Mika Mustakallio is a founding member of FBN International's Next Generation Working Group. www.fbn-i.org
Offering clearly marked highways and pointing out the right junctions is an effective way to motivate young people to commit to the family business. Mika Mustakallio looks at the options for preparing the next generation for the road to prosperity
Highways are visible and easily identifiable parts of our infrastructure. These main roads lead from A to B, passing all manner of midpoints. It's all planned with junctions and final targets perfectly mapped out and communicated.
Compare a good road infrastructure to a family business and its next generation, and the similarities are striking. We should invest in building clearly marked paths with meaningful junctions. We should point out recommended routes, special highways, and junctions of knowledge along the way.
Investing in these highways can offer remarkable benefits. They not only lead the next generation towards a deeper understanding of the 'family business identity' but bridge the communication gap between generations. Only by investing in the infrastructure do they become available on all levels.
So what are the benefits? First, is it important imagine the senior generation both as an investor in the family business and beneficiary. In other words, investing in highways is not for the exclusive benefit of the next generation – investors are exposed to significant yields as well.
Indeed, investors stand to lose by not investing, as it were. From the family business perspective, if the next generation fails to warm to the idea of carrying on, the failure affects the senior generation. In other words, investors take a knock. So, like a dual carriageway, the benefits of investing in next generation work both ways.
The most valuable dividend is arguably the next generation's ability to find and grasp their family firm's identity. Yet this can blossom by encouraging younger family business members to participate in special next-generation events so that they can experience shared learning with their family business peers. Offering them responsibility in small chunks and through employment in the family business will foster their passion to succeed. The 'investors' – the senior generations in family businesses and their close advisers – should therefore study their roadmaps and point out relevant junctions