Karen Vinton is a family business consultant with Vinton Consulting Services in Gallatin Gateway, Montana
To prepare your heirs to take the reins of your family business, you must start early and be more of a mentor than a boss. Karen Vinton believes that a light touch and plenty of encouragement are the best way to reap satisfying dividends from willing offspring
Consider these two different scenarios. Company A's owner has two of his three adult children working in the business. All three children worked in the business when they were growing up, doing deliveries, cleaning, taking orders and other odd jobs. The owner never planned for his succession and is not effective at delegation. One daughter works part-time in the business; the youngest daughter works full-time. The owner wants to retire but doesn't think that either daughter can run the business as well as he does. The daughter who is working full-time is now looking for an alternative career. The other daughter is developing another business and hopes to quit soon. The owner's spouse is concerned about his health and wants him to retire, but he doesn't know how he will do it.
Company B is run by two second-generation siblings who now have four children working in the business. Over the years both siblings have discussed how to bring their children into the business. They told their children what kind of education and experience were required to work for their company. The four cousins worked in various areas of the business their entire lives and have all completed the required education and experience. As a group, the siblings and children talked about what skills were needed for the next president, who should take over as president, and how the cousins who do not become president could have successful and satisfying careers in the business. Recently, one of the children became president, replacing his aunt. A career development plan has been established for the other cousins and all are still working in the business.
These two scenarios highlight some of the different keys to successfully raising heirs to work in and eventually lead a family business. The siblings in Company B planned in advance, informed their heirs of the standards and expectations and acted as mentors to the cousins. Company A's owner has consistently acted as a boss and not a mentor to his children and gave no forethought to succession. It is important to set standards and have plans for heirs who want to enter the family business. All businesses have standards for hiring and promoting employees. Your family business should not be any different. If you have a software development firm, you might require employees to have certain computer skills. If you need a person to lead a new product initiative, you would require leadership skills too.
Worker or leader?
Families need to make sure that heirs know there is a difference between working in a business and leading the business. Different skills and expertise are required for each. For example, if an heir has a real talent for sales, that should be encouraged; but being a top-rate sales person does not necessarily translate into being the right leader for the family business. So what can families do to help heirs develop leadership skills? One of the best ways is to encourage your heirs to get involved in the leadership opportunities in extracurricular activities starting at a young age. Each extracurricular leadership experience will build upon the next. Getting involved in everything from scouting to church to fraternities and sororities can help heirs develop their leadership skills. Many of these organisations also have events and seminars that can help heirs hone their leadership skills. As heirs get older, encourage them to take leadership classes and seminars. In fact, why not take a leadership workshop with your heir? This could provide a great opportunity for both of you to experience a common activity and might bring to the foreground issues and concerns you both have about being a leader. This also models your willingness to learn new things for your heir.
I always recommend to families that they encourage heirs to get experience and education outside of the business. If children had only one teacher throughout their education, how broad an education would that be? The same problem can emerge if children only work in one business: they can get a narrow perspective of work and organisations. One man I knew constantly complained to me about how his father ran the business and how poorly he was paid. But the son had never worked anywhere else. He never saw that other businesses had similar problems and it wasn't just a problem in his business.
Degree of expertise
Getting an advanced education can also help heirs get a better perspective on the family business. While there are only one or two places to get a degree in family business, there are a growing number of educational resources available (see box). Even if your heir goes to a university that does not have a specific course in family business, encourage them to read and study family business. Most universities require research papers for many classes, so encourage your children to do research on your business, on the industry or on a problem that is facing your business. Read the report and give feedback to your heirs on their ideas. If the report is a good one, share it with the rest of the family at a meeting.
Also encourage your children to take advantage of internship programmes that are offered at their university. Internships give students the opportunity to get work experience while getting college credits. The Family Business Network has the Next Generation Working Group that is offering a trainee programme that helps place young heirs in other family businesses.
So what if you have done all of the above but the heir does not really want to work in the family business? This might be the most difficult thing your child will ever have to tell you. It is much harder to tell a parent that you have no interest in working for the family company, than telling a stranger you don't want to accept their job offer. It is important to let children know as they are growing up that they have a choice. Forcing children to work in the family business can bring much heartache. But even if your children do not work in the family business, you have not wasted your time. All of the things you have done will help your children be successful in their chosen careers. You can also rest easy knowing that that you have helped prepare them to be more effective stewards of your company when they end up owning the company some day.
What if you have done all of the above but the heir does not really have the skills to work in your business? This is a tough situation. You can take some consolation in knowing that you are not the first parent to face this situation. It happens every time a successor is chosen. Someone gets chosen and someone does not. This is where it helps having standards set from the beginning. If a university degree is required and your son does not get a degree, then he should not have an expectation of a job. That was his choice and he has to suffer the consequences. But what if you think your heir does not have the necessary leadership skills, a much more intangible thing to measure? You might want to ask a trusted adviser or co-worker for their opinions. Sometimes it is hard for us to see our children as adults and an outside perspective might help.
Raising heirs should be a rewarding experience. If you are willing to act as a mentor and give them the guidance they need to find their own career paths, which may lead them to satisfying careers in the family business. But perhaps your heirs will find greater satisfaction as informed and involved owners of the family business. The greatest joy any parent or mentor can have is helping their children find their own roads to satisfaction, happiness and success.