How can family business owners prepare the next generation?

Operations may be running smoothly in your family business today, but all of that can change for the worse if your leadership transitions to a generation that is unprepared. This may be a risk for your organization if you aren’t keeping the following strategies top of mind.

Start early

Every time you bring up work while having dinner with your family, you are shaping your children’s perception of the family business – a perception that can vary greatly depending on the message you deliver. You could constantly complain about problems at work and talk about how stressful things have become or you could make sure to highlight the successes you experience and the joy you get from running your own company.

In addition to a positive perception, the next generation should have an understanding of expectations for family employees before they enter the company. What criteria must a family member meet if they want to start working in the business? What if they want to work in a management role or be a future owner? To avoid setting an unintended precedent, there must be clear, shared answers to these questions before any member of the next generation is employed.

Help them grow

When family members enter the business, they need to start in a position they are qualified for and not a made-up leadership position like “VP of Special Projects.” Giving them a real job with a real boss and providing them with effective feedback will help them gain the experience necessary to lead your organization in the future.

Some additional ways to help them grow:

• To gain credibility, they need to demonstrate success in a company other than your own. This shows that a family business job isn’t a fallback because everything else was too difficult.
• Obtain a business coach for them. This can help them reflect on where they are, where they would like to be and what steps they need to take to get there.
• Once they’re qualified, assign them responsibility for executing on a visible organizational initiative that allows them to assume some profit and loss responsibility.
• Consider rotating the next generation throughout the different areas of the business to give them a level of exposure that is similar to what the senior generation had when the company was smaller.

As a relative of the person you are training and developing, you may feel the need to protect them from any challenge or struggle that comes their way. Don’t. Failure is what seasons us and if you rob them of these opportunities for growth, they’ll be crippled when the next obstacle approaches and you aren’t there to save them.

On choosing your next leader

Stay objective when examining ability. This may come as a challenge, but it is essential that your next leader is qualified and capable. If you’re having trouble being objective about the abilities of family members, it may be a good idea to get the board involved in the decision and/or hire an executive coach.

As you can see, there’s a lot that goes into preparing your family business’ next generation of leadership. The most important thing to remember? Don’t put it off.

Moving forward

For more information about developing your family business’ next generation, contact Daniel White using the information below.