I’ve just seen a terrific production of King Lear, and was struck by how resonant the plot remains. It has everything – family upheaval, power, greed, betrayal, lust, madness and destruction – all the elements of a compelling TV drama. They’re the same elements I regularly see surrounding succession planning in family businesses.
Consider the tale - the head of the family business (Lear) decides to relieve himself of his more onerous duties by dividing his kingdom between his three daughters – while maintaining all his titles and privileges. Translation – “I want to remain the top man, but I want you three to take over the work”.
No Succession Planning for LearLear’s method of transferring power leaves a lot to be desired. Not appointing his successor based on merit, he makes a classic, and fatal, mistake. He challenges the three to express their love for him, and states that the division of the realm will be based upon his satisfaction with their answers. The eldest two, Goneril and Regan, outdo each other with professions of devotion. The youngest, Cordelia, doesn’t co-operate. She cannot articulate her love. Lear is furious, and disowns Cordelia. He splits the kingdom in two, giving half each to Goneril and Regan. Lear banishes his advisor who tries to counsel him not to take this course of action. Handing over control of a business based on emotions is disastrous. Listening to “suck ups” and disregarding impartial feedback, is a common problem in many companies. When the head of the business is surrounded by “yes men”, he only hears what he chooses.
The plot moves on, and as it’s quite a long play, I’ll summarise (apologies to students of literature). The daughters gradually whittle away at Lear’s privileges, to his considerable resentment. In the meantime, their respective spouses flex their muscles, seeking dominance. There are subplots in which hangers-on become turncoats, and both women fall for the same “knave”. When the chain of command is unclear in a business, opportunists can create havoc, and people become embroiled in personal vendettas instead of concentrating on the business purpose.
Lear goes mad, and full battle ensues between the estranged Cordelia, come to rescue her wronged father, and her two sisters. Cordelia loses, and she and Lear are lead away to prison. Goneril and Regan fall out. Regan kills her own husband. Goneril poisons Regan, who stabs her lover. Before dying, he announces that he has arranged the murder of Cordelia and Lear. A distraught Goneril, then commits suicide. It’s too late to save Cordelia, and Lear dies of a heart attack. Basically, the family is entirely destroyed, but the kingdom remains, to be ruled over by a new monarch.
Adequate succession planningSo, what can owners of family businesses learn from Shakespeare? Well, Lear is largely the master of his own downfall. We might not have had a play if he had undertaken adequate succession planning:
- Don’t ignore the issue. You are not immortal. Define the circumstances and timing of when you will quit the business.
- How will you be remunerated (lump sum, salary, pension, a combination of both)?
- If you plan to remain involved in some capacity, what exactly will your new role be? If you are handing over operational control - that means you no longer HAVE operational control. Where is the line between expertise/advice and interference?
- If family members already work within the business, what are their roles and accountabilities? Are they agreed, written down and clearly understood, or does everyone do a bit of everything and decisions are made through acquiescence or dominance?
- Have you picked your successor? Pick one. Appointing two people to the top job is not generally a successful strategy.
- What is the basis for your selection?
- Do the family members within the business know and understand your decision?
- How about the family members outside the business (including spouses)?
- Is there a formal partnership or similar agreement defining what happens if one family member wishes to leave the business, and also, what happens their role and shares in the business if they are incapacitated or die?
- What independent advisor have you consulted? This person should be professional, and without self-interest. Have you spoken with someone who will tell you when you’re acting like a fool?