If you fail to plan, you are planning to fail. Benjamin Franklin put it as succinctly as can be. This is true of almost everything in life, and nowhere is this more evident than in family businesses, where the question of which family members should join the business, and when, is absolutely crucial.
It’s never too early for a succession plan for a family business
Planning isn’t the same as assuming. You can plan from any stage of your children’s lives, but having serious conversations with a pre-teen about the responsibilities of the business may be a bit inappropriate. However, as they enter their latter high school and college years, you can definitely start having these conversations.
Be careful of the possibility of putting pressure on them or making them feel obliged. You’re operating under different assumptions to them, and what you see as welcoming encouragement may be interpreted differently. Leave room for doubts or differences of opinion on their part, and recognise that they have their own path to chart, wherever they choose to work.
How to choose who should join the business
Accept that your kids may not want to join or may not be a good fit to work for the family business. Not everyone can join the business. This may clash with the expectations of some who consider joining a family business a foregone conclusion.
While such businesses obviously exist to create employment and prosperity for the family, joining the business should never be a given. You wouldn’t hire a stranger for a job or promote an employee without careful consideration of their skills, advantages, drawbacks and alternatives.
While there are obviously special, often emotional considerations unique to a family business, you should treat these decisions with similar gravity and thought. It all comes down to having open, honest conversations with your family. Don’t assume anything, and remember that their perspective of the business may be quite different from yours.
The case for outside experience
I’ve seen this notion find greater and greater traction over the years. It’s now widely accepted that the next generation should get a job after graduating from college, business school, or whatever relevant institution.
They are expected to gain experience in at least one other company before joining the family business. Some family businesses want a minimum of three years working at another company, many a minimum of five. Some businesses even require that prospective employees have earned at least two promotions elsewhere before they can be considered for a position.
Regardless of the length of tenure, this should be more than a box-ticking exercise for your children before they can be welcomed into the fold. Working elsewhere offers a host of benefits for both them and the family business, such as:
Helps to find their passions: Some people know what they love to do from a young age; others take decades to figure it out. Either way, the more opportunities and challenges they’re exposed to, the better your chance of finding what they’re really passionate about. And if that passion leads them away from the family business, so be it.
Broadens their experience: Exposure to new ideas, ways of working, environments and cultures breeds critical, innovative thinking. Learning how other firms do things can help children figure out for themselves what works and what doesn’t, gives them an appreciation for the challenges of business, and provides perspective on how things are at the family business.
Increases their confidence: Knowing that there’s a family business to provide employment is a double-edged sword: it provides comfort and security, but can also sap an individual’s confidence in their sense of worth outside of the organisation. If they’ve never had to go for an interview, send out their resume or fight for a promotion, they may well lack the confidence to see them through challenging times ahead.
Boosts their credibility: It’s easy – and perhaps understandable – for non-family members of the business to see the next generation as being guaranteed a job based on name rather than ability. Outside experience, especially with proven success, can show that they are worthy of joining the business and earn them respect in the eyes of their future co-workers.
The case for getting straight into the family business
On the other hand, I’ve seen the case made for skipping the outside experience and joining a family business soon after graduation. In some cases, this may indeed prove more suitable for particular individuals.
Accelerates their learning: The earlier your children get started in business, the faster they will learn the ropes of your organisation. This includes business-specific processes, as well as experience in numerous departments of the company. Plus, starting young means they can legitimately work their way up from the bottom, gaining experience and earning respect along the way.
Guides and manages their career: You know how important the development of your children is – for their future and that of the company. Combined with the trust that exists between family members, this can open up opportunities for more focused career development or even experimentation.
Builds their relationships: Relationships are essential to business, and good ones take time to build. Starting the next generation early gives them the chance to nurture those relationships as they develop themselves, providing rich opportunities for growth, learning and mentorship as well as deepening bonds that should sustain your business into the future.
Aids in succession planning: Developing the next generation sooner will prepare them ultimately to take over the business or, alternatively, could reveal that they’re unsuitable to do so, allowing you to start on other plans. Either way, this could help the family business.
Get the business to “join the family member”
We always focus on the idea of family members joining the family business, but I encourage people to consider things from a different perspective: How can your business join your family members? How can it meet their needs?
Obviously, everyone has different priorities, and your business likely exists to serve people outside the family. But it is a family business, and so it can be helpful to think about things this way. How it can serve the interests, talents and needs of the people within that family. That doesn’t mean allowing them to use it as their own private bank or running it into the ground, of course; it just means you can bring the business to them, rather than vice versa.
Give them a taste of what’s to come
Remember that neither you nor your kids should assume they will enter the business. I’ve spoken about how important it is for them to be able to prove themselves, to make a positive impression, but it’s equally important that you do the same. If you come home every day and complain about problems or difficulties at work, you can expect your children to develop a negative view of running the business.
Focus on creating a positive feeling about the prospect of joining the business. Sure, you can share the challenges of work, but do so from a constructive perspective. Ask them for their ideas, take them to work to show them around, and show them the different aspects of the business. Make it exciting; try to fill them with a sense of anticipation. Think of it as marketing your business to the talent you hope one day will take the reins and guide it towards a safe and prosperous future.
