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Succession planning – Parents, you need to lead!

Parental leadership is, I believe, the key factor in all successful succession plans but is barely mentioned by succession experts or in the succession planning literature.

That is the owners of the family business/assets, who I will refer to as ‘the parents’, need to lead! And without strong leadership, it is far more likely things will go ‘pear-shaped’!

Thinking back to last month’s article and the key message that parents need to start thinking through the implications of having children come back to the farm before they actually do, it is clear that parents need to show foresight and leadership at this early time! Parents are the only ones involved and in control at this point, so ignore it at your peril.

So leadership needs to start at this early stage, but before discussions are had with any children, it is vital that the parents themselves have discussed the implications of children returning to the farm and the possible future implications of this on their retirement and, ultimately, estate planning.

If the parents are not aligned, messages will likely be mixed, which is never good! Parents must work to become aligned in their thinking – this is part of effective leadership.

Typically, good succession planning advice suggests holding family meetings & having discussions with all family members to tease out their thoughts, wishes, worries, suggestions, plans, etc. Not only are well-run family meetings aimed at informing parents but siblings too.

Critical at this point is the parents’ engagement in the process and, most of all, understanding that they will ultimately be required to make decisions as they, after all, most commonly own or control the farming assets.

This effort usually occurs when planning gets serious, most commonly years after children have returned and are now mature adults. Now whilst this is critical be aware that by the time children have grown into adults, likely been married and had children there will be factors at play that are far more complex than when they are young and just thinking of returning or have just returned. Again, the incentive is to start planning and communicating early.

At this point, the reality is that parents are likely to have to make decisions about the distribution of assets that not all will agree with. There is a real risk that the objectives or wishes of children put them in conflict, especially if there is a history of no or only minimal communication and thus a lack of understanding of the delicate task faced by parents when they seek to implement a succession plan. It is very common for relationships to get strained at this point; thus, the temptation is to put the planning process off because it is all getting too hard! After all, most parents, quite understandably, want to make their children happy and minimize conflict between them and themselves.

With my earlier comments on alignment in thinking between parents in mind, I often also see a divergence in views at this point. If you can please allow me to generalize, it is often ‘dad’ wanting to weigh the succession plan heavily in favour of the farming children and ‘mum’ wishing to please all children, including non farming, putting them in conflict and often in a position where progress is put off because parents are not aligned.

Now my experience is that at about this stage, and subject to how long the process drags on, relationships start to fracture, with conflict increasing quite rapidly. Not a good position for any family to be in.

So, who is at fault? If the farming child or children are somewhat entitled and pushy, then maybe they are, or it’s the non-farming children who just ‘don’t understand’ and/or just want a ‘piece of the pie’ of which they have ‘not contributed’. But in reality, parents need to accept
the majority of the responsibility as it is they who have probably failed to lead effectively.

Not only have they not planned and communicated early, but even when they did later in life (which is most common mind you so don’t feel that at this point you are much different to plenty of others), it all got too hard. They put it off and off…..and by putting it off, the problems between parents and children and between the children themselves compounded to the point of near no return.

So as hard as making decisions is on such complex matters, parents, you ‘need to lead’, and preferably you need to lead early. You must be prepared to listen and consider all of your children’s interests and wishes, of course, but then make decisions! Earlier, well thought out, compassionate and decisive decisions, even when they mean some or all of your children’s wishes cannot be fully delivered upon, will always give you the best opportunity for understanding, acceptance and course time for relationships to heal.

And remember succession planning should be about the people, not the farm!

Finally, ALL succession planning is challenging. Even in the most successful transitions, elements will still be played, as described in this article. It happens, but it can be overcome. When parents lead effectively, the children typically follow and understand their position better.

It’s best early, but it is never too late!