Dennis Jaffe published an article in Forbes about what family business leaders can do after they have stepped down from their businesses. He also shared valuable and essential insights about this topic which can surely help family businesses thrive and prosper even better.
Amory “Amo” Houghton Jr. followed his father and grandfather to become the 5th generation to lead their family business, Corning Incorporated (formerly Corning Glassworks). But unlike many family business leaders, he stepped down at age 60, handing over the leadership to a younger family member, as was required by the family’s retirement and succession agreement. This is not what is expected from family business leaders. The more common expectation is to see an 80-year-old patriarch vowing never to step down.
Most aging family business leaders have two dominant desires that are often in conflict. On the one hand, they want to pass the business on to their children. At the same time, they like what they are doing and want to keep doing it as long as they can. But staying on too long can endanger their first desire: successful transition to the next generation.
Why do family business leaders want to stay on so long — way past the average age of retirement? The reasons are often more personal than business-related. They enjoy the perks of leadership, and they have clearly mastered the job. Indeed, they can do it in their sleep. Leaving can look to them like jumping off a steep cliff. They simply don't know what they would do for a second or third act in their lives. Therefore, they want to remain in their seductive comfort zone rather than seek out something new where they might be less successful or important.
Today, life expectancy is greater than ever. If a family leader stays in place for a lifetime, he (or increasingly she) will leave behind two or more adult generations of family members. Their children will reach their 60s, and their grandchildren their 40s — prime times for their careers. Staying on is not helpful to them. Witness the painful place in the family hierarchy of Prince Charles as his mother continues to serve the UK admirably and his children come into their own. This middle-generation dilemma of endless waiting arises in too many family businesses. The rising generation is ready with new ideas and youthful energy. If they have to wait too long, the most talented will seek opportunities elsewhere.
Amo Houghton had a next step in mind when he left his leadership post at Corning. The congressional seat in his upstate New York community was open, and he was well qualified, well known and respected. In fact, other family members had previously held that seat after their retirement. For Amo, this proved to be a good decision. He went on to two decades of congressional service, where, by his own description, he took on important assignments that no one else wanted. At the same time, he served as an elder statesman for the family company. Corning has had to reinvent itself several times, as it moved from glass kitchenware to fiber optics, and Houghton’s decision to move on in mid-life allowed dedicated next generation members to take the family business in fresh, new directions.
Increasingly, talented people experience two or more careers over a lifetime. After a decade or two in one position, they find a new challenge. Bill Gates is a good example. After being a tech-company founder, he joined his wife Melinda to create a family foundation. His company has survived. And his foundation, improving healthcare, reducing poverty, and enhancing education on a global level, is the largest private foundation in the U.S.
James E. Hughes, who has co-written several important books about the human dimensions of family businesses and wealth, suggests a special role for elders is emerging in our society. He believes they can use their wisdom and experience to help their family and the community through a different form of leadership than they used as CEOs or board chairs. They can serve as mentors to the younger generation; they can reach out and find new opportunities; and they can build upon long-standing personal alliances in times of crisis. After they step down and give up formal leadership, they can offer help and guidance to their heirs. Judge Thomas Mellon, who created the banking empire that bears his name, wisely stepped aside for his talented sons. But he had a younger son from a later marriage, and in his mid 70s, he moved to another city and helped that son start a new venture. That was his legacy career.
Jeffrey Sonnenfeld, a professor at the Yale School of Management, studied the different ways leaders leave their organizations. Departures can be smooth and helpful or destructive and highly contentious. In The Hero’s Farewell, Sonnenfeld identified four leadership departure roles taken by CEO’s: Monarchs, Generals, Ambassadors and Governors. Monarchs choose to die in office or are overthrown in a Shakespearian melodrama. Generals leave reluctantly, undermining and plotting against their successors as they plan a comeback. Governors go on to other pursuits, as Houghton did, while Ambassadors stay in the background and help their former firm on important projects as needed.
Becoming an elder is an appealing and important role that all family business leaders can move on to. As of yet, there is no formal definition of this role. It is just emerging as lifespans lengthen and the strong boundary between work and retirement is being breached. While the prospect of travel, golf and leisure is still attractive to many, a life with 30 years of leisure is not so enticing. Business leaders still want to make a difference, even as they leave heavy responsibilities behind.
Chip Conley, who started and sold a hotel company, then joined Airbnb as an executive and is now embarking on yet another career, as he enters his 50s has just written a book titled Wisdom@Work: The Making of a Modern Elder. In it, he affirms that workplaces have to utilize the “human capital” of their elders by creating new roles for them after they retire from formal leadership. Conley suggests that elders can support technology development, mentor and educate young leaders, cement global alliances and help preserve the company’s intellectual capital, its collective memory.
For the elder, stepping down is far from the end of their productive life. After a successful run as a family business leader, there is yet another career stage: the “legacy career.” In this career, which could easily last for 20 years, they can be of service, use their knowledge to help younger leaders build their own business, and mentor and help their children renew and develop the family business. They can also serve their community as volunteers on non-profit boards and/or in service roles.
But to do this, family business leaders need to change their mindset and behavior. They have to give up seeing the power and perks of formal leadership as the end goal and have faith that after they have succeeded and made their contribution, they can go on to serve in other ways. They need to trust their children, allowing them to step up and take on leadership in their own way, even if they feel (often erroneously) that they are not quite ready for the job. They must be willing to step aside for young leaders who are ready and will not wait much longer for their chance to make a difference.
When the CEO of a family business retains leadership much beyond their mid-60s, this can lead the business to coast and become stale. In contrast, inviting the next generation into leadership earlier can bring fresh ideas and new directions, with an elder finding satisfaction and having impact while comfortably serving in the background.
While public companies want their former CEO to leave quickly and not stay around, a family business is also a family. Elders are not exiled. They can help the family develop new ventures, such as a family office or investment arm that add value by investing the profits from their original business. They can serve on the board, sometimes as emeritus members, to mentor and develop new leadership. They can teach, inspire and mentor their grandchildren. They can take on a special project to extend the business. Or they can take leadership in industry organizations or community development, keeping the family name visible and building respect while serving a broader constituency.
This is exciting and important new work for a family business leader. So why do so many leaders hang on to the same role for so many years and frustrate their successors? One reason is that they do not see the opportunity to learn and grow in later life. As respected leaders, they live in a bubble in which they are protected from discomfort and having to learn new things. They only see what they already do well, not what they might learn to do in different environments. They have forgotten how to learn and grow, or they feel that having gotten this far, there is no need for further growth and change. They may even fear change and doubt their ability to adapt. For all these reasons, they stay with what they know, rather than find new paths that can be as rich and rewarding as the leadership role they now enjoy.
Family business leaders reaching their 60s and above can join other elders to define new pathways for legacy careers. As they move from the world they know to one where their creativity, experience and wisdom can be of new benefit, they can recover the excitement of learning they had when they were 30. They might also discover that they can be most helpful to their family business not by having formal power, but by serving behind the scenes or as advisors, helping a new generation of leadership make a difference.
For a family business leader, stepping down is only the beginning. What awaits is stepping up into a new role.