish succession and transfer control of the
family business to the next generation. The only natural succession point is at
the death of the previous generation, and the problems of that timing are obvious
to those who study history and see the parallel between early-history kingdoms
and family businesses. So we can agree that the next generation should take
over while the older generation is still alive, but this leaves the question of
how quickly the decision-making power should be transferred. After all, it is
true that the older generation is both more experienced and less in
touch with current affairs. What to do?
In a recent paper in Administrative Science Quarterly, Jian Bai Li and Henning Piezunka looked at this transition from father to son (their
data had few women in charge) as one of handling succession in a multiplex
network tie. A network tie is any social connection between two people, and a
multiplex tie is one that spans different social arenas. I have a multiplex tie
with my boxing trainer who seeks my advice on his entrepreneurial venture. A
father–son pair involved in the same business has a multiplex tie because,
well, they are father and son.
For a father to hire his son in the family business is
unproblematic because the father has higher rank in both the family and the
business. For a son to succeed his father in leading a family business is
problematic for the same reason – the lower-rank family position of the son now
is coupled with a higher-rank business position as top manager, unless the
father leaves the business entirely. I think we understand that leaving the
business completely is difficult, especially for a founder, and being managed
by a son is not any easier. Of course the father, being a father, can make sure
that the son bears most of the cost of the complications this entails, because
he can draw on his authority in the family sphere whenever necessary.
As the title suggested, this leaves a role for the mother.
The research showed that she could very effectively handle the transition by
barring work discussions from the family context and advising the father and
son separately on how to handle each other. But this required that she not work
at the firm, because any role she had in the firm would complicate relations
and make her a participant rather than an advisor. In network terms, the mother
could help the succession only if she was involved in only one of the multiplex
ties between father and son. When she was involved in the firm as well as the
family, succession failed. Indeed, I am personally familiar with a succession
process that failed exactly because the mother was also involved in the
business, so to me this rings true.
This research was done in China, but I think those who know
family business succession elsewhere will know the problem of succession well.
Because this way of solving the problem is based on sound network theory
principles, it is likely to help family business succession everywhere, including
in contexts in which the mother is the founder, more than one sibling might be
involved in succession, and the neutral advisor may or may not be a family
member. Succession is never easy, but being aware of the multiplex network roles
of those involved and using them to better advantage could make it less
painful.
