Preparing the next generation to take over a family business is not easy. Statistically, only one in three family businesses transitions successfully. Through planning, preparation, and training, next-generation succession in leadership can adapt and grow with the changing marketplace.
Successful family business and wealth transitions are often backed by comprehensive and workable plans for helping next-generation family members become responsible, educated, competent, and confident with regard to essential business matters.
How The Next Gen Must Prepare To Succeed Their Parents’ Business Legacy
Secret #1: Know the Next Generation
Each generation is characterized by common traits in how they shape the workforce. Gaining awareness of their leadership style will give you an idea of what they tend to value in leadership and how this can shape the future of the family business.
As generational leaders, Millenials will
- Voice dissatisfaction
- Challenge outdated business practices
- Want to work as a team and build relationships
- Want to have a purpose in their work and leadership, and feel fulfilled in their career
As building relationships is a priority for millennials, it can be a challenge for them to be objective in decision-making and in conducting performance reviews. Furthermore, millennials are now moving into management roles. They are adapting to managing staff working at home, and flexible work schedules of their team, while still learning how to lead.
Secret #2: Identify Skills the Future Leader Will Need
What skills does a future leader need to take over the family business leadership role successfully?
D. Muzquiz, of The Predictive Index, lists 4 core competencies of leadership. These include
- Showing sincere appreciation for others
- Ability to inspire their followers
Creating mastery in a leadership capacity will result in the benefit of a more engaged leader and employees.
Frank (2019) advocates family business leadership will require both a family strategy and a governance framework as business becomes more complex over time. An entrepreneurial spirit is not enough to navigate the changing world of business. The family strategy addresses family goals, career growth, and ownership issues. A governance framework provides guidelines to navigate the business needs while reducing disruptive family conflict.
Secret #3: Diversify Training
The first step for current family business leaders is to envision the future roles their children may inherit or wish to fulfill with regard to family business interests. The next step is creating experiential learning and career development opportunities designed to support those needs and interests.
Where can your kids go to gain the skills they’d need to contribute significantly to the family business?”
- In-house training can include mentorship, job shadowing, bringing in consultants, and workshops conducted by other employees and family members
- Share in leadership decision-making
- Online courses and workshops
- Work with a business leadership coach to assess interests, values, and career plans, and identify individual skills and areas of growth
- Comprehensive business skill training such as an MBA or management certificate
- Soft skills training such as communication and conflict management
- Read industry articles
- Build relationships with department heads, employees, customers, the board of directors, and customers whenever possible
Secret #4: Training Mindset
Preparing someone who intends to work in the business and one day be a leader requires a different training mindset than preparing a next-generation member who will not work in the business but may be an owner or shareholder.
Leadership mindset vs. owner or shareholder mindset
Leadership mindset is characterized as being agile, adaptive, a decision maker, objective, and participating in continuous learning. A growth mindset is critical throughout the leader’s development and transition into the successor role.
Owners and silent partners have valuable roles to play, but it is a different mindset. They do not need to be visible, and involved in the day-to-day business, guiding, inspiring, and managing people and projects. Leaders do.
Secret #5: Protect The Next Generation’s Future
If the family business doesn’t continue, what type of job would the next gen be prepared to fill?
Leadership skills will be valued in any position in the workforce, from project management, patient and customer care, and team management to programs and services. Strong leadership with a growing skillset from continuous learning builds success, both for the individual and the company they serve.
Recent Job Trends for Millenials
Curious about what career opportunities are growing in the US over the next 8 years? Check this out.
Bottom line, tech skills, people skills, time management, leadership competencies, creativity, and a growth mindset are success built in. For now, let’s focus on your family business and designing it for success.
Knowing the next generation what they value, their interests, strengths, and level of commitment to the family business is where to begin in preparing a leadership succession plan. You want a leader who is invested in the company long-term. Training soft and hard skills, on the job and through education opportunities, and demonstrating a leadership mindset is critical. The next generation must also be proactive in identifying their own skills, interests, and career paths, especially if they want to succeed in the business. Preparing your kids for business succession provides them with lifelong skills to support them going forward in their careers.
Now that you know the 5 secrets to successful next-generation leadership in your family business, let’s spend 30 minutes exploring what your next generation needs to become the leader of the future for your family business.
Lunch & Learn – join me for my online November Lunch and Learn on Tues, Nov 29 @12pm ET. We will be discussing strategies for setting up the next generation for leadership success in a family business.