Succession planning is a vexing issue for family businesses throughout the world. Orchestrating a smooth and successful generational transfer of power is key to family firms’ success — and, in fact, their survival. Research on what makes for successful transition has often focused on the two apparent main actors: the current CEO and the successor.

However, in a six-year research project on successions in family firms, we found that, for a succession to be successful, there is another actor who must play a crucial role. After conducting hundreds of interviews with CEOs, successors, and top managers whose companies had undergone succession from fathers to sons, a clear pattern emerged: the difference between the companies where successions went well and those where it failed had to do with the mother.

Before we go any further, we need to make a disclaimer. In the family businesses we studied, the transition was always from the father, who was the founder and CEO, to his son. This father-son constellation reflects most cases in our empirical setting. Also, we focused on cases where the succession took place between father and son to exclude gender as a confounding factor. We discuss in the paper to what degree our findings generalise to female founders and/or female successors. It is worth mentioning that we strongly support gender balance, and our study should not be read in any other way. In fact, if anything, our study highlights the particularly important role that women/mothers play in successions in family businesses.

The mother as “uniplex third”

The mother, i.e. wife of the current CEO, played a crucial role. Interestingly, the mother being uninvolved in business was crucial for the success of the succession process. When the mother was involved in running the business while also tending to her responsibilities in the family, succession failed due to family roles and norms spilling into the business and creating conflicts. In contrast, when she focused her activity to the family only, she could effectively enforce boundaries between family and business, thereby enabling the current CEO and the successor to smoothly renegotiate the transfer of power without interference from their roles and norms in the family. We refer to the mothers who are uninvolved in the business as the uniplex third. While the father and the son have a multiplex relationship that crosses both family and business domains, these mothers have uniplex relationships to the father and to the son as they are connected to them in the family only.

The uninvolvement of the mother in the firm is crucial because it enables her to resolve the frictions created when the succession process create conflicting hierarchical positions of the current CEO and the successor across family and firm domains. Prior to the succession process, the family and business hierarchical positions of the current CEO and the successor were consistent across domains: the CEO (i.e. the father) occupied superior positions to the successor (i.e. the son) in both family and business. The succession process, however, disrupts this consistent hierarchy, since it would install the successor as the head of the business over the current CEO, even as he remains the son — and therefore hierarchically inferior — to his father in the family. In the family businesses we studied, this disruption of the previously consistent hierarchy resulted in painful battles between father and son that blurred the boundary between family and business. As the successor tried to step out of his father’s shadow and do things differently, the current CEO feared the loss of the respect that is usually accorded to the father.  The resulting parental pushback made the successor felt unfairly constrained and deprived of the autonomy he needed to run the business.

Seeing her husband and son at odds, the mother naturally attempts to intervene. But the mother loses the legitimacy to do so effectively when she also serves as a top manager in the business. Indeed, the successor tended to receive the mother’s efforts to intervene in his conflicts with the current CEO with suspicions when she was also involved in the business. One successor told us, “[Mom] says she wants to keep family and company separate, but how was I supposed to keep family and company separate when she was still in management?” According to our informants, these three-way tensions were key reasons for succession failure.

In contrast, when mother was uninvolved in the business, she was perceived as more neutral and her domestic authority was more respected. This enabled her to prevent business disagreements between the current CEO and the successor from escalating into personal conflicts by preventing them from entering the family domain. For example, when faced with an argument between her husband and son over business strategy, one the mothers we studied announced, “I don’t care what you guys did at work, and I don’t want to care. But now you’re at my dinner table, and at my dinner table we are family. You guys can fight tomorrow when you get to the company, but not at my dinner table.” Moreover, the mother, by refraining from involvement in the business, was also more effective in using her family authority to help the current CEO and the successor adjust to life post-succession, e.g. by urging the successor to regard his work as building upon that of his father rather than replacing it.

Overall, the mothers who were uninvolved in the business and thus occupied the role of the uniplex third were effective because their role provided them with two qualities that are not often seen together: neutrality and trustworthiness. We normally tend to trust people who we know will take our side. So, they are trusted, but not neutral. By being involved in only the family, however, the mother was able to enjoy the trust of the current CEO and the successor while also credibly remaining neutral to their business disagreements. This enabled her to potently exercise her authority in the family and diffuse frictions between her husband and son during a time of transition in their multiplex relationship.

Overall, the presence of a uniplex third exercises a powerful positive effect on family business successions—and, indeed, on role transitions in all types of multiplex relationships. Our findings thus have implications beyond the realm of family businesses. They illustrate the value of a uniplex third — someone who is both trustworthy and nonpartisan — in diffusing conflicts and facilitating change in multiplex relationships.

♣♣♣

Notes:


Jamber Li is an assistant professor of strategy and policy at the National University of Singapore’s Business School. He has a PhD in management science and engineering from Stanford University. His research interests are embeddedness and multiplex relationships, structure of roles and networks, and culture and organisations.

 

Henning Piezunka is an assistant professor of entrepreneurship at INSEAD, in Fontainebleau, France. He got his PhD at Stanford University, an MSc at the LSE and a Diplom Kaufmann from the University of Mannheim (Germany). Before joining academia, he was an entrepreneur. He co-founded a web design company in 1998, which served clients in more than 80 countries and had 25 full-time employees before he sold it in 2015. Henning’s teaching focuses on the formation of new business ventures.