Passing the Torch to the Same Generation

If you want to hand things over to the young, it helps to remember that you are old

A fellow airplane passenger recently told me what he considered a tragic story. He had built a large company up from scratch over 40 years. As his 70th birthday approached, he wanted to retire from his demanding position as President and CEO. He had planned to turn the business over to his protégé, who would lead it into a bright future. But then his chosen successor suddenly died!

I started in with the usual bromides: “So sad to see people cut down in the prime of life, so much left undone” etc. I then asked if the protégé had had young children.

“No” the CEO responded, “but one of his grandkids is only 11 and is taking it pretty hard. They were close.”

Puzzled, I asked how old the promising young heir to the throne was at the time of his death.

“65” the CEO said sadly.

I said something like “Well, uh, well, uh, that certainly is a shock that, uh, I mean, to think that a person in their mid-60s could die is uh, well, uh, what can one say, really? You know the inflight movie is a Whoopi Goldberg/Pauly Shore vehicle that has always had a special place in my heart, so I’m going to watch it now but I wish you the best in working this out”.

I have seen many elderly people handle the transfer of control to the next generation smoothly and wisely. But I have also heard variants of the CEO’s story many times as well. Like many psychologists, I am fascinated by failures in human rationality and wonder what drives some people to such unwise decisions when the time comes to pass the torch.

It is no feat of mathematical wizardry to conclude that if you want someone to lead your company/institute/department/initiative for 20 years after you have retired, you should be looking at candidates who are at least 20 years younger than you are. Yet there are many organizations in which the current leader and all the plausible successors have heads of grey hair if they have any hair at all. I have several non-competing hypotheses that might explain this phenomenon.

(1) It feels rude to tell people that they are old enough to start planning for a transition.

I once evaluated a scientific center’s 5-year grant proposal for which one of the evaluation criteria was mentorship of young investigators. The mean age of the team presenting its application to our review panel was in the 60s so I raised this issue. The head of the center, a twinkly-eyed professor in his 70s, responded “We have always been committed to bringing along the next generation — Dr. Smith sitting right here next to me was my graduate student!”. Everyone laughed at his charming answer, including me.

It would have been churlish to say the truth: “Yes, over three decades ago she was your graduate student but that doesn’t make her a young investigator. And a man your age has a reasonable chance of ill health and death over the next 5 years, and it’s not responsible to pretend that that is an impossibility.” So I said nothing and let it pass. Before the 5 years were up, Dr. Smith had retired and the head of the center had had a stroke, leading to an organizational crisis.

(2) The United States of America has a youth-obsessed culture, which leads many people to not want to accept that they are in fact old.

I don’t identify with this personally because I look forward to being old and value the company of the elderly more than I do that of the young. But I see it everywhere in insistent pronouncements that “30 is the new 20” and “60 is the new 40”. I see it in the face lifts and dye jobs and trophy wives: Many people do not want to admit to themselves or others that they are old.

This self-deception could play out in organizational transition decisions if one’s own “youth” becomes a false anchor for judging the youth of one’s potential successors. If someone who is only 5 years younger than me is young, then logically I must be pretty young too. But if I have to look for successors 20 or 30 years younger than me, then I really must be old.

For the CEO I met on the plane, I suspect some of this was wrapped up in fear of death. If a 65 year old is not immortal then by implication a 69 year old CEO isn’t either. A scary thought for some, and one that can lead them to pretend to themselves that their chosen heir is a bright young thing rather than a fellow Medicare recipient.

(3) The Baby Boom has been suckled on youth culture more than any prior generation.

For 40 years, the mass media has told Baby Boomers that they are the most important and best people who ever lived, and that includes their being eternally youthful. That omnipresent media/marketing message combined with the enormous size of the Boomer generation means that with each passing year, we have more old people who don’t think of themselves or their same-age peers as old. Whatever individual psychological barriers there are to accepting one’s old age, they become magnified when they are sociologically shared within a generation.

If 70-year olds on a corporate boards can ask “I’m not old enough to think about a successor, am I?” and have a dozen other board members in their 60s and 70s respond “Of course not — none of us are!”, a culture of age-denial will persist in many organizations. Because everyone dies eventually (yes, even Boomers) that’s going to lead to some ineptly-handed organizational transitions in many domains of American life in the coming years. The exceptions will be the wise heads who understand that the search for new, youthful leadership starts with an acceptance of being old.

