July 09, 2019
Nurturing the next generation of family business owners
Most family business owners aspire to see the business they built flourish under the leadership of the next generation — whether it is one (or more) of their children or some other family member.
That’s what Mario set out to do. He had spent his adult life building a successful window manufacturing and installation business and was fortunate to have his three sons, Frankie, Justin and Sean, each join him after completing university. He was ecstatic about having them work alongside him because he knew of several other business owners whose children decided to pursue careers outside of the family business.
Mario also took comfort in the knowledge that he would eventually hand over control to one of his children, thereby enabling the continuity of the family business into the next generation.
Over time, he mentored each of his sons to run specific areas of the business, while he oversaw the overall operation. Frankie, the eldest son, had been in charge of the manufacturing plant for almost 15 years; Justin, the assembly process for about 10 years; and Sean, the sales and business development function for close to 5 years.
While Mario was confident in the abilities of his sons to run their respective areas of the business, he was not so sure which one of them he should mentor to replace him as the chief decision-maker. Which of his children was most qualified to take on the leadership role of the company? How to avoid conflict among his children?
Mario seeks advice
Mario sought the help of David, his family business advisor. David had a wealth of experience in this area, having coached many business owners on their succession plans.
David and Mario met for almost two hours, talking about what Mario should expect from his children. Mario had already observed how Sean had automated the business development process to make it far more efficient than his own paper-based system. Justin had improved the assembly process by re-arranging the logistics workflow. Frankie, on the other hand, was a little more “old school”, like Mario. In addition to his business degree, he also had experience in the “school of hard knocks”, acquired through expanding the manufacturing process to accommodate increasing demand for windows.
Mario accepted that his children would want to run the business differently from the way he had done in the past, given the changing business environment, technological advances, etc. He knew he would have to give his successor the freedom to implement change, while continuing to align with the core values of the business.
David presented Mario with a set of questions to help him determine which of his sons he should mentor as his successor:
- Do all three sons have the same level of interest in the business over the long-term?
- Who has the greatest vision for growing the business?
- Who is the most astute leader?
- Who has the best communication skills?
- Which one has the greatest passion and drive to succeed?
David advised Mario to take emotions out his decision. “Running the business comes naturally to you. It’s your ‘baby’, so you know what to do when it has hiccups, when it burps and when it is in pain. Pretend that you are considering an outsider rather than one of your sons as successor. What would you expect from a non-family member? Then ask yourself which one of the boys is most qualified presently or could become so with your further mentoring and training?”
Mario considered David’s advice for several weeks before announcing at a family meeting that he would commence mentoring Frankie to be his successor. Fortunately, the conversation with his advisor, David, enabled Mario to present his rationale in such a compelling way that both Sean and Justin agreed.
Mentoring your successor
Handing over control of your business to anyone requires a diligent process to prepare them for success. Quitting “cold turkey” seldom works. You must allow enough time to train, coach and mentor your successor. Having a structured program to expose them to all aspects of the business should provide them with first-hand experience of what it takes to run it. Give them the freedom to make decisions, so you can get useful insights into their readiness to take over.
Here are some suggestions for nurturing your next generation successor:
Provide exposure: Open up all aspects of the business to them so that they can acquire firsthand knowledge of its operations, as well as the challenges. Give them a feel for what it takes to lead.
Develop trust: Create an environment in which they can comfortably participate in the day-to-day decision-making. Empower them to openly discuss their views and give them an opportunity to deal with problems that may arise to build trust and confidence.
Promote family values: Help them understand the values on which the business is built and your vision for its future. Let them know how important their role will be sustaining the business for the benefit of the family at large.
Mentor and train: Dedicate time and energy to training and mentoring to impart your knowledge and experience. Make them aware of challenges that may arise and teach them how to deal with them.
Share your experience: Tell next generation members stories about your successes and failures to give them a sense of connection to the business and to the family. Show them how the family has benefitted over time from running a successful business.
This story is for illustrative purposes only, based on our professional experience, and does not necessarily reflect the situation of any individual or family.