Succession: A chairman’s dilemma or opportunity?

Another true story. In fact, this happens all the time in the realm of family-owned businesses, wherein many of whom are faced with a succession planning crisis.

The dilemma is both inevitable and deeply personal. For many founding chairpersons, particularly those who have grown their enterprises from the ground up, turning over Board responsibilities and executive functions is not just a technical shift — it is an emotional and psychological struggle. The struggle they face lies in letting go of authority, legacy, and control while trying to ensure that what they built continues to thrive without them.

This transition becomes even more complex when successors are chosen from the next generation or, more controversially, from outside the family circle. Succession becomes a defining governance challenge — fraught with the hard truth that not all heirs are ready, and not all founders are willing to accept that.

The founder’s dilemma

Founders often view their companies as extensions of themselves. This is why the decision to pass on leadership is laced with fear — fear of decline, mismanagement, or cultural erosion. The situation intensifies when the Board must confront the reality that family loyalty does not always equate to leadership readiness. Many chairpersons hesitate to relinquish power, not due to greed or ego, but out of sincere concern for continuity and the risk of decline under unprepared successors.

However, the refusal to address succession proactively leads to stagnation, internal conflict, or even collapse. What could have been an opportunity for renewal and sustainability instead becomes a crisis of leadership.

The power of family constitutions and shareholder agreements

A well-written family constitution provides a foundational framework to guide family members in their roles as shareholders, Board members, or professional managers. These documents are not mere formalities; they reflect a family’s shared values, commitment to unity, and respect for professional governance. When anchored by a clear succession policy, they create predictability and reduce emotional decision-making.

Likewise, a strong shareholders’ agreement delineates voting rights, share transfers, dividends, and dispute resolution mechanisms. This empowers family enterprises to professionalize their governance and resolve tensions before they escalate into open conflict.

Learning from San Miguel’s succession

A well-known example is the transition within San Miguel Corporation. Eduardo “Danding” Cojuangco, its influential leader and patriarch, recognized the importance of sustainable leadership. Rather than insisting on a family successor, he appointed Ramon Ang — a trusted, non-family executive with deep operational understanding and vision — as CEO and eventually president.

This bold decision was rooted in meritocracy, not heredity. Ang’s tenure is now regarded as a turning point that led to expansion, diversification, and the strengthening of San Miguel’s institutional structure. Cojuangco’s trust in outside talent was not a betrayal of legacy — it was its preservation. This case underscores the value of hiring competent professionals to sustain the enterprise beyond the founder’s lifetime.

The role of governance advisors

Succession is not only about replacing people; it’s about evolving systems. This is where governance advisors become essential. Experienced advisors guide families in drafting policies, governance charters, and Board structures that promote long-term collaboration. They create a necessary structure that separates the Board of Directors with management, that separates the chairperson’s functions with that of the CEO, hence the destructive interference of a chairperson with the CEO. These are safeguards that reduce dependence on any one individual, ensuring that leadership is systemic and sustainable.

Governance must be nurtured in a culture that appreciates performance, not one that punishes mistakes. A culture of fear, driven by legacy protection, does more damage than calculated risk-taking backed by preparation.

Final thoughts

The true legacy of a founder is not just the empire they built, but the foresight they showed in letting go at the right time, to the right people, with the right structures in place. In this light, succession is not a dilemma. After all, succession planning is the Chairman’s greatest opportunity to create the legacy that he or she deserves.