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Family Succession What happens when the children want to take over the family business?
A problem can arise when the business is legally transferred from say the father to son, but the father doesn’t fully retire from the business. The father may want to still make some decisions and may regularly visit the workplace. What happens is that the son is legally in full control of the organization, but the employees and others view the father as being still in charge which can undermine the authority of the son. For example if the son makes an important decision that proves to be incorrect, the employees may look to the father for leadership. Simple solutions such as making sure all employees are informed that the son is in charge are mostly ineffective. Most times, the father has to fully excuse himself from all decision making and even retard his visits to the workplace.
Another problem can arise where say the father wants to retire and has made plans for the son to take over. The son may rise through the ranks even though others are more qualified. What happens is that valuable employees quickly see that their efforts will go unrewarded, become disenchanted with trying for promotions, and seek employment elsewhere. The company is then slowly drained of its most valuable employees.
Another problem can arise when family members inject personal emotions into business life. For example say various family members work together but, because of familiarity, will take family problems and issues into the workplace. Infighting can occur which is often noticed by employees. This may drag down morale and affect the organization in many other ways.
A Chartered Accountant can assist your business in family succession situations. Contact Keith Anderson CA at (780) 447-5830 if you need advice.
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