Author: Keith Humphreys

Keith Humphreys is the Esther Ting Memorial Professor of Psychiatry at Stanford University and an Honorary Professor of Psychiatry at Kings College Lonon. His research, teaching and writing have focused on addictive disorders, self-help organizations (e.g., breast cancer support groups, Alcoholics Anonymous), evaluation research methods, and public policy related to health care, mental illness, veterans, drugs, crime and correctional systems. Professor Humphreys' over 300 scholarly articles, monographs and books have been cited over ten thousand times by scientific colleagues. He is a regular contributor to Washington Post and has also written for the New York Times, Wall Street Journal, Washington Monthly, San Francisco Chronicle, The Guardian (UK), The Telegraph (UK), Times Higher Education (UK), Crossbow (UK) and other media outlets.

22 thoughts on “Passing the Torch to the Same Generation”

  1. I’ll suggest a fourth hypothesis. Many of us (myself included!) really don’t think that they’ve aged at all since they were 25 or thereabouts–wrinkles and whatnot notwithstanding. Where I work, the ritual joke every summer is that we’re resorting to cradle-robbing for our interns, and they get younger every year. (We pay them!; We pay them!) This isn’t limited to baby boomers. We just don’t feel any older. Maybe this is a guy thing.

    Some of this rubs off on our peers–since they’re not positively decrepit, they must be sharing from our fountain of youth, albeit of course less efficiently than us.

  2. It was only 8-9 years ago that I last heard my father, a WW2 vet and now 88, say that except for the physical aches and pains, he felt no different than he did as a teenager or young adult. So not just boomers though perhaps a guy thing.

  3. I think certain personality types are more susceptible to delusions of youth. In particular, highly ambitious people. They see holding on to youth as “winning the fight” and getting old as “losing”. You find a 65 year old candiate who’s winning that fight and you see the best of both worlds: wisdom and youthfulness. With that option at hand it might be pretty easy to dismiss statistical realities. In contrast, most of the people I know (mid-50s through 70 who are not CEO types) seem to accept their aging even if they’re on entirely happy about it.

  4. I’d suggest that there’s another innocuous explanation, which is that in an organization that prizes stability, being led by people who’ve worked there for 30 or 40 years can be reasonable–the tenures will be short, but the transitions will be much less disruptive.

  5. There’s also a generation-skipping effect, going back at least to WW2. Unless CEOs and upper managers are is focused on delegation and mentoring from a fairly early point in their careers, they’re mostly going to know and hire people their age into management tracks. If you want a leader who is 45 when you’re 65, you’ve got to start grooming them when you’re 45 and they’re 25. And given mobility, company loyalty, churn and so forth, that’s not likely these days.

    What tends to happen, as far as I can see, is that some disruption or other leads to a large cohort of people coming into leadership positions in their 20s and 30s, and then staying there through their 60s and 70s, essentially leaving no room for the generation immediately behind them. Then there’s an interregnum, with the mid-career generation not really suited (by training or temperament) to take the reins, a new set of wunderkinder stepping in and aging out 40 years later and so forth.

    And then there’s the problem of changes in generational tastes — I remember reading a letter from my grandfather to a business associate looking for “a young man of good family” who might want to take over his factory and let him retire.

  6. You’re assuming “human rationality” plays a role in the decisions made by the founder of a business. Bad assumption. I’ve worked for seveal businesses where the founder was still present in the business, and all of them were little fiefdoms in which the founder played out his fantasy that he was an absolute, if benevolent, despot. (The benevolent part, by the way, was never true.)

  7. I’m a friend of the blog. I find it insightful and valuable — well-written and well-reasoned. That’s why it’s disturbing when I hear the dissonant ‘clang’ of cliched, ‘accepted wisdom’ that just ain’t so. This line — “For 40 years, the mass media has told Baby Boomers that they are the most important and best people who ever lived, and that includes their being eternally youthful.” Huh? Really? I’m a Boomer, born in 1951. Let’s see — in 1968, the media was telling me that I was a traitor for not wanting to fight in the glorious Freedom Adventure in Vietnam — a war started and perpetuated by the so-called “Greatest Generation” (Kennedy, Johnson, Nixon). I graduated college in 1973, in the midst of America’s oil-embargo/stagflation/de-industrialization. The ‘Greatest Generation’ was grabbing theirs and cashing out — Boomers were told to suck it up and deal with. In the 80’s, during Saint Ronnie’s reign, Boomers were derided as the “Me Generation” and trashed being self-obsessed narcissists. Today, of course, as we move toward retirement Boomers are being trashed for being “greedy geezers” who want to bankrupt the nation by accessing the Medicare and Social Security we’ve been paying into for 50 years.

