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According to a study, more than 80 percent of failed transitions in family businesses from the first to the second generation can be attributed to unresolved emotional conflicts. Many people believe it is easier to take over a business from one’s father than to painstakingly build a business from scratch as a startup founder, which involves a high initial risk. It is often assumed that the successor simply lands in a ready-made situation and takes over a thriving business. However, consulting practice often shows the opposite to be true.
This became very clear in 2012 when Jörg Fischer stepped down with immediate effect from his position as managing director of the legendary family business. As a result, his father, Klaus Fischer, returned to the helm of the world-renowned anchor manufacturer after just one year. It was Klaus who, starting in 1980, expanded the company into an international corporation with approximately 600 million euros in revenue. Above all, it was to his credit that the company also entered the automotive supply business, thereby achieving a 17 percent share of the group’s total revenue. However, profits have fallen far short of expectations for years.
When his son Jörg took over the company in 2011, he wanted to divest the loss-making automotive business as soon as possible and, like competitor Würth, focus more on direct sales. The father strongly resisted giving up the automotive division, viewing it as “part of his life’s work.” Since the new sales strategy failed to deliver the desired results, an open dispute ensued. As a result of this conflict, the situation escalated, and Jörg left the company.
Anyone who starts their own business as an entrepreneur can shape their company as a pioneer. The company is their creation and is inevitably tailored to them as the founder. As a successor, the situation is entirely different. The company has developed independently of the successor and is tailored specifically to the senior partner. This means that the successor not only faces the challenge of being accepted as a leader by employees, customers, and suppliers immediately after taking over, but also finds himself confronted with a corporate culture that he did not help shape. This tension often gives rise to major conflicts during the business succession process. It is precisely these emotional conflicts that, as mentioned at the outset, can jeopardize a successful generational transition. To prevent matters from reaching that point in the first place, business mediation is a successful and recognized method for constructive conflict resolution.
Mediation is a structured conflict resolution and negotiation process. Unlike court proceedings, the goal is not to determine who is “right,” but rather to develop a mutually agreed-upon and sustainable solution in which both parties to the conflict stand to gain. The mediation process enables the parties involved in the conflict to develop a solution that balances their interests on their own, under the methodological guidance of a neutral third party.
To date, approximately 6,000 of the largest U.S. companies have incorporated mediation clauses into their standard contracts. In Germany, the Mediation Act has been in effect since 2012.
Numerous German companies have also recognized and adopted business mediation as a means of conflict resolution. According to KPMG, the initial belief that business mediation would strengthen internal corporate culture and drastically reduce conflict costs has now become an established fact. E.ON, SAP, and Deutsche Bahn are prime examples of companies that successfully utilize a pool of mediators to resolve internal conflicts.
