Ten ideas to successfully prepare for handing off leadership to the next generation.
Once it is declared that “the kids are taking over the company,” it can strike fear in the hearts of non-family managers and family members alike. It is definite, yet filled with ambiguity. It’s simultaneously stimulating and intimidating.
Here is my list of 10 important things younger-generation adult children can do to smooth their transition into leadership in a family-owned business, so everyone involved feels positive and vital.
1 ) Regularly express your appreciation to your father and mother for the opportunity they created for you. Your expressed thanks are essential for a successful family business relationship. Parents in their 60s and 70s seek validation for their business accomplishments. When appreciation is not expressed, parents often feel that the children are ungrateful.
2 ) Nurture a reciprocal commitment to each other’s success. This is important between a parent and child, as well as among siblings. Without this explicit, mutually demonstrated commitment, enormous tension can arise. With this commitment, the family works as a team in their business.
3 ) Establish agreed-on ground rules for how you will become part of the business. Use business sources and your parents’ experience to establish how you will enter, train, be accountable, develop leadership, use mentoring, be compensated and work with siblings, multiple generations and non-family managers. Defined ground rules help prevent arguments and can save enormous amounts of time. The younger generation should take the initiative to work with their parents and see that these rules are defined.
4 ) Formalize all agreements to prevent misunderstandings. Hearing this, many family members will say, “We don’t need to do that because we all love and trust each other.” That’s exactly why you need to do it. Love and trust is no guard against misunderstanding. I have found that the family-owned business that formalizes its ground rules, creates shareholder agreements and develops family participation plans tends to be more successful, with fewer hurt feelings.
5 ) Define and adopt a common family vision. This is a written understanding of what you, your siblings, parents and all family members want to see perpetuated in the company, based on the family’s values and what unites your family. It envisions what you are and aspire to as a family.
6 ) As part of your family vision, strive for good communication and ways to manage differences. In any family, differences are normal, but many business families shy from discussing them because they fear it will create family disunity. I often hear clients say, “We don’t want to upset our family relationship. We don’t want to ruin family celebrations, holidays or events.” Unfortunately, the reverse often comes true: Not talking about issues produces the disunity people are trying to avoid. Regularly discuss and manage differences before they grow into problems.
7 ) Be willing to lead in organizing family meetings. Family-owned business meetings can be: 1) shareholder meetings where only shareholders attend; 2) employee meetings where only company-employed family members attend; or 3) family meetings where the entire family is invited to attend. Use this third version to work out the overlap between family and business and how it is managed.
8 ) Actively help formalize plans necessary for success. While the senior generation is responsible for many of these plans, the younger generation helps by being actively involved. There are many different plans to formulate. First, develop a strategic business plan that draws out what is often only in the entrepreneur’s head. Get those insights on paper. Second, when the time is right, have the family develop an ownership and estate plan and a management and leadership plan. Third, create a plan for how to be a family beyond the business. In my experience, business and financial differences will erode family relationships unless the family knows how to come together to preserve those relationships.
9 ) Build the emotional equity of your family as vigorously as you build the business equity. You read stories about divorced couples who keep their business relationships, and siblings who squabble over business issues that ruin their family ties. To build emotional equity, celebrate and maintain family celebrations and traditions. These precious moments and events are the glue that holds people together as a family and not just as a business.
10 ) Have fun with each other out of the office. Enjoy work and play. Meet for lunch or breakfast a few times each month. Share dinner occasionally. I have clients where the father and sons and a father and daughter get away at least once a year to golf, ski or go to the theater. Time spent together enjoying each other’s company away from the business builds emotional equity. You can’t accomplish everything on this list in a few months, but you can select priorities to encourage and involve others in your family. Follow through on these ideas and I confidently guarantee a smooth ride when it’s time for you to take the reins of your family business.
See the original article on Twin Cities Business Mag