Preparing the Next Generation of Leaders for the Family Business Part 3 of 4BondBeebe
Posting by Geoffrey D. Brown, CPA, Principal
In the last two posts we talked about identifying potential leaders and educating the next generation of family business leaders. In this post I’ll discuss setting standards for work experience for developing leaders.
If several (or all) of your children have a desire to work in the family business, it’s obvious that not all of them can ascend to the role of CEO, so as leaders, finding the right fit for them is important. When preparing and assessing the next generation of leaders, requiring a certain level of work experience can provide you with the opportunities necessary to understand the next generation’s strengths and weaknesses, and where they can fit best in the company.
External Work Experience
Mature family businesses often require that family members with an interest in joining the business spend a few years working outside of the company. In my many years advising family businesses, I have seen it work successfully both ways, either coming directly in to the business from college or spending time elsewhere. However, I will say that allowing your top executives, especially the family executives, the opportunity to bring a diversity of ideas into your company can enhance your opportunities for success.
Experience outside of the family business also allows for a review of your family member’s skills, talents, and growth areas by a more objective party. You can glean significant insights from your young leader’s performance in other companies and from talking to his/her supervisor. This will help you evaluate the next generation’s leadership potential, as well as identify areas where your young leaders need guidance and education.
Internal Work Experience
There is also great benefit to providing a wealth of work experience from within your family business. Some of the best executives that I know spent a good part of their early career working in different sectors of their company. Their breadth of experience now allows them to view the business in such a way that they more deeply appreciate the issues and problems facing operations, sales, information technology and even administration. These professionals are so much better at connecting the dots and understanding the impact of any one decision on the whole organization than those whose experience has been limited.
Developing a management training program for your future leaders will expose your potential successors to as many different aspects of your business as possible. Another benefit of extensive experience within your company is the opportunity for you to observe the next generation to decide who fits best where and who has the potential to eventually become the CEO.
Regardless of whether you require broad internal experience, external experience, or both, I also suggest that you conduct honest and frank conversations on an ongoing basis with the next generation about where they fit best in the business. If there is going to be more than one person from the next generation working in the business, you need to make sure that each family member is comfortable in his/her role and understand, from a business perspective, the reasons for those roles.
Requirements for work experience, in tandem with educational background, can help provide clear, objective standards for choosing your family’s next generation of leadership. In my next, final, post, I’ll look at several other issues – such as communication and managing expectations – that can complicate the already difficult succession process. While it can feel overwhelming to think about all these issues, a broad, 360-degree view will help you properly prepare the next generation to lead the family business, and help maintain effective family involvement in your business.