Generations coming together in a family business can create problems and have a negative impact on the continuity of the firm’s operations.
It is recognised that siblings often have a different view from each other, but this can be nothing compared to the differing viewpoints of parents and their children.
As advisors we are often faced with the problem of the younger generation not being able to communicate with the elder generation, and vice-versa.
However, this is not necessarily the problem of generational difference but of how the family members involved in the business have been developed and their talent managed. Family members will often arrive at the door of the business with little or no training and commence their career.
For Family run businesses succession planning is even more important if the ‘reins of power’ are to be successfully transferred generation-to-generation, and, crucially, for the business to continue trading profitably.
Recent research suggests that only 30% of companies are considering their succession and managing the talent of the next generation. Growth potential, and the ability take on bigger roles, is not being identified or developed.
In order to facilitate good family-based succession, we have to manage out future talent. This is not something that is planned five years prior to a requirement for succession, but is a planning environment that has a generational aspect. Think long term.
First you have to have a vision for the continuity of your business on a generational basis. This means creating an environment that welcomes innovation and change. An environment that your family will want to contribute to and share, and an environment that generates opportunity.
A focus on the family is important – almost a family-first attitude. This does not mean ability is discounted and nepotism prevails, but it does mean that a strong family unit is developed.
This usually means spending time and money on family development, both educationally and emotionally – once again highlighting the need for planning ahead as this applies from school age right through university into professional development.
Doing so ensures family members are able to maximise their skills in life, benefiting themselves and ultimately the family enterprise – the proverbial two birds, one stone.
Creating an environment for opportunities both within the business and outside it will also mean family members have a wide range of choices and are not just facing a future inside a business, industry or role that does not match their skill sets.
* Tim Isherwood works at strategic planning consultants Steuer Gregsson working with family owned businesses to secure trans-generational success, and advises on company performance, talent management and future direction.
