Are family entrepreneurs even concerned with the survival of their firms? Perhaps, in their minds, this is always the distant future and they prefer to focus on current issues. They may also feel uncomfortable when contemplating their retirement.
Another challenge is what the children want. That may not always be taking over the family firm. And even if they do so, successors from the next generation are rarely sufficiently prepared to take on a leadership role.
Power shift within the family
Succession may be difficult because it replaces a simple hierarchy (the older generation is the decision maker in both the family and the business) with a new, more complex relationship. Elders are still very powerful within the family but suddenly in the family firm, they no longer wield the power. An inconsistent hierarchy may then create strong tensions and even result in the failure of the succession.
The INSEAD business school studied successions in Chinese family firms and conducted hundreds of interviews. They explored how families can overcome the afore-mentioned tensions.
The case of family businesses in China: you need a facilitator
The confusions of hierarchy inconsistency can be mitigated by setting up boundaries between professional and personal lives and roles. For example, a rule that no domestic disagreement may leak into the workplace helps to prevent personal conflicts from becoming entangled with professional ones.
Due to traditional norms in China, the transition is usually father-to-son. The mother then can play the role of a third party, who can help keep tensions between the former leader and the successor to a minimum.
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