12 Succession and Transfer of Power

FAMILY BUSINESS ENTERPRISE

TEAM OF LECTURERS
UNIVERSITAS PELITA HARAPAN
Family Business Enterprise | Universitas Pelita Harapan 2019
MEETING 11:
SUCCESSION AND TRANSFER OF POWER
Family Business Enterprise | Universitas Pelita Harapan
TOPICS TO COVER (1)

1. CEO as Architect of Governance, Transfer of Power and Architect of

Succession and Continuity (Poza 2010, 107-111)
2. CEO Exit Style and Implications (Poza 2010, 112-117; 124-125)
3. Roles of CEO Spouse (Poza 2010, 117-123)

1 CEO as Architect of Governance
• Blurred system boundaries present the strongest case for the need to
build institutions to govern between family, ownership and the
management, which falls to CEO.
Ownership
Board of Shareholder
Directors Meeting
Family Family Top

Assembly Council Management
Family Business
1 CEO as Architect of Governance-the Good
• CEOs believe that there is clarity and understanding among family

members of succession requirements and the manner in which the estate
and business ownership will be transferred across generations.
• CEO-parents are significantly more positive in their assessment of the

extent to which younger generation managers in the business are
listened to and their ideas considered.

1 CEO as Architect of Governance-the Bad
• CEOs are also significantly more certain that the length of the time
he/she will continue in this role is understood.
• Many CEOs think about retiring or changing their responsibilities than

act on it.
• Few make announcements or behave in a way that commits them to a

transfer of power within a specified period of time.

1 CEO as Architect of Governance-Transfer of Power
• Transferring power in any setting is never easy.
• For many, the drive of power is as much a life force as the needs to
achieve and to be loved.
• In the family business, transfer of power is further complicated by the

demands of family relationships and the sheer potency of ownership. It
is not only the matter of passing the management on to the next
generation.
1 CEO as Architect of Governance-Transfer of Power
• Transfer of power can be problematic when:

• CEOs don’t want to leave
• CEOs fail to prepare next-generation members for leadership
• Succession is triggered by illness or death of CEO

1
CEO as Architect of Governance-
Architect of Succession and Continuity
• CEOs of the family businesses are building companies to last, so they
cannot afford to become narcissistic, spotlight-hungry performers.
• As architect, CEOs must realize that, for the vision to become a reality,
they must enlist the right people and then executive the right strategies
to ensure both sustainability and continuity.

1
CEO as Architect of Governance-
Architect of Succession and Continuity
• The continuity planning consisted of many meetings and conversations,
much soul-searching and reflection, a variety of developmental
assignments for next-generation members, the appointment of interim
nonfamily CEO, etc.

2 CEO Exit Style and Implications (1)
• The monarch
• Doesn’t leave until forced out
• Imagines no one could ever replace him/her
• The general
• Leaves the office reluctantly and plots a return
• Hopes the next-generation leader proves inadequate
• The ambassador
• Allows others to learn the business first-hand and then eventually manage it
• Holds on to their diplomatic or representational duties on behalf of the
corporation

2 CEO Exit Style and Implications (2)
• The governor
• Leads for a limited term, then moves on
• Ensures their successor will be trained and ready
• The inventor
• Returns to development activities
• Takes a key position in another enterprise
• The transition czar

• Provides active leadership during the succession process

3 Roles of CEO Spouse
• Are stewards of family legacy
• Keep “family” in family business
• Instill a sense of purpose, responsibility, and community in family

members
• Embody a spirit of cooperation and unconditional support

• Factors that influence the role adopted by the spouse:
• Relationship with the CEO
• Knowledge of and interest in the business
• Commitment to continuity of family participation
• Perception of need
• Ability to perform the needed leadership role
• Availability of others to perform communication-promoting and
trust-enabling functions
• The Business Partner
• The Chief Trust Officer
• The Senior Advisor/Keeper of Family Values
• The Free Agent
• The Jealous Spouse

• The Business Partner

• Is critical to the start-up and early stages of business through their
financial investment or professional, technical, or administrative
skills
• May then move on to a different role
• May be the lineal descendant of the owning family or may be a large
shareholder
• The Chief Trust Officer

• Provides the glue that keeps everyone united through the predictable
challenges faced by families who work together
• Acts as a healer, mediator, facilitator, and communication conduit for the
family
• May also take responsibility for family initiatives, like creating a family
council, writing the family’s history, hosting weekly or monthly family
gatherings, etc
• The Free Agent

• Often aware of both family and business matters, but chooses to grow and
develop a separate identity
• Usually available for consultation and advice during challenging times in
the life of the family and the business

• The Jealous Spouse

• Feels that the CEO loves the business so much it is his or her first priority
• Has to compete with the business for the CEO’s recognition, affection,
financial resources, and time, thus experiences jealousy
• May provide the motivation for greater delegation and professionalization of
the business so that its success and survival depend less on the superhuman
efforts of the CEO
THANK YOU
FAMILY BUSINESS ENTERPRISE | UNIVERSITAS PELITA HARAPAN 2016

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FAMILY BUSINESS ENTERPRISE

1. CEO as Architect of Governance, Transfer of Power and Architect of

2. CEO Exit Style and Implications (Poza 2010, 112-117; 124-125)

3. Roles of CEO Spouse (Poza 2010, 117-123)

Family Business Enterprise | Universitas Pelita Harapan

Family Family Top

• CEOs believe that there is clarity and understanding among family

• CEO-parents are significantly more positive in their assessment of the

Family Business Enterprise | Universitas Pelita Harapan

• Many CEOs think about retiring or changing their responsibilities than

• Few make announcements or behave in a way that commits them to a

Family Business Enterprise | Universitas Pelita Harapan

• Transferring power in any setting is never easy.

• In the family business, transfer of power is further complicated by the

• Transfer of power can be problematic when:

Family Business Enterprise | Universitas Pelita Harapan

Family Business Enterprise | Universitas Pelita Harapan

Family Business Enterprise | Universitas Pelita Harapan

Family Business Enterprise | Universitas Pelita Harapan

• The transition czar

Family Business Enterprise | Universitas Pelita Harapan

• Are stewards of family legacy

• Keep “family” in family business

• Instill a sense of purpose, responsibility, and community in family

• Embody a spirit of cooperation and unconditional support

Family Business Enterprise | Universitas Pelita Harapan

Family Business Enterprise | Universitas Pelita Harapan

• The Business Partner

• The Chief Trust Officer

• The Free Agent

Family Business Enterprise | Universitas Pelita Harapan

• The Jealous Spouse

Family Business Enterprise | Universitas Pelita Harapan

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