Succession to the next generation is a widely discussed topic connected to family businesses. Thus, planning for this event, while also considering the employees of the business can be considered to be very important. This bachelor thesis, therefore, aims at giving a guideline on what actions incumbents and successor of a family business should take in order to prepare their employees for succession.
Firstly, a comprehensive literature review highlights several important topics connected to the succession within a family business. The significance of the incumbent and successor, as well as of the employees of a family business are also elaborated in order to highlight the relevance of these topics. Furthermore, succession within the family business is then connected to various steps and theoretical models. Moreover, a qualitative research approach in the form of expert interviews, combined with a case example of a family business are used in order to identify relevant information connected to the topic.
Table of Contents
1. Introduction
1.1. Problem Definition
1.2. Aim and Research Question
1.3. Methodology
1.4. Definitions
1.4.1. Family Business
1.4.2. Succession
2. Literature Review
2.1. Succession in Family Businesses
2.1.1. The Succession Process
2.1.2. Succession Planning
2.1.3. Success Factors for Succession
2.2. Employees’ Perspective
2.3. Incumbent and Successor
3. Empirical Approach
3.1. Description of Analysis Method
3.2. Sampling
3.3. Setting of the Interview
4. Results
4.1. Responsibility and Role Assignment to Successors
4.2. Incumbent Moving to the Background
4.3. Investing into the Next Generation
4.4. Early Integration of the Next Generation
4.5. Working Atmosphere
4.6. Open and Trustworthy Relationship with Employees
4.7. Open and Transparent Communication
5. Discussion
5.1. Give Signals to Employees
5.2. Build Trust and Foster Communication
5.3. Conclusion
5.4. Critical Reflection and Future Outlook
Research Objectives and Themes
This bachelor thesis aims to provide a comprehensive guideline for incumbents and successors in small to medium-sized family businesses on how to effectively prepare their employees for a succession process. The central research question focuses on identifying the specific actions that both current management and successors should undertake to mitigate the risks associated with organizational change and ensure continuity.
- The role of the incumbent and the successor in facilitating organizational transition.
- Methods for providing clear signals to employees regarding the succession process.
- The importance of fostering a culture of trust and open communication to reduce resistance to change.
- The integration of the next generation into the business as a preparation strategy.
- Strategies for maintaining a stable working atmosphere during generational shifts.
Excerpt from the Book
1.1. Problem Definition
As highlighted above, the succession of a family business to the next generation can be seen as a major change as well as challenge within the company. This special form of change can even be seen as one of the most significant strategic issues, which most family businesses are likely to face at one point in time (Ibrahim et al., 2001, p. 245). Especially for the family business top management this issue is one of the most important ones to consider (Chua, Chrisman, & Sharma, 2003, p. 91). Several prior studies have been dealing with the succession process within family businesses. Special focus has been given to the area succession planning (Bigliardi & Dormio, 2009, p. 48; Morris, Williams, Allen, & Avila, 1997, p. 398; Sharma, Chua, & Chrisman, 2000, p. 237; Tatoglu, Kula, & Glaister, 2008, p. 173). Further studies also dealt with the correlation between succession and business performance (Wang, Watkins, Harris, & Spicer, 2004, p. 77) as well as the relationship between a family business structure and succession (Brenes et al., 2006, p. 374).
The two parties, which are likely to be responsible for dealing with the succession process most, are the incumbent as well as the successor of the family business. As Wang et al. (2004) confirm “successors are an important stakeholder group in the succession process” (p. 61). Nevertheless, according to Lipfert (2013) also incumbents play a crucial role during succession (p. 69). However, also non-family managers and the relationship with them should not be neglected (Chua et al., 2003, p. 104). Nevertheless, especially the incumbent as well as the successor should deal with their employees during the succession process appropriately. Furthermore, they should also prepare them in the best possible way for the change, in order to avoid negative consequences of the change. The sufficient planning of the succession can be seen as a key factor for success (Bigliardi & Dormio, 2009, pp. 47–48; Morris et al., 1997, p. 398). Overall, it has been identified that there is a lack of research concerning the question of how to deal with the employees of a family business, more specifically what the roles of the incumbent and the successor are, when it comes to the preparation of employees for succession.
Chapter Summary
1. Introduction: Introduces the importance of family businesses in the economy and defines the problem of succession as a significant strategic challenge requiring employee preparation.
2. Literature Review: Provides a theoretical overview of succession processes, planning models, the employees' perspective, and the roles of incumbents and successors.
3. Empirical Approach: Describes the qualitative research design, including expert interviews and the circular deconstruction analysis method used to evaluate data.
4. Results: Details key findings from the interviews, focusing on role assignment, incumbent transitions, employee integration, and communication strategies.
5. Discussion: Synthesizes the research findings with literature to provide actionable recommendations for managing succession through signaling, trust-building, and communication.
Keywords
Family Business, Succession, Succession Planning, Incumbent, Successor, Employee Preparation, Organizational Change, Trust, Communication, Knowledge Transfer, Generation Transition, Employee Satisfaction, Qualitative Research, Management, Leadership
Frequently Asked Questions
What is the primary objective of this bachelor thesis?
The thesis aims to provide guidelines for incumbents and successors in family-owned businesses on how to prepare their employees for a generational handover, ensuring business continuity and minimizing potential negative impacts of organizational change.
What are the core thematic areas discussed in the work?
The work centers on the succession process, the role of leadership in family firms, the necessity of transparent communication, employee integration, and the psychological aspects of transitioning control between generations.
What is the central research question?
The research asks: What actions should the incumbent as well as the successor of a family business take in order to prepare their employees for a succession process?
Which methodology does the author employ?
The author uses a qualitative research approach based on expert interviews with three generations of a family business and an employee, analyzed through a circular deconstruction method.
What does the main body of the work cover?
It covers the theoretical foundations of succession, the empirical analysis of a specific family firm case study, and a discussion of key strategies such as role delegation, signaling to employees, and building trustworthy relationships.
Which keywords best characterize the research?
Key terms include Family Business, Succession, Succession Planning, Incumbent, Successor, Organizational Change, Employee Preparation, and Knowledge Transfer.
How does the author define a "Family Business" for this study?
The author utilizes the Three-Circle model, defining it as a business governed or dominantly managed by family members, with the majority of ownership held by the family.
What role do the employees play according to the findings?
Employees are identified as key stakeholders whose acceptance of the successor is vital for success; they are considered a "key asset" that requires proper communication and inclusion to prevent resistance to change.
Why is "early integration" considered a success factor?
Early integration helps build emotional bonds between the successor and the firm (including its employees), facilitates knowledge transfer, and provides a clear signal of continuity, which helps stakeholders adjust over time.
- Quote paper
- Janina Berkmann (Author), 2016, When the Senior Leaves and the Junior Takes over. Preparing Employees for Succession in a Family Business, Munich, GRIN Verlag, https://www.grin.com/document/432728
