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Preparing the next generation: education

Miguel A Gallo is a Professor at IESE Business School, Barcelona, Spain.

In the first of a two-part series on preparing the next generation for a career in the family business, Miguel A Gallo explains why the role of education is so critical for a future career in the family business

The statement that "the family business is different" has become something of a cliché, but that does not stop it from being a truth that impacts almost all strategic management activities in these types of companies.

Thus, for example, it is not the same thing to be a shareholder in a public company with no legal obligations (only rights and opportunities to sell one's shares) as to be a shareholder in a family business with the moral responsibility of trying to increase the unity between family members and between the family and the company (in most cases without the possibility of selling one's shares in the short-term).

Neither is it the same thing to be an executive in a non-family business with no direct relationship to either the owners or the members of the board as to be an executive, and often a board member, in a business belonging to one's family, where the other owners are one's relatives.

Adequate preparation of the next generation for a career in the family business must be founded on the fact that these differences do exist. It must also be designed for the type of business that the family wishes to develop, because that is what is going to define family members' positions in the business, and it must always cover aspects relating to ownership training.

In preparing the next generation for a career in the family business, one must distinguish between "education", "experience" and "career training". This article, the first in a two-part series, explores the role of education.

"Home" schooling 
The "education" received at home is critical for a future career in the family business. It is at home that one learns to love the family business or hate it, depending on the example and criteria set by parents and siblings. In the home, and at a very early age, one learns and adopts many of the values that make up the company culture, by learning its history and observing how other family members experience the problems that arise over the years.

It is in the home that the path is either laid or blocked – depending on the conduct of the older family members – to understand the strength in "unity", which is essential to the continuity of the family business, and the company's "competitive advantages", which are key for competing in the marketplace. Finally, it is in the home where one learns the human virtue of hard work or working to serve others, or where one learns to evade work or to become a workaholic.

The need to develop "love for the family business" means that, both during school life and university years, it is very important that work experience in the family business is only offered as a "reward" to those family members who have attained good marks in their studies…and never as a "punishment" or a place of refuge for a poor student, which can lead youngsters to "hate" the family business.

For similar reasons, it is also important that the spouse of the family member who is working in the family business has extensive knowledge of the company, because both the mother and the father influence their children by example and comments, and no one can teach someone to love something that they themselves do not know well.

Finally, in a global context, the preceding generation, accustomed to operating in a local context, must make an effort to realise that it is not only what is familiar and close to home that is good. They must set an example, often at personal sacrifice, by learning other languages, appreciating other cultures that may be very different to the one they were born into, experience the discomforts of travel and so on.

Formal education
Mainly in relation to university, but also to school education, family members often ask themselves: what kind of studies will make my child most successful in the family business? It can be difficult for parents to respect their children's freedom of choice in these circumstances. It is helpful for the children to have truthful information about the company, what it is like and what it needs. Parents have to ask their children to strive in their studies, for where there is no knowledge there can be no freedom of choice.

The answer to the question posed above is almost always "it depends…" But among all the possible options, there are schools, universities and types of training that provide better preparation than others for working in the family business. The better places teach how to manage numerical matters with ease (essential for understanding costs, finances and many other elements of business activity) and teach students to know and understand people (the human being is the key asset of any company).

They teach how to "look outside" (the company always works within a context that provides business opportunities), to interpret the signs of the times and survey the future (strategy mapping means defining future circumstances), to work in a team and to be international in one's outlook. Finally, the better schools demand high student performance. This is important because showing that one can overcome demanding educational challenges is an added proof, for family and non-family businesses, that one is capable of making a significant effort.  

The above comments on education do not mean that family members without a university degree cannot become managers in the family business because, of course, many worthwhile people do not discover the importance of studying until they have worked for many years. Today, many very good business schools conduct training programmes that focus precisely on this kind of situation and experience can be a magnificent asset.

But it also means that one must judge accurately and early on whether these family members lack skill or motivation. If this is the case, then insisting that they work in the family business, allowing them to value themselves above their actual worth or to be flattered by the organisation, is one of the biggest traps into which the family business can fall.

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