I have seen the coffee mugs proclaiming that 60 is the new 40. I marveled at the pictures and videos of octogenarians competing in and completing marathons. I have read the World Health Report for the 21st century which celebrates “the prospect of a healthy and extended old age” for people around the globe. Robert Murdoch, 81, is getting divorced from his third wife with whom he has two pre-teen children just as he is excitedly restructuring his news empire.
My own mother had managed three foreign trips in the six months before she died at age 90. My father continued to spend time in the store daily up until 6 months before he died at 80. I get it! We are living longer and are far more active than preceding generations. Lovely, isn’t it?
Except if you are a next generation family member, who is working in the shadow of a senior generation member who refuses to move over. Lest I be accused of being ageist, let me immediately say that I am fast approaching eligibility for old age pension. I feel the pain, however, of the successor generation which must wait till death to release their father, uncle, mother, or aunt from their stranglehold on the business. Regrettably, it is often an iron grip that these folks exert on the business, wanting to control details even as they do not use e-mail.
I am not advocating that we put the senior generation out to pasture as soon as they turn 65. Yes, there is space for their wisdom and experience during a transitional period, but, there must be that — a time when they loosen their grip on the business and allow successors to put their stamp on the organization. In my own practice, I have had some instances of senior generation members relinquishing the reins as they approach 70. Seems to me like that is a pivotal age for some folks. They genuinely begin to cut back on hours and responsibility as they get to that milestone in their lives.
I have also encountered those who are close to 80, or have even crossed that threshold, and refuse to budge. They want to continue operating as they did 20 years before, even if it is painfully obvious that the business needs new input. How is it that these business owners do not see it? Why do they continue to cling to a career that requires modification if not relinquishment?
No Enforced Retirement
The short answer is because they can. These are not employees bound by prescribed retirement ages or contractual obligations. They have the choice to stay put “till death do us part”. My observations are that those who have a life outside of the business are more inclined to step aside and move on. This is borne out by research which concluded that married business owners are more likely to fully retire, as opposed to partial retirement, than those who have lost their spouses to divorce or death. They have a constant companion with whom they can pursue other activities. And folks who have an active social life are happy to get out of the office and do more, and different, things. The research also considered the financial aspects of full vs. partial retirement, and found that sole proprietors and those with more equity in the business need to stay on the payroll longer to secure their lifestyles.
As counter intuitive as it appears, especially to founders who often struggle to finance the business in the beginning, it is necessary that business owners begin to make financial provisions for their golden years as if they would not have access to operational business income. Yes, I know that if you leave more capital in the business, it could yield more returns than ceding that money to an investment banker. I am familiar with that and other arguments that family business owners make for putting all their eggs in one basket; and I have seen that basket crash to the ground, too.
Mostly, though, the partial or non-retirees do not have financial reasons for staying put. It is really about not having created a life outside of daily desk routines. Again, these folks counter that they devoted all their time and attention to building a successful business, which would have suffered drastically had they split their focus. Yet, research points to the creative value of periods of disengagement to drive the energy and results of full engagement.
Sometimes the best business ideas are generated in your brain as you tee off or visit an art museum, far away from your desk. The reality is, though, that the most tenacious family member CEOs have not managed to develop interests that they consider productive and, frankly, as engaging as walking the shop floor. And, often, the next generation feels despair as they are not able to implement any of the new ideas and approaches necessary for their own fulfillment, and often for the growth of the business. Is the angel of death the only savior in this situation?
Alternative Paths
The final separation is not the only way forward. In some cases, the umbrella of the family business is wide enough to cover a separate entity or division into which the semi-retired senior generation member can have the kind of operational input that he or she covets. Sometimes the “retiree” can go dabble in another business which uses his original skills, but does not compete with the current family business.
One of the Mars empire senior generation members did exactly that–he started a gourmet chocolate company which kept him in the game, but not in the same division as the family business. For others, the real estate portfolio in which many operational FBs invest their profits, provides alternative work for senior generation members. They embark upon developing land or renovating existing buildings.
I continually advocate for using the talent and experience of these seniors to mentor other young business owners. I am creating my own private database of these folks to offer as board members for other family businesses or personal mentors to non-family members– a worthwhile second career to be sure. We are grateful for the medical advances that allow us to have second and third acts. But that is what they must be–not an extended first act.