One of the challenges for founders of family businesses is aligning the career expectations of the next generation. The younger generation tends to seek certainty so they can move quickly to make decisions, but they often find themselves at odds with the leadership style of founders who may feel it is not yet time to discuss succession planning. In addition, there is a cultural norm that the eldest member typically becomes the next leader. This article explores the importance of clarity regarding timing and the challenges posed by the culture of seniority in the family business succession process.
The "Timing" Issue That Is Rarely Discussed
Several case studies in family businesses in Indonesia show that the next generation often needs clarity regarding when they can make important decisions for the family business and what their future career path within the family business will look like.
However, the timing—specifically when and in what role—is rarely discussed openly by parents or founders. Founders often put off the conversation, reasoning that they’re still capable of running the company for the time being.
What usually happens is that founders tell their children to “just go along with it—it’ll be yours eventually” without any clarity on career plans, which can create confusion. Without a dialogue about when and how this transition process will be carried out, the next generation’s motivation to contribute fully to the family business typically diminishes over time.
The Pitfalls of Seniority and Patriarchy
Furthermore, in family businesses, there is often a tendency to prioritize the eldest child as the company’s next leader. This is a tradition commonly found in family businesses. However, this tradition must be approached with caution and accompanied by an objective assessment of competence.
Automatically designating the oldest child as the “next leader” without assessing their abilities or considering the organization’s needs typically increases business risks and poses a threat to the family business. If leadership structure is determined solely based on birth order, this often overlooks the potential of younger siblings who may be more competent in specific areas.
Impact on Sibling Harmony
Neglecting a merit-based system in favor of maintaining traditional seniority can trigger internal conflicts among siblings.
If top positions are awarded solely based on age while performance isn’t the primary criterion, this usually creates a potential source of conflict for younger children, who may be more competent. As a result, one of the best talents might actually choose to pursue a career outside the family business.
If we prioritize the eldest, even though the eldest isn’t necessarily the most capable, right?[1]
David Bingei, Fidelitas Advisors
Among the factors that need to be considered in family business succession are clarity regarding the succession plan and fairness in the evaluation of potential successors. By clearly communicating the timeline and implementing an objective merit system, founders can increase the likelihood that the next generation will want to join and carry on the family business, and at the very least, provide a strong foundation (based on the merit system) for how the next-generation leader is appointed as the successor to the family business.
