As all parents can attest the soft and hard skills of running a business and a household are similar and yet so far apart.Â Merging both whereby your children and family members move to take on the additional of being your nearest and dearest to becoming your employees, Â eventually your colleagues and in the end, the boss is a transition on many levels for all the family members that requires quite a separation of powers and mentalities.
In our efforts to give our children the taste for the family business it is important to keep the following principles in mind:
While you can decide not to involve your family in the business, your children will ultimately determine whether the business will continue as a family business in their generation.
In most instances, children cannot or should not be pressured to make such decisions before they are ready, and one should discourage statements such as, “We have a family business, and it’s intended for you!”
Rather, as the teenagers approach adulthood, business owners are encouraged to make a statement more like: “We’ve got a great business here. You’re welcome to enter if you wish, after proper education and outside work experience. After you’re here a few years, if you decide you’d like to make this business your career, we can talk about whether this is something we want to continue into the next generation.”
Sometimes the situation suggests that there is a “right” answer to the questions of future leadership and ownership continuity, when, for example, one child is obviously suited for leadership and you are convinced the other children are not.
When the answer is dear, the business and the family are best protected by sharing conclusions as early as possible. Then everyone can become settled in their expectations and avoid years of emotional ambiguity and doubt about important career decisions. It hurts to face children’s disappointments, but procrastination causes greater problems.
When the solution is not so obviously clear, parents should seek the participation of their children in defining their futures. This process is one of thoughtful delegation, not casual abdication. The following is a guideline of how this can be approached:
- When the children reach their late teens, initiate a series of family meetings that can continue over months or years. At the outset, describe the situation and the decisions to be faced. Get input from your children about their willingness to participate and their thoughts on how to proceed.
- Suggest that as a group they develop a vision of the future, identifying important questions and studying various alternatives. Usually, the first question that should be answered is whom to include in the process. For example, the children’s spouses? Children active in the business? Nonactive shareholders? You should also consider from whom to ask guidance such as key nonfamily managers.
- After they have identified questions and examined options or scenarios, ask them to report on their thinking to you. You might also share the young people’s views with valued professional advisers or outside directors for their input.
- Respond to your children’s ideas with guidance and feedback. Offer thoughts on other questions to be considered or alternatives to be explored.
- The next generation presents its proposed vision of the future as a basis for generational transition.
The greatest obstacle to the success of this process is the natural instinct of parents to make or heavily influence most decisions, especially those affecting the family or the business they built. Parents need to work on developing confidence in their children’s thoughtfulness and in their abilities to work well as a team.
Empowering each member of the next generation to affect his or her own destiny is a precious gift of trust and faith and is as great a gift as a parent can provide.
Contributed by the Family Business Office Regulator, Dr. Nadine Lia