    “Best people who ever lived.” Really? How did I miss this? Prove it.

    1. The messaging that you aren’t accounting for was in largely ads and pop culture.

      The kids are all right.
      You’re the Pepsi generation.
      This is the dawning of the Age of Aquarius.

      1. We are star stuff, we are golden
        You’ve come a long way, baby
        Rolling Stone
        the city magazine
        AARP magazine

    2. Yes but the self-help books were all for us. I liked the baby ones but felt rather left out by “Creative Divorce” then ones on learning to love again, then on forming step-families, then on retirement. I haven’t checked recently; are they giving us advice about choosing a plot?

  8. It’s great that at least the geezer *had* a succession plan. At a major regional firm where I interned as a prelude to a possible full-time job, I asked the senior managing partner about the firm’s succession plan and was told (meaning the senior partners) “Oh, we’re not going anywhere.”

  9. Back in the 70’s my brother worked for a company that did some business with textile firms in the U.S. south. This was when those firms were being driven out of business by imports.

    He told me that one of the companies had had to layoff some people. About 20% of the workers, I think.
    They did it by seniority which meant everyone who had been at the company for less than 30 years.

  10. I doubt very much that it’s just a guy thing. Then again, I think I actually am healthier now than 20 years ago, though I realize that can’t continue forever physically. Maybe mentally it can though?

  11. There´s a nice, well-documented, highly visible group to test the hypothesis: European royalty in the last 200 years, since they started surviving to 70. The heirs grow into discontented late middle middle age not doing the only job they are trained for. So they get more eccentric and reinforce the royal parent´s need to hold on, as (Bertie, Charles…) isn´t really up to it, you know?

    Say what you like about Obama´s dilatory appointments policy, but at least he chose young Supreme Court justices (as senior judges go). Sotomayor was 55 and Kagan 50 when they were nominasted.

  12. There is a well-documented and -discussed phenomenon in small business that’s much like this– succession in “closely-held” companies. I know these discussions go back at least 30 years and maybe closer to 40, though I only know them second-hand so I don’t have cites.

    “Closely-held” is jargon for what usually used to be called family companies. In the post-WWII period they increasingly adopted some kind of corporate form, which changed their family nature, and the aspirations of children of the founding generations quite often didn’t run in that line. Hence the succession problem. (A lot of these businesses had done well and spun off quite a good living for lots of people and should have been worth a lot when sold, but outside buyers were few and generally didn’t want to pay what should have been market value based on cash flow or net return. Because they weren’t being passed on, in other words, when sold they weren’t worth what they “should” have been. Talking about this was a commercial opportunity for some advising firms and that’s probably where to start looking for the literature.)

    I think this kind of succession problem is related to what Keith is talking about because it comes from roughly the same place– the founding generation don’t want to retire, until suddenly they do, and they haven’t thought about what happens next.

    Given that this particular aspect of it goes back 30-40 years I don’t think it’s baby-boom generation or youth-obsession-related at all. People get involved in things from one day to the next and are comfortable with the people they’ve worked with from the start.

    It takes a rare person to have been in charge for years, working with the same core of people day in and day out, and _also_ thinking about whatever institution it might be as having an independent life that needs to continue beyond his/her active years. No matter the size of the organization, I would think.

    It probably would feel a little rude to hit someone in the face with their mortality. But what’s wrong with asking something like “Gee, what do you have in mind when you retire?”

    1. My daughter works for such a closely-held company in the Lille area of France. The industriels du Nord are a specific subculture. They tend to be social Catholics, paternalistic to their employees, patient investors, and quite fertile. There´s usually a son or two, or more rarely daughter, being groomed to take over from the patriarch. They are not stupid, and realize the artificiality of the environment the boss´s child faces in the family firm. So the offspring are sent away to learn management in another similar company, where he or she won´t get favoured treatment.
      Most of these companies are small, but by no means all. The supermarket chain Auchan and the DIY chain Leroy-Merlin (both Mulliez family – the family tree is impressive), and sports equipment chain Decathlon (Leclercq family) are multi-billion-euro businesses of this type with international operations.

