The Change in the Generational Passage in the Company


Let’s examine the peculiarities that such a delicate moment entails for the life of the company

What is the Generational Passage

Today we hear more and more often about “Generational Passage” in the Company… but what does it mean?
This term means that there is a “transfer” of Decision-making Powers and Responsibilities from the previous President or CEO (very often “senior” and identifiable with the Company Owner) to the successor (usually in family businesses it can be represented by the son / daughter or grandchildren of 1st or 2nd degree).

What Changes it involves within the Company Organization

In the majority of cases, the succession at the top of the company involves not only a change in the previous organizational structures with consequent and significant impacts on the working and human side (dismissals, resignations, transfers, retirements), but also changes in the entire business with banks, suppliers, professionals, just to name a few examples), especially in the context of SMEs (Small and Medium Enterprises).
Suffice it to say that 70% of Italian companies are family-run and that almost 25% are led by an entrepreneur over 70 years of age: therefore it is very likely that in the next decade they will probably face the generational change. A recent analysis has also confirmed that, due to the economic crisis amplified by the Covid-19 pandemic, 60% of “family” businesses will not survive after the generational handover causing the loss of thousands of jobs and major repercussions in terms of employment.

Some Causes that determine the failure of the Change

Often, in implementing the Change in the Generational Passage, the Entrepreneur makes the following mistakes:
1. Delaying the “handover”, even in the presence of valid successors, by not organizing it in time
2. Expect that the Sons follow in his “footsteps”, even if they do not have the skills or have different interests
3. Considering all the others inadequate to “take the baton”, creating a climate of distrust in the organization
4. Assigning “key” roles of responsibility and decision-making to children / relatives, even if they do not meet the requirements
In addition to these, there may be many other reasons linked to the character of the decision maker or to the reference market.

How to Effectively Manage Change in the Generational Shift

To implement a generational change without causing serious repercussions for business continuity, the Entrepreneur should first plan this process very carefully and without haste, communicating to his collaborators (management and employees) the future strategies that will redesign the corporate organizational structures and introducing them the new figures who “will pick up the baton” and who will have to be wisely involved more and more in the life of the company, starting to interact more and more with those who tomorrow will have to know how to coordinate.