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Signs when next generation in Family Business is ownership ready?

Next Generation-Family Business-Ownership

How do you know when the next generation in Family Business is ready to take over the company?

The ultimate answer lies with the human side of family business. That almost unseen or silent message sent off by the next genration to their parents and employees that they are ready. 

"an evolution is required within next generation... The self-perception shift from manager / employee to leader / owner"

The fellow scenario represents a common theme in many of the relationships we have seen over the years.

The parents trust enough to leave operation of the business to their son for periods of time, so clearly they believe in him enough to take care of things while they are away. Yet on a regular basis, they’ll comment to us that he takes too much time off, has a life outside of the business, and freely spends his money.  The thing is, he is improving the company, building respect with employees and proving that he can lead.  So by all accounts the succession plan should be triggered into implementation. Yet it is not.

When we dug into the issue, it was clear that they saw their child from a comparative lens.

“We put in lots of time and sweat at that age, so we expect the same behaviour from him or her now.”   

“We spent every waking hour at the business, and she should too!”  

“He wants to spend time with his children, yet we brought him and his sister to work with us when we started the business.” 

Having said the above, the parents would also agree that the business is larger, more sophisticated now, and with employees who take on the specialized roles they had to do themselves years earlier. So here is the paradox:  They trust their child to run the company for months at a time, but don’t see proof that he can take ownership.

So what is missing?

Within small to medium sized businesses it all comes down to the ability to answer two key questions:

“If we leave the company to our child, will she be able to provide for our future security?”

“Will the legacy of the company be ensured? That is, will it be around to achieve its purpose?”

To answer those two questions, an evolution is required within the younger next generation in Family Business:  the self-perception shift from manager/employee to leader/owner .  It is an almost unconscious thing. How the child walks into a room, speaks, hold themselves, or directs employees. Their improved strategic decision capabilities and confidence are all observed by family and staff alike. These are messages that are picked up and filed away as indicators of readiness.  If there is an incongruency within people’s minds, then questions are asked. If questions are asked, doubt continues.

When this new mind-set is recognized, the child will notice their parent backing away, letting go of decision making, where before the parents would tell him what to do, now they ask for advice. Even the types of conversation around the kitchen table changes subtly. The feeling of being watched over or challenged through higher expectation levels off.

Parent perspective of Next Generation Ownership

  •          Let go of the comparative lens and look for actual proof of readiness for ownership
  •          Give them projects or ask for their suggestions on projects for proof of readiness
  •          Share financial state of the company
  •          Give them more responsibility  - don’t look over their shoulder, but give clear outcomes
  •          Define their role
  •          Measure on real outcomes

The Next Generation: are you ready for Owernship?

  •         Get in early
  •         Stay late
  •         Sacrifice for the company
  •         Do what you say – keep your word
  •         Don’t hold an entitlement attitude
  •         Shift into a leader/owner mind-set - show leadership 

This ultimately is a meeting in the middle. Both sides being prepared to allow the other to follow their own strategy, but both sides relaxing a bit to ensure the end result is met. We know from years of working with family companies, when simple behaviours that show a willingness to grow are observed over time, the nit-picking stops, and family peace (and prosperity) is possible.

Learn more about programs Jonathan Creaghan offers on developing the next generation


 Jonathan Creaghan helps clients transform themselves and their workplaces.  He believes that businesses ultimately succeed or fail because of the human factor.  He teaches people to think differently, to see reality with fresh eyes when solving issues that impede them, whether personal or business.  Jonathan provides “Solutions for the Human Side of Business”.  www.jonathancreaghan.com

Jonathan is the author of several books including Duxter’s Leap! and the Thinking Differently® Leadership series  which includes Thinking Differently® about… Getting More Done.  His books are published around the globe in several languages.

Copyright © Jonathan Creaghan, 2014, all rights reserved

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