  13. Dealing with closely-held businesses is, more or less, what I have been doing for all of my professional career. It seems to me that you have omitted or ignored an important fact.

    Most successful closely-held businesses are successful because they extensively mined an economic niche. In time, the economic return that can be extracted by that activity declines.

    Years ago, we represented a client that, while technically a publicly-held company, was so dominated by the members of one family that it was, de facto, a privately-held company. It was founded by four brothers, the youngest of which changed the basic business model in a way that resulted in the company becoming very successful. The members of the next generation were competent stewards of the company and during their tenure the company grew. However, as that “second” generation moved into their ’70s, the company faced three simultaneous challenges that it could not surmount.

    First, there was no obvious leader or leaders in the next generation. Second, there were too many family members who either didn’t work at the company or were given satraps where they drew undeserved salaries. Third, and more important than either of the first two challenges, was the fact that the niche mined by the company was now being mined by smaller, more nimble competitors who could produce the same product less expensively. Moreover, the economic conditions in the general society (in this case, the growth of fast food outlets) that propelled the company’s growth in the early days had leveled off.

    Ultimately, the company sold out. The acquisition also flopped for the reasons described in item three, above. The company’s business was sold again and again and again. It no longer really exists since it was ultimately acquired by another player in the same industry.

    I’ve seen similar situations play out many times. By way of example, in Baltimore, the retail landscape was once dominated by a few department stores founded by German Jewish immigrants. None of these store exists today. And, it was not for a lack of having competent successors. Rather, it was that the business model that propelled these businesses to success was based on certain external social conditions and those conditions changed.

    The problem with the “grooming a young successor” theory is that a great successor is one who is willing to risk the company on something new. Very few, if any, individuals are up to this challenge because it means betting the company on the new idea. As a consequence, most companies enter into a period of slow decline.

    1. Hecht’s, I think it was, was still in business in Baltimore– probably not downtown anymore but at a mall up on York Rd toward Towson, as I recall– when I was living there (quite a while ago, obviously). That whole sector, as you say, has been in trouble for a while now. So the idea that there are sector and company life cycles makes sense.

      Actually, in this area one of the PA department store chains that had fallen on hard times responded by hiring back the 70-something former head guy. That was a bet-the-company moment. He seems to be a very canny retailer. I have no idea how the whole chain is doing but the local one looks to be doing pretty well.

      Back when I was hearing about closely-held firms, a lot of the focus was on smaller ones. A factor in what happened with a lot of them was that their success was largely due to what a few key people knew about or knew how to do, and/or to the business relationships and reputation they’d built up. When they retired or sold out, a buyer lost that and also knew that some of the people still there might also be retiring or finding work somewhere else. That was one big reason why the founding generation had a hard time getting what they thought they should have gotten when they sold out. No succeeding generation comes with any guarantees. Just look at the Walton heirs.

    2. Isn´t the life-cycle you describe that of almost all companies? Look at Microsoft, slowly decaying, with no family dynasty in its management. Some big electrical engineering companies have survived for a century – GE, Siemens. But that´s unusual. Some insurance campanies and banks have been even longer lived, because the products have changed little.

      My French examples are counter-evidence in favour of family firms. Auchan was the first Western supermarket retailer into Russia, under third-generation management. It´s a general retailer, not seeking a niche among the new rich, as even Ikea did, so it had like Macdonalds to develop a domestic supply chain. It helps that the Mulliez extended family is enormous, with 550 stakeholders in the family trust. In a group that size, you are quite likely to find talent. Particularly if there´s a genetic component; the patriarch´s lucky genes will pop up somewhere in his many descendants.

      1. You say: “Isn´t the life-cycle you describe that of almost all companies?” That’s my point. Success is very much tied to fitting in with certain business conditions which, if they change, often doom a company because it cannot adapt. Certainly, having a leader with pluck and foresight is necessary. But picking a successor is almost counter-intuitive. You often have to pick someone who’s willing to bet the farm on a new business paradigm.

        Take Kodak: It figured out early on how to digitize photos. But it stood pat because it didn’t want to cannibalize its existing film business.

        It will be interesting to see how Macdonalds deals with what I believe is a long term trend–a move to more vegies and less meat and potatoes.

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