You’re a family business owner operator with retirement on your mind, but there’s a problem.

There is not viable successor in sight.

You’ve combed the ranks and imagined each of your key stakeholders as a potential successor, but no one fits the bill. You’ve racked your heart and mind, but facts are facts: there’s nobody on the inside who is both willing and able to take over the management of the family business.

So, again, you’ve got a problem. And the ultimate resolution to that problem—short of selling the company— involves hiring a manager from the outside.

In a family business, bringing in an external successor creates its own set of challenges. How will the new leader negotiate the already-existing family dynamic in the business? Who will help navigate the complexity? How will he or she be received?

Those questions become all the more acute when you realize that the employees who will be left to onboard the new leader will be the very family members you might have passed over.

As we’ve seen time and again, these are dicey waters. That’s not to say, however, that they can’t be navigated. It just takes time, intention, and ongoing conversation.

When you make the decision to pass over an employee, it’s important that you communicate with them openly and honestly. Treat this as an opportunity to strengthen their value to the company. How?

Use this simple formula as a guide:

  • Acknowledge that you understand how the employee feels.
  • Appreciate the employee’s ongoing contribution using concrete examples.
  • Affirm his or her value to the company—both now and in the future.

Are you preparing to bring in an external successor? Not sure how to break the news to your current employees? With the right approach, you can ensure that passed-over employees retain their enthusiasm and become effective ambassadors for the new leader. They may not pick up the baton in a formal sense, but their positive influence is still important for the company’s success.

One more thing, if you need help with the conversation, this step by step conversation guide from a psychologist might help. Check it out.


succession strength logo Succession Strength, Inc helps entrepreneurs and family business owners pass the business smoothly from owner to heir. Take our free survey today to assess your succession readiness.