You’ve tired and toiled for years to create a family empire that has what it takes to stand the test of time. While it can be a proud moment or a fearful one, at some point, it will be time to pass the torch to keep your family business thriving for years to come.
To ensure this handover of power is executed effectively, it will take some thoughtful planning.
“Laying the path to a successful family-business transition requires a bit of threading the needle,” says Henry Hutcheson, author of the book Dirty Little Secrets of Family Business.
“On the one hand you don’t want to paint an overly rosy picture to the next generation. That could create a sense of entitlement and the false perception that running a business is easy and all you need to do is count the money and show up every now and then to check on things.”
“Conversely, emphasizing too heavily on the difficulty of running a business— and the impeding loom of responsibility to their family they will soon face—may scare your predecessors rather than motivate them,” offers Hutcheson.
So Hutcheson says that prior grooming of the next generation is best. By giving them summer jobs during high school and college breaks, you can test their strengths and nurture their weaknesses.
Once they join the family biz full time, giving them group projects in addition to individual assignments will facilitate their balance and functionality in what ever role they are chosen to play.
“It’s critical when you are selecting the next leader to realize that it’s not all about who will lead,” Hutcheson says. “It is also about ensuring that those who are not selected are in support of the decision and can work as a team with the new leader.”
Hutcheson isolates four concepts for development of your family business’s next successful leader:
The leaders of the next generation must exude confidence in what they do, say, believe, and most importantly, in themselves. “Much of this can be developed while working in the family business by constructing and leading significant projects,” Hutcheson says. One shortcut to achieving this is to work for other companies before taking over the family business—this is must in many of the most successful multi-generation family businesses.
As previously mentioned, balance and functionality is essential in next generation leaders. And hands-on experiences is the perfect way to ensure competency in all aspects of the business. A leader who has worked as an accountant can better monitor company finances. A leader who has known the pressure of meeting a quota or preparing for a trade show can better motivate and manage a sales and marketing team. Ensuring that your predecessor understands the meaning of a hard day’s work can pay off in the future.
Hutcheson notes that in the book Emotional Intelligence, Daniel Coleman discusses two studies that measured the success of one group of high school valedictorians and of Harvard graduates. One interesting factor in success, regardless of the group, was the individual’s ability to perceive and react appropriately to the emotional state of others. “It’s not enough to just be smart and confident,” Hutcheson says. “You need to be able to work with people.”
No Special Treatment
Showing up early and staying late. Going the extra mile when others have gone home. Taking personal responsibility for the success of the business and pride in your individual work, regardless of your current position or familial relationship to the CEO. These are attributes needed from the potential next generation leader of the family business.
“This will show that you are part of the team and that you want to be judged on the merits of your work, not your bloodline,” Hutcheson says.
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