Lede
Some firms still confuse the nursery with a leadership academy.
What does not make sense
- Calling it “tradition” when the plan is simple. Dad builds. Mum holds. Child takes the chair. The interview is a family lunch.
- Pretending the heir “started at the bottom” when the lift key was handed over at birth.
- Asking staff to clap for merit while every big role has a surname printed on it.
- Acting surprised when good people leave because the ceiling is made of family portraits.
- Treating a company like a court, with courtiers, placeholders and a coronation date.
Sense check
Family firms are everywhere and many are brilliant. But a business is not a bloodline. If the next leader is chosen for DNA, not delivery, the bill arrives in lost talent, slow decisions and soft budgets. If the heir is sharp, fine. Prove it in the wild, then bring the receipts.
The numbers worth knowing
- Most family firms do not survive to the third generation. The drop-off is steep. Survival is the exception, not the rule.
- Perceptions of nepotism cut commitment from non-family staff. People give less when the top job looks stitched.
- Professionalised succession with real processes tends to outperform the melodrama. Placeholder “regents” keep the lights on. Pros raise the game.
- Across economies, family businesses carry huge weight in jobs and GDP. When they slide, whole communities feel it.
The sketch
Scene one: the heir “learns the ropes” in a role created yesterday.
Scene two: a loyal interim keeps the seat warm, calls it stewardship.
Scene three: the crown fits. The best operator resigns. The numbers stop growing. The press release says “new chapter”.
What to watch, not the show
- Job specs written around one person.
- Boards stacked with cousins instead of people who ask hard questions.
- Suppliers chosen for family ties, not terms.
- Promotions that jump rungs because of Christmas photos.
- A culture that says “family first” and means “voice last” for everyone else.
The Hermit take
Run a company, not a dynasty. Put the surname on the door if you like. Put merit in the chair. If the heir is the best, the numbers will say so.
Keep or toss
Toss the coronations. Keep open competitions, independent boards and leaders who earned the keys.
Sources
Cornell SC Johnson College of Business – Family Business Facts (survival rates by generation; economic weight): https://business.cornell.edu/centers/smith/resources/family-business-facts/
Harvard Business Review – The Key to Successful Succession Planning for Family Businesses (nepotism perceptions and staff commitment): https://hbr.org/2020/05/the-key-to-successful-succession-planning-for-family-businesses
Harvard Business Review – Lessons from Large Family Firms About Choosing a CEO (process-driven success vs drama): https://hbr.org/2024/01/lessons-from-large-family-firms-about-choosing-a-ceo
Financial Times – Family charters and why only a minority of firms reach the third generation: https://www.ft.com/content/e3e25299-8d05-41da-83e0-5e92bff18254
KPMG – Global Family Business Report 2025 (scale and governance challenges): https://assets.kpmg.com/content/dam/kpmgsites/xx/pdf/2025/03/global-family-business-report.pdf