KINGSTON, R.I. – April 19, 2023 – By 2030, more than 30% of family businesses in the U.S. will lose their aging leaders to retirement, or death. Many of those leaders don’t have a strategy for letting go of their business, turning it over to a successor, or selling it. While it is rare for an incumbent leader to die while in office, it is difficult for them to face their mortality. Yet letting go and the outsized effect of facing one’s mortality have not been examined closely since early writings in family business.
Nancy Forster-Holt, assistant professor of innovation and entrepreneurship in the University of Rhode Island College of Business, has seen that up close. About 20 years ago, she and her husband bought a marine products company from an aging owner, “Paul,” who hadn’t planned for his eventual retirement.
“Very few business owners have an exit plan. When we bought our business, the owner told us, ‘I didn’t have an exit plan; I had a heart attack.’ That was so profound to me. That’s what led to my Ph.D. topic on the retirement of business owners.” In reading Atul Gwande’s book “Being Mortal,” she was struck by the parallels between facing one’s mortality and planning to let go of one’s business.
“It struck me as different from what I’d heard in the medical world where if you understood your mortality, you’re a little more likely to let go instead of pressing for life-saving outcomes,” said Forster-Holt, whose research interests include succession of family business owners, and gerontology and retirement of aging “ENDrepreneurs.” Instead, existing scholarship on family business succession emphasizes the leader’s quest for immortality, stating it was the chief cause of failed succession, she said.
Now Forster-Holt and co-authors Susan DeSanto-Madeya, a URI associate professor of nursing and palliative care expert, and James Davis, a professor of management, marketing and strategy at Utah State University, are looking at the phenomenon of the disconnect in succession planning of small business owners in a new paper. Their essay, “The Mortality of Family Business Leaders: Using a Palliative Care Model to Re-imagine Letting Go,” was published in March in the Journal of Management Inquiry, a leading peer-reviewed journal for scholars and professionals in management, organizational behavior, strategy and human resources.
Their paper explores existing literature on family business succession and rethinks the understanding of mortality and its connection to a business owner’s planning to “let go” – inserting the medical model of palliative care to understand its possible effects on the process. Palliative care makes use of tools that span a period from diagnosis to death, and the paper introduces the idea that planning to let go of one’s business takes many forms. The authors offer the Mortality Awareness Model, which depicts four states of letting go, reflecting where a person is in confronting their mortality.
Forster-Holt, who made a call for a better understanding of the struggle to let go in a TEDxURI talk, ran the family business center at Husson University in Bangor, Maine, prior to coming to URI, and found that existing scholarship on family business succession didn’t provide for an adequate way to discuss it.
“The tools were lacking for me in my practice with family businesses,” she said. “You just would hear story after story of advisors not knowing how to get deeper, and not knowing the language that would help leaders and their families to talk about the future. We didn’t have the tools, not even the conversational tools. I said, ‘What if there was a toolkit for that? What if there was a better way of talking about it?’”
In their essay, the authors offer an interdisciplinary approach to the question of letting go by adding palliative care, specialized care that is recognized by the American Board of Medical Specialities and the Accreditation Council for Graduate Medical Education.
Palliative care places emphasis on mortality awareness and planning, Forster-Holt said. It provides an evolving approach that focuses on a person’s quality of life during serious illness and at the end of life, while also promoting an understanding of one’s mortality – not necessarily that the person’s death is imminent – and facilitating an appropriate level of planning.
It addresses the reluctance of incumbent family business leaders to plan for letting go by including family or other stakeholders in the process, setting up ground rules, and promoting clear and timely communication, goal setting, dignity, trust and a shared understanding of choices.
The essay also looks at levels of mortality awareness and advanced care planning – key parts of palliative care – creating a model of four states of letting go and organizational succession outcomes, including good, forced, failed, and eluded. The typologies provide a diagnostic tool in which letting go can be better understood, managed and planned for.
“This model could start a thousand conversations,” said Forster-Holt. “For example, a leader and their family can be in the quadrant of ‘Good Death,’ with high mortality awareness and high levels of planning, or they can be in ‘Denial of Death,’ with low levels of awareness and planning.
“This is simply labeling the outcomes from lack of awareness to high awareness and from lack of planning to very high planning and everything in between,” she said. “The family business literature talks about not judging. I can’t tell you whether you had a good or bad succession. It’s up to you to judge. Palliative care promotes the ‘rescued journey’ where you can use the tools available to improve outcomes – in our case, business exit. We’re asking, ‘Is there a way to see where you are now and understand that maybe there’s a way to go somewhere else, using your family with you.’”
Forster-Holt sees future research opportunities from the essay, including exploring the relationships of gender and culture to mortality awareness and letting go. It could also inform advisory services for family business and promote the inclusion of palliative care specialists as trusted family business advisors.
“I want to produce work that is useful to advisors, practitioners and family businesses,” she said. “I also would like to see it taught in the classroom. We don’t teach about mortality in business school, but we probably should.”