Should I stay as chairman after my child becomes CEO?

Staying as chairman after your child becomes CEO can work well, but only if you genuinely change jobs. It works when you run the board rather than the business, back the CEO in public, raise disagreements in private, and agree in writing which decisions are now the CEO’s. It fails when the chair becomes a second, unofficial CEO. Ask yourself honestly which of the two you would be.

There is no single right answer. For some families the founder as chair gives the successor stability, access and cover. For others it keeps the old centre of gravity in place and leaves the new CEO leading in name only.

Why founders want to stay as chair

The reasons are usually good ones.

• Continuity. Banks, major customers and long-serving executives are reassured to see the founder still at the top of the structure.
• Protection. A chair can shield a young CEO from a difficult board, a demanding shareholder or a family member with opinions.
• Experience. Decades of judgement on capital, risk and people are hard to replace, and the board benefits from them.
• Identity. The company is a large part of who the founder is. Chairing keeps a real connection without running the day to day.

None of these is a bad reason. The question is whether the arrangement serves the successor’s authority or competes with it.

What is the difference between a chair and a CEO?

The roles are often blurred in family businesses, so it helps to be plain. In broad terms, the CEO runs the company: the strategy in practice, the senior team, operations, results. The chair runs the board: its agenda, its discussions, and its oversight of the CEO on behalf of the owners.

A founder who was CEO for decades did both, in effect. Becoming chair means giving up the first and doing only the second. That sounds simple. In practice it is one of the hardest changes a founder makes, because every instinct pulls back towards running things.

The exact powers of the chair depend on the company’s articles, shareholder agreements and the law where the company is registered. Those are questions for the family’s lawyers and governance advisors, and they are worth settling before anyone takes the role.

When does it work?

The founder as chair tends to work when most of these are true:

• The founder wants the new job, not the old one with a new name. Interest in the board’s work, governance and long-term questions, rather than in this week’s operating decisions.
• Decision rights are written down. Which decisions sit with the CEO, which need board approval, and which, if any, stay with the founder for a period. The Handover Charter is one place to record the practical side of this.
• The chair backs the CEO in public. Disagreement happens one to one, before or after meetings. In front of the board and the team, the founder supports the CEO or stays quiet.
• The senior team reports to the CEO, and only the CEO. Executives do not keep a second line to the chair’s office.
• There is at least one independent voice on the board. An outside director gives both generations someone to test their views against, and makes the board less of a family conversation.
• There is a review date. A year or two in, the family looks again at whether the arrangement is working and whether it should continue.

When does it not work?

It tends to fail in recognisable ways.

• The chair still attends the senior team meeting. Even silently, their presence tells everyone where the real authority sits.
• Executives go around the CEO. A long-serving director takes a concern to the chair, the chair responds, and the CEO hears about it later.
• Decisions are reopened. The CEO decides, the chair raises it again at the next board meeting, and the decision changes. After a few times, nobody treats the CEO’s decisions as final.
• The founder keeps the office, the parking space and the head of the table. These signals are noticed far more than founders expect.
• Disagreements play out in the boardroom. Directors watching a father and son, or a mother and daughter, argue about strategy will draw their own conclusions about who leads.

If several of these sound likely, it does not necessarily mean the founder should not be chair. It may mean the role needs firmer edges, a shorter term, or an independent chair for a period while the CEO establishes themselves.

What are the alternatives?

Chairman is not the only way to stay involved. Founders also choose to sit on the board without chairing it, to hand the chair to an experienced independent director, to keep a small number of key relationships for an agreed period, or to step back to an owner’s role. We look at the full range in what should my role be after I hand over the company.

Some families use a staged approach: the founder chairs for a fixed period, then hands the chair to an independent director or, later, to the successor. Whatever the structure, the governance and legal design belongs with the family’s advisors.

What should you ask yourself before deciding?

A few honest questions help:

• When I imagine my child presenting the strategy to the board, do I picture myself chairing the discussion, or correcting the content?
• If the CEO made a decision I disagreed with, could I support it in public and raise it only in private?
• Would I be comfortable not attending the senior team meeting at all?
• If a senior executive called me with a complaint about the CEO, would I send them back to the CEO?
• Does my successor want me as chair? Have I asked them, in private, and listened to the answer?

If the answers are mostly yes, the role may suit you and help the company. If they are mostly no, another role will likely serve the family better.

What the successor can do

A CEO working with a founder as chair makes the arrangement stronger when they agree a regular private meeting with the chair before each board meeting, bring disagreements there rather than to the board, and show visible respect for the chair’s role while making operating decisions in their own name. Our article on how to present to the board as a family successor covers the boardroom side.

In short

• Staying as chairman works when the founder changes jobs: running the board, not the business.
• It works with written decision rights, public support for the CEO, private disagreement and at least one independent director.
• It fails when executives go around the CEO, decisions are reopened, or disagreements play out in front of the board.
• The legal and governance structure is for the family’s lawyers and advisors to design.

How the founder steps back, including whether they chair the board, is one of the agreements made in the handover session at the end of the Second Chair™ program.