When the Next Generation Enters a Family Business
I recently had the honor of being a keynote speaker along with my son Scott at the Family Business Magazine NextGen 2022 conference. In 2021, Scott succeeded me in the CEO role of our 76 year-old, fourth generation, family-owned, and operated business. While entry into or succession within a family business can present wonderful opportunities for the next generation, this certainly can present unique challenges, none of the least of which is the potential impact on family relationships.
I want to share some of the closing points I made on this subject at the NextGen conference, and while my comments specifically reference the next generation of leaders of family businesses, these comments can certainly apply to anyone being considered to join or transition within any business. Here are two questions about this topic that I answered in my speech.
Should the next generation of family members be allowed to join the family business?
It is imperative that a next generation family member desires to join the family business for the right reasons. While joining a family business can be financially rewarding, it should never be mainly about money. In my view, and while not a comprehensive list, there are many valid and important reasons why the next generation should want to enter the family business. They have a passion for entering and learning the business, they have a desire to have the opportunity to play a meaningful role in the business, they believe they have a skill set or prior working experience that enables them to bring value to the business, and they want to play a role in continuing the family legacy. Other reasons such as earning potential, stability, and flexibility are certainly valid reasons to want to join one’s family business, but these should be secondary to other reasons as noted above.
How should the next generation of family members be promoted within the family business?
For any number of reasons, it could likely be a wise decision not to promote the next generation into a particular role. It may be a role for which they do not have adequate experience or a suitable skill set. They simply may not be ready, or the role may not be a proper fit. As a parent, it certainly can be difficult or tricky at best to suggest to a child that they are not fit or ready for a particular role. After all, you want your children to successfully grow and advance within your family business. However, saying no in a compassionate and heartfelt manner or finding a more proper role is a far better alternative than potentially setting up your child for failure. If your child is not a proper fit for a particular role, do yourself, your child, and most importantly your company, a favor by not placing them in such a role. Insert a more deserving non-family team member or outside candidate into such a role. In the end, as difficult as it may be, it ultimately serves the best interest of all parties.
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