Succession - Dilemma

“THE NEWS”, Trade Journal for Family Businesses – July/August 2025 Edition

Succession in medium-sized companies is not a simple transfer of power; it is a balancing act between preservation and renewal. Modern diagnostics can help avoid high-risk decisions and enable the handover of a lifetime’s work without losing the company’s DNA. The following case study is based on a real-life succession case from 2024. Names and details have been changed to protect those involved.

Hans-Dieter Langner could still smell the coolant in the air as he walked across the yard of his company at the age of seventy. For three decades, he built his machine-tool operation in the Black Forest from a two-man shop to a hidden champion. Wanting to ensure the long-term future of his life’s work, he brought in an external successor: Erik Neumann-eloquent, MBA, international experience.  He hoped this would bring fresh ideas to small and medium-sized enterprises. However, no consideration was given to whether the commercial manager, Petra Schmidt, or the head of production, Stefan Heck, might have been better suited to taking on the responsibility. In its desire to demonstrate openness to new ideas, the company failed to recognise the wealth of existing expertise.

In the canteen, Langner overheard engineers discussing quitting because nobody had time for ideas that did not promise immediate returns. The breaking point came during a Monday meeting. Neumann presented a reorganisation concept that would halve the size of the research lab. When asked how the team had been involved, he replied coldly, ‘We adopted a fast-decision-making approach to increase speed.’ The problem was not the idea itself, but the lack of cultural alignment.

1. Succession is risk management, not a competition between candidates. A wrong hire costs more than “just salaries” — it can cost you structure, motivation and customers. Reliable leadership diagnostics are an investment in organisational stability.

2. Tradition and the future require measurable alignment. Values, thought processes, and leadership behaviour can all be analysed. Those who make corporate culture visible can recognise early on whether someone will integrate or cause disruption.

3. The best talent is often already within the organisation. Objective comparisons between internal and external candidates can reveal operational blindness and romanticism based on a sense of duty. In Langner’s case, an analysis would have made this clear: Petra Schmidt is less academic but highly regarded. An invisible asset.

4. Financiers prefer data to gut feelings. Banks offer better conditions when leadership potential is reliably documented. Diagnostics create clarity and trust.

5. Succession is a process, not an employment contract. A co-pilot year with clear milestones ensures knowledge is transferred effectively and prevents friction losses. Those who skip this step end up paying twice later.

Every successful succession begins with a structured conversation about what truly matters. What does the company name stand for? Which customer relationships are irreplaceable? What innovations are expected? Only then should candidates be selected, both internally and externally, based on consistent criteria. The results are consolidated in a matrix of competencies, potential and risks. What may sound like psychology is pure business economics.

At Höchsmann & Company, we combine market expertise with modern diagnostics. Executive search meets personality analysis. This combination provides security for entrepreneurs who want to delegate responsibility rather than rely on luck. Our advisors listen not just to the words, but also to the undertones: the hesitant shoulder shrug, the promise made too quickly, and the question that was never asked.

A moderated meeting involving the leadership team, the bank and the works council, supported by robust diagnostics, could pave the way for new solutions. Either Neumann might be willing to learn, or Petra Schmidt could take over. Both options are possible as long as the dialogue remains open. Trust is the only capital that does not appear on any balance sheet, yet it underpins them all.

In the first phase, the new leadership learns the processes and the stories, such as why a customer stays even when paying more.

In the second phase, they gradually take on responsibility, deliver small successes and avoid major disruptions.

In the third phase, they set their own priorities without making cuts.

Even the best method relies on dialogue. Those who merely send reports create distance. Those who explain, listen and address fears build bridges. A successful succession is not defined by the vacuum it leaves behind, but by the new strength it unleashes. It begins with the insight that a company is greater than any individual, and it ends only when everyone has embraced their new role.

And what about Langner?

In the evening, he stands in the car park. Between the factory hall and the evening sky, silence hangs in the air. He breathes in coolant – and hope. Tomorrow, the dialogue begins – this time with everyone. This time, it will include everyone. No more steps backward, but forward-thinking leadership.

Katja Krater is a diagnostics expert who uses aptitude testing methods to provide additional support for selection and succession processes in family businesses.