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Print this pageFixed retirement age?
Should family businesses force the senior generation retire by a certain age? The following discussion contrasts the 'Pro' view in favour of a fixed retirement age with the 'Anti' view against it.
Pro: I'd like to start things off by pointing out that 'not letting go' is one of the key risk factors facing family businesses. Time after time, I've seen businesses ruined by strong leaders hanging on for too long. A refusal to retire will make potential successors, both from inside and outside the family, give up hope and give up on the business. They think they will never get their chance so why bother to wait? So I believe in a fixed retirement age at, for example, 65 years of age. A fixed cut-off is the best way to focus minds on succession and make sure that it actually happens, rather than dragging on for years.
Anti: I prefer a more flexible approach than a crude cut-off at an arbitrary age. Are you saying that at 64 years of age someone can be an excellent leader, yet just a few months later that same excellent leader should be forced out of the business?
A fixed retirement age is discrimination based on age. You could have a situation where someone is by far the best person for the job, and supremely suitable in almost every respect, yet they are forced to leave the business simply because of a birthday. How is that fair? I would argue very strongly against a fixed retirement age. The matter should be left to the good judgement of the person themselves.
Pro: The problem is that you can't rely on 'good judgement'. If the leader of a business hates the idea of giving up power and prestige, they will easily persuade themselves that they are still fit to carry on.
I've heard many business leaders say: 'this business is my life'. People who think like this will not retire a moment sooner than they have to. They will want to carry on, justifying it to themselves by saying that they are the only ones who can save the business.
Anti: Sometimes the senior generation really are the best people to save the business. History shows that age alone does not stop people from doing great things. I think of Konrad Adenauer; he was 73 when he became Chancellor of Germany after the World War II and he continued to serve until he was 87.
Why have a crude cut-off at an arbitrary age? 
I also think of the investor Sir John Templeton who made $86 million in 2000-2002 when he was in his late 80s. In fact, age may be a positive advantage because it means a person has great experience. And whoever is the best person for the job should do it.
Pro: You make it sound like there should be a competition between the senior and junior generation, and that the top jobs should go to whoever has the relative strength. But I don't see it like this. At 65 years of age, the senior generation should go - even if they can still do the job as well as, or even better than, the Next Generation. The reason is that the senior generation can't stay forever, no matter how good they happen to be. Age gets everyone in the end - even someone like Konrad Adenauer. Much better to bring on the Next Generation in good time and let them have their chance to gain experience of overall leadership, make mistakes, learn from them, and become great leaders themselves.
I stick to the view that at least some people who claim 'I'm still the best person to run things' are actually just covering up the reality that they have no alternative plan for their lives. I suggest that help is given to the seniors in planning a 'third career' separate from the family business. Then give them a hero's send-off to recognize all they have achieved. This way, the seniors feel better about stepping back and will worry less about their successors damaging their legacy.
Anti: Clearly there is disagreement between us on whether there should be a fixed retirement age; you're for it and I'm against it. Let's see if there is any room for compromise over an idea that is a little different. What do you think of an 'enforceable retirement age'? By this I mean that the Board of Directors are able to require someone to retire once he/she is over a certain age, but it is up to them whether or not they actually require the person to retire.
Pro: My concern is that the Board might be under the control of the senior leader. It could only work if the Board were able to make a genuinely independent decision: is it, or is it not, in the best interests of shareholders if the person continues in office?
Anti: I think many older people would actually welcome the idea that a decision about their suitability for continuing in the business is outside their hands. They can then be sure that, if they do continue, that it's for the right reasons and not for the wrong ones. An enforceable retirement age is, to me, much more acceptable than a fixed retirement age.
Pro: I'd still prefer a fixed retirement age. I think that many longer established family businesses, say in at least the third generation, have a fixed retirement age. Why? Because they've learned through hard experience that it's the best way.
Anti: And I'd still prefer a completely flexible retirement age. We must agree to disagree - just like people in family businesses worldwide!
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