Successful family business succession:

Utilizing peer groups for critical leadership

skills development
Jenell Lynn-Senter Wittmer, Clinton Oliver Longenecker and Angie Jones

amily businesses comprise more than 90% of firms, employ 50% of the workforce, Jenell Lynn-Senter Wittmer

F and create 75% of new jobs, with 33% of the largest firms in the US defined as family
firms (Inc. Newsletter, 2021). While family businesses are the lifeblood of the
is based at Department of
Management, The
University of Toledo,
economy, leadership transitions are often unsuccessful (Poza, 2021). Succession planning in
Toledo, Ohio, USA.
family-owned businesses is more challenging than in other organizations due to nepotism,
Clinton Oliver Longenecker
ineffective planning, and family dynamics (Zellweger, 2017). Less than half of family business is based at MGMT, The
owners expecting to retire are confident in the skills of their successor (PwC, 2016 Family University of Toledo,
Business Survey). To develop the next generation of leaders, it is imperative to identify the skill Toledo, Ohio, USA.
sets that are most critical for success, as well as understand how best to develop future leaders of Angie Jones is based at
family businesses. This study explores what skills current business owners and future successors Family Business Center,
deem to be most critical, along with the development activities they believe are most effective. The University of Toledo,
Toledo, Ohio, USA.

Method
A needs assessment was conducted on a sample of 150 family-business leaders belonging to
a Midwestern Family Business Center (current owners 64%, successors 36%; mean age
51 years; 67% male, response rate 83%, from a variety of different industries such as retail,
manufacturing, sales, IT, etc.). Leaders were asked “What are your most pressing leadership
development needs for your organization as you move toward succession?” Leaders were
prompted to think about the specific developmental needs of the successor (or themselves if
they were the successor). A follow-up question was asked: “For each of these skills, what
method would best help you develop this skill?” Examples were provided, such as traditional
classroom training, peer groups, executive coaching, online learning, etc. Responses were
content analyzed, placed into themes, and percentages for each theme were calculated. The
top eight necessary leadership skills are identified below, along with the preferred methods for
development. There were high percentages associated with each of these key leadership skills,
especially given the open-ended nature of the questions.

Leadership succession skills & development

#1: Effective Communication/Active Listening (94 per cent) – Communication surfaced as
the single most important factor for leadership succession in a family-owned enterprise.
Communication is the lifeblood of any organization, especially during periods of transition,
as it ensures people have necessary information about the enterprise and how to perform
their job. It allows them a voice to express their opinions, identify problems, and share
opportunities for improvement. The preferred method of development was peer groups.

DOI 10.1108/DLO-07-2021-0116 j
© Emerald Publishing Limited, ISSN 1477-7282 DEVELOPMENT AND LEARNING IN ORGANIZATIONS: AN INTERNATIONAL JOURNAL j
 Peer groups allow leaders to discuss sensitive topics regarding difficult communication
issues with others who share similar experiences.
#2: Employee Engagement (85 per cent) – Employee engagement has been found to have a
powerful effect on commitment, motivation, culture, problem-solving, and the ability to adapt to
rapidly changing environmental conditions. Especially during times of transition, family
business leaders will need to rapidly engage employees in order to connect and motivate their
team. Again, family business leaders expressed that peer groups will allow them to develop
better employee engagement tools; learning from others in similarly structured and led
businesses can provide them with information about successful engagement strategies.
#3: Emotional Intelligence (81 per cent) – Emotional intelligence (EI) has been linked to
leadership success in a variety of settings; family businesses are no exception. During
periods of leadership transition, effective working relationships are essential, and those with
higher EI, are in a much better position to cope with the challenges associated with
leadership transition. It takes exceptional EI to balance the emotions, relationships, and
stress of both family and work within the one setting. Leaders suggested that peer groups
allow them to self-reflect and receive trusted feedback about areas for improvement in EI (in
a judgement free environment) from others who know them well.
#4: Crisis and Stress Management (77 per cent) – In turbulent times and those of change,
stress management skills are required, as leaders attempt to navigate the dynamic, fast-paced,
and unpredictable environments with high quality critical thinking, problem-solving, and
decision-making. In family businesses, leaders are likely to feel more pressure given the
personal nature of the business and the number of loved ones depending on its success. Peer
groups, again, were most preferred, as leaders felt that having an opportunity to discuss stress
and concerns in a confidential group (and to learn that others are experiencing similar issues),
allowed them to manage their stress more effectively.
#5: Mentoring and Coaching (73 per cent) – While formal training programs are important,
on-the-job training continues to become a larger component of workforce development and
talent management in family businesses. In order to stay competitive, leaders need to
develop their team rapidly and with fewer resources. Participants identified the ability to
mentor and coach organizational members, providing them feedback and guidance, as
necessary to accelerate employee development and learning. Many reported finding their
own mentors through peer groups, which have helped them navigate through issues unique
to family businesses, like how to be a mentor and coach to your own child.
#6: Delegation (69 per cent) – Delegation allows leaders to drive the engagement and
development of employees, along with clarifying individual/group performance expectations,
and creating a culture of accountability. Within family business settings, proper delegation and
accountability are paramount to avoid perceptions of favoritism and bias. While several
respondents cited that coaching is helpful for the development of delegation skills, the majority
continued to cite peer groups as their preferred method of development. Sharing with leaders
who have had similar experiences can provide leaders with targeted and trusted advice.
#7: Change Management (65 per cent) – The environment that family businesses operate in is
becoming increasingly dynamic, competitive, and disruptive. Modern leaders must possess the
ability to lead all types of change whether strategic, operational, or tactical. It is somewhat ironic to
note that our participants made it clear that change management skills are required for an
effective succession – a process that itself represents a significant change. Similar to delegation,
many leaders reported that coaching is helpful during times of transition and change, but peer
groups still maintained as the preferred method for developing change management skills. One
individual stated, ‘‘My peer group holds me accountable for the changes that I know that I need to
make, especially as they relate to changes that will impact family members. They have walked me
through these changes step-by-step and have been there for me when I need a sounding board.’’

j DEVELOPMENT AND LEARNING IN ORGANIZATIONS: AN INTERNATIONAL JOURNAL j

#8: Conflict Management and Resolution (51 per cent) – Family businesses have all the
pressures associated with running a normal enterprise coupled with the challenges that can
come along with “family,” such as family dynamics, sibling rivalries, and generational
competition. It is easy to see why conflict management skills are deemed necessary for
effective transition. Peer groups were cited as the preferred method of developing conflict
management and resolution skills. Family business leaders prefer to learn from peers who
have been in similar conflicts and understand the pressures of working with family.

Discussion
Previous literature on leadership development has paid little attention the value of peer groups
as a development tool, citing other activities such as executive coaching, classroom/online
learning, etc. A major practical implication of the current study is that family firms looking for
developmental opportunities for leaders should turn to the unparalleled resource of peer
groups. There is faster growth and more profitability when leaders are in peer groups (5 per
cent growth rate compared to an industry average of a 1.62%; 22.6% operating margins, as
opposed to an industry average of 10.26%). Best practices suggest that peer groups be
reserved for members of the owning family and non-family C-suite executives with longevity in
the organization. Groups should be formed under a rigorous process where multiple members
of a family business center meet with individuals and assess their personality, business/
personal situations, and expectations/motivations. After a careful vetting process, ensuring no
conflicts of interest, groups should be formed and adhere to a formal onboarding process that
starts with group training. Meetings should be confidential and self-moderated (where
moderators are provided semi-annual training and are responsible for the overall health of the
group). Success and health of the peer groups should be measured by constant contact with
the moderator and an annual survey (Loeffler and Wittmer, 2020).
Future research should examine the success of peer groups as a developmental tool before,
during, and after succession in order to inform future creation and utilization of peer groups as
a developmental tool. In summary, family business leaders prefer to learn from others who can
Keywords:
relate to their unique issues and concerns in a structured, trusted, and confidential manner. In
Leadership skills,
the leadership development process, researchers and practitioners should keep in mind the Family business,
context of the business and the preferences of the leaders themselves when determining Succession,
leadership development activities, especially during the critical time of succession. Peer groups

References
Inc. Newsletter (2021), “Family owned business”, available at: www.inc.com/encyclopedia/family-
owned-businesses.html
Loeffler, K. and Wittmer, J.L.S. (2020), The Value of Family Business Peer Groups during a Global Crisis,
Family Firm Institute, Boston, MA.
Poza, E.J. (2021), Family Business, Cengage Learning, Boston, MA.
PwC (2016), “Family business survey”, available at: www.pwc.com/gx/en/services/family-business/
family-business-survey-2016.html
Zellweger, T. (2017), Managing the Family Business: Theory and Practice, Edward Elgar Publishing, Cheltenham.

Corresponding author
Jenell Lynn-Senter Wittmer can be contacted at: jenell.wittmer@utoledo.edu

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