I was recently speaking to the wife of a retired, very successful entrepreneur who had sold his business some years ago and then invested the proceeds in a number of very sound but passive investments. She was concerned about her husband’s state of mind. He appeared to be chronically depressed with little to occupy him; and with a consequent unwanted interest in the social and retail activities of his wife which once wouldn’t have been of the slightest concern to him. Not surprisingly the marriage was under some strain.
Sadly this is not an isolated case. We hear all too often of business people failing to thrive or even survive for long, in retirement.
Succession plans generally focus on preparing the successor and the business for the transition, and give scant attention to the retiree – other than to define the retirement timeline.
And yet, it is often the issues around retirement that, consciously or subconsciously, prevent the current CEO/owner from addressing the succession issue at all. Most surveys on the subject find that a low percentage of privately-owned businesses have a documented succession plan for either management or ownership. Indeed, in family businesses, it is not uncommon for CEOs to postpone their retirement indefinitely so that succession is unable to be effected in an orderly manner.
The 2006 MGI Australian Family and Private Business Survey conducted by RMIT University found that 56% of family business owners saw themselves working in the business after the age of 65. While 44% of these people gave their reason for this as their good health, nearly one in five admitted that their personal identification with the business and their inability to dissociate themselves from it contributed to their desire to continue working past normal retirement age.
The survey found that 77% of family business owners indicated that they would have something to retire to as opposed to something to retiring from. However this leaves 23%, a significant proportion, without an obvious life after the business. In expressing reservations about succession and retirement over 20% stated that they saw succession as surrendering power over the business and a first step towards losing control over life. Only one in four said they were looking forward to retirement, and only 22% said they had adequate outside interests.
This is hardly surprising for a person whose life has been consumed by building and maintaining a business, with little time to spend on other interests. Indeed many business owners will tell you that their business is their hobby and they feel no need to have other avenues for personal fulfillment.
If we accept that succession planning in family businesses is as much about maintaining family
harmony as it is about maintaining the success of the business, then it is doubly important to focus on the retiree – first to overcome the reluctance to address retirement and succession and secondly to ensure that the person can continue to have a fulfilling life after retirement and be an amiable member of the family.
Activities that are commonly adopted by retirees, other than golf, include:
Whatever the role or activity, it should meet at least one of the following criteria:-
(i) It makes use of the skills and knowledge accumulated by the retirees over their years in business (ii) It is a real, not a token, role. A token role will only magnify the sense of loss – of power, influence and identity. (iii) It is a position that allows the retiree to maintain at least some of their business networks (iv) It allows the retiree to act is some way as ‘head of the family, by continuing to have control over family assets and/or activities.’
In this way the retiree is able to be, and feel, useful and fulfilled and respected by peers and his family. The person is less likely to impede the succession plan, less likely to become depressed and aimless in retirement, and less likely to put their marriage under pressure.