Joe started a small manufacturing company in his garage 30 years ago that grew to a sizeable company with more than 100 employees. Joe wouldn’t consider his business a “family business” technically, but his wife had originally worked as the bookkeeper, and all of his three kids worked in the business growing up – sweeping the floor and doing other menial tasks during the summers. After graduating college, one of his sons returned to work in the business, starting in customer service, but both of his daughters moved away: one to attend medical school and the other to pursue acting.
Joe was excited to have his son, Kyle, work in the business. He had always secretly hoped that at least one of his kids would want to work in the business and continue his legacy. Kyle was good with people and a hard worker, so he quickly gained the trust of other non-family managers in the business and was soon promoted. Kyle and Joe got along well and there was never much family drama, although there wasn’t much interaction either. As Joe approached retirement age, it was fairly obvious that Kyle was the heir apparent to take over running the company. The majority of senior leaders in the company were all nearing retirement themselves, and Kyle was already showing himself to be a driven and capable leader. Joe was never one for much formality, so he had never created a formal succession plan or had any formal discussions about what was next. He figured it would just “happen.”
When Joe turned 60, the age that he had originally thought he might retire, he decided that he was having too much fun working in the business. This was his “baby” and the company had a lot of exciting opportunities in front of them. Joe’s health was good and business was booming, so he continued working into his late 60’s. One day Kyle came into his office, closed the door and told his dad he was quitting. He had found a position out-of-state working with an old college buddy. He would start as the COO and have the opportunity to run the company in a few years if everything went right.
Joe hardly knew what to say. He felt blindsided. He felt betrayed. He felt confused. Why would Kyle leave him and the business they had built together? Why would he leave the potential ownership of an extremely profitable business behind? Why would he destroy his father’s legacy?
Kyle left the business and went on to a very successful career as CEO of several other manufacturing companies. Kyle and Joe’s relationship was always cordial, but was never the same after Kyle left. Joe’s business continued to succeed, but after a heart attack, he had to step away from the business and things began to go poorly. It quickly became evident that the company’s success had primarily been because of Joe, and he hadn’t built a strong enough leadership team around him to continue on.
As Joe had more time to reflect on where things had gone wrong, he realized a few things he had been blind to previously. He had always assumed that Kyle knew his succession plan and knew how badly he wanted Kyle to continue running the business for him – but they never actually talked about it. And they never talked about finances either - Kyle had never actually seen the P&L (that was a closely guarded secret), so he had no idea what potential he was leaving behind. The lack of communication and assumptions on both sides sunk a successful business transition.