America is built on family businesses. But such companies often have troubleturning success into succession: only 39% of them make it to a second generation, 15% to a third. Typically, they falter on family dynamics: imperfect communication, unspoken expectations, and unresolved conflict carried from home to office.
Founders frequently fail to carve out a professional role for their children, says Doug Sprenkle, Ph.D.; a scion is often seen by other employees not as an asset but as a necessary annoyance. The Purdue University psychologist advises family businesses to have a clear idea about an heir's position in the firm: CEO or chief lapdog? Heirs should be paid according to their responsibilities, not their surname, and should be supervised by a non-family member while building skills for the succession.
Kathy Wiseman, a Washington, D.C., organizational consultant, urges heirs to examine the unwritten rules by which a family business operates. Some firms, for example, permit heirs to act irresponsibly as long as the ledger is in the black; others are governed by the founder's wish that his children fail so he can hold on to power. Those who crack the code can act in the company's best interests and make sure the business doesn't go up in flames when it's time to pass the torch.
