Good morning,

It’s an eventuality for most family enterprises: determining the right time for the leader to retire and make room for the next generation. But that decision can be complicated by a seemingly simple number: age.

How old is too old to lead? When is a successor ready to take over? And what can companies do to ensure that transition doesn’t turn into a protracted—and detrimental—guessing game?

Kellogg’s Matthew Allen offers advice for taking a proactive, strategic approach to succession. Plus, Ivy Onyeador on how to roll out successful diversity efforts.

Treating age strategically

Given their particular dynamics, family firms are more susceptible to age-related leadership issues than other businesses. An aging leader may view their progeny as ill-equipped or not ready for prime time, no matter their age. The same leader may have assembled a loyal board that is in no hurry to push them out. They may cling on long after their decline becomes an issue that hurts the business.

“Age-related challenges in family businesses are typically caused by excessive focus on the current leader,” Allen writes.

This focus can lead to disenfranchisement of the next generation, missed opportunities for growth and innovation, and a cultural stagnation that leaves the organization complacent.

“In reality, the focus should be on what is best for the organization and the family,” he writes.

Family enterprises can approach leadership succession both sensitively and strategically. Allen recommends establishing a mandatory retirement policy because it pushes leaders to think about their next steps early. The company can help by giving that leader a series of “off-ramps” to mentorship and advisor roles that can keep their knowledge circulating while keeping them engaged past their retirement.

When evaluating the leader’s performance, looking beyond the family to independent voices can prevent the “blinding love, loyalty, or respect of younger family leaders and members” from becoming an impediment to achieving a clear assessment.

Teasing apart the company’s legacy and its leadership needs is critical to making this transition a success. “Families should clearly define legacy and values as independent of any single leader and resident in the broad family and enterprise,” Allen writes. “The leader then becomes the steward of the legacy rather than its symbol.”

Read more in Inc.

Launching successful diversity efforts

According to Kellogg professor and current Harvard Business School fellow Ivy Onyeador, corporate equity initiatives often suffer from common misconceptions—from a lack of clarity about what problems the initiative is trying to solve to underestimating the support it may have among the rank-and-file. Any of these can cause an initiative to fail, which can slow broader efforts to address inequality in the workplace.

“Based on lots of [research] work that I’ve done and that other people have done, we actually find that there’s widespread support for diversity, equity, and inclusion efforts” in companies, Onyeador says in a new video produced by HBS. “People … like working for companies that are engaged in this work.”

Onyeador offers advice for leaders looking to launch successful diversity efforts in their companies. Like any other business challenge, goal-setting and metrics are important.

“Specifically identify the problem that you’re trying to solve,” she says. “Take a measurable baseline of where you stand on this issue. Then, based on your identification of the problem and your identification of why this problem is occurring, you can address and design a solution that is particularly tailored to that issue.”

Once you have designed the solution, engaging in measurement to track the progress of the initiative and determining whether it is working is critical to calibrating progress, backlash, and other potential solutions.

Leaders’ messaging about the initiative is critical as well.

“Explain to your constituents why this policy is being put in place, how you’ll know that it works, and make the case for the value of this outcome.”

View the video here.

See you next week,

Fred Schmalz, business and art editor
Kellogg Insight