The death of a loved one will change your family. Make sure it doesn’t also put your company at risk.
By Ellen Frankenberg
One of the greatest obstacles to succession planning is the fact that life has limits. The “D word” still evokes shivers, especially among confident business leaders who expect to solve any problem that comes along. “If I die…” they say, in hushed discussions with estate planners, rather than, “When I die…”
Precisely because they have been so successful, some strong family business leaders consider themselves indispensable. They delay succession planning because it’s so hard to picture anyone else in their seat.
To add a touch of reality, some families conduct a “fire drill” exercise: They schedule a meeting “as if” there had been an emergency, such as a death in the family, and rehearse how they would make decisions with an empty chair at the head of the table. Dad or Mom can sit in the background, learning how their children or grandkids would get along if the parents couldn’t intervene to manage conflict or break a tie.
Bonnie Brown Hartley’s book Sudden Death: A Fire Drill for Building Strength and Flexibility in Families raises practical questions to prepare entrepreneurial families for immediate needs following a death. (See also Bonnie M. Brown, “Arming your firm against crises,” FB, Autumn 1997.) Some considerations:
- If succession planning is not complete, has a brief initial plan been written and left with an impartial person?
- If there is no member of the next generation prepared to lead the company, who will be appointed as an interim leader? Has a clear understanding of this individual’s role been confirmed in writing?
- If a spouse will inherit immediate control of the company, what does he or she need to know to manage a successful transition?
- Are wills, trusts and guardianships up to date? Which legal adviser should your heirs call first?
- Will ownership of company stock be transmitted in a way that provides control to those who will lead the company, or is it split among many heirs?
- Is life insurance sufficient, given the growth of the company, especially if it will be used to buy back stock? Who is the agent? Are beneficiaries up to date?
- Which financial adviser knows about other investments—personal stock portfolios, IRAs, deeds or other corporate assets? Have beneficiaries already been assigned to these assets? How will estate taxes be managed?
- Is there proprietary information, technical knowledge or critical business contacts known only to the current leader?
- Are there co-signers on checking or savings accounts or lines of credit?
- How will management handle immediate cash needs?
- Is there a competent board of directors/advisers capable of managing a transition and confirming the next CEO?
A system upended
When the leader of the family and the family business dies, after a prolonged illness or suddenly, the whole family system is upended. Not only is each individual affected by a range of complicated emotions, but all the relationships between individuals in the family are changed. Any family is more than the sum of its members; each individual’s presence and role affect the way every other individual participates. When the family also owns and manages a business, they must quickly reorganize to find a new equilibrium.
Who will speak for the family at the memorial service? How will we handle differences of religious belief at the funeral? Who will stay at the house with Mom during the next few days? Who will speak to the employees on Monday morning? Whom did Dad ask to be executor? How does the board function when its chairman dies unexpectedly? Who will work with the bankers now that Dad’s signature no longer secures the credit lines? New roles and responsibilities must be assigned and supported by the whole family.
It’s one thing to know that Dad intended to appoint Brian, the youngest son, as president, but quite another to see Brian move into Dad’s office and sit in his chair. How will Brian’s older sister and brother relate to him now? What will Brian have to do to earn the respect of the family and other top managers? No one can do things the way Dad did them, and discovering a new way to lead a unique and complex family system cannot be taught in business school.
Each death carries a different meaning for each member of the family. Some family members may have become closer during a final illness; others may not have resolved longstanding conflict with Dad before he died. A son or daughter who expected some long-delayed sign of approval that never came will find grieving more complicated.
New roles assumed—president, majority stock owner, widow—may carry either secondary losses (feeling robbed of a familiar identity) or secondary gains (finally becoming the decision-maker). Grief over the loss of a beloved family member may be complicated by more private feelings of excitement over new opportunities. After a long illness the predominant feeling is often one of relief. If the deceased was a tough and critical taskmaster, the family may look forward to new leadership, even though no one says this out loud.
Within the intimacy of the family system, each member’s grief can trigger another’s. Some members may not want to talk about death because they don’t want to lose control; some may try to “protect” others from intense feelings of loss. Some may want to keep Granddad’s office just the way it was when he left it; others will want to move on as quickly as possible. Why not take a cruise this Christmas, so we won’t see the empty chair at the table?
Each member’s response to death will differ, and each must be acknowledged. Most experts believe it takes at least two to five years to get beyond a major loss. Each family member will need to find his or her own rhythm for grieving, depending on the quality of that person’s relationship with the deceased.
Working through grief
Sometimes people with good intentions try to determine the meaning of another’s grief:
“Something good will come out of your loss …”
“She has gone to a far better place …”
“Don’t worry, you’re still young enough to find someone else …”
“This is God’s will for you and your family …”
“Aren’t you over that yet?”
A woman who lost her 41-year-old husband, a marathoner, to a shocking heart attack said that the only thing from her deeply religious heritage that made sense to her was one quote from the Book of Job: “Listen, only listen to the sound of my voice.… This is the consolation you can offer me.” She didn’t want others to try to interpret her overwhelming loss, but to simply listen to her.
Working through grief isn’t for sissies. Therese Rando, Ph.D., in her book How To Go On Living When Someone You Love Dies, describes the time and energy that are required to work through grief. Grief, Rando writes, is handled best by those who can:
- Acknowledge the loss and the complicated feelings it triggers.
- Allow themselves to experience the pain, to cry, to get angry or anxious, to react to the separation according to what the loss means on a deeply personal level.
- Move forward into new roles and responsibilities, while also acknowledging both good and painful memories from the past.
Working through grief while continuing to manage a family business requires some additional choices:
- Avoid making life-changing decisions for at least a year, if possible.
- Take very good care of your own physical health—eat right, sleep well, exercise (or walk at least a mile a day in the sunlight).
- If you see any changes in your health, get a medical check-up.
- Build a small group around you of those who can support you in your grief and also keep focused on the requirements of the business.
- Find appropriate ways to memorialize the deceased, according to your family’s values and the company’s culture.
- Determine which skills you need to develop in order to succeed at your new role, and then be easy on yourself as you attain them.
- Spend time with the most competent legal and financial advisers you can find.
- Find some way to make your own life meaningful, even if you can’t explain why someone else died.
The loss of anyone in your family’s inner circle will change you—and may put your company at risk, if the transition is not handled smoothly. The pain of loss may never entirely go away, but it will become less acute, like a scar that you can still see but isn’t painful every day. Learning that life has limits can make each day you have yet to live —and those who share those days with you—more precious than you ever realized. FB
Ellen Frankenberg, Ph.D., is a consulting psychologist who works with family businesses in transition (www.frankenberggroup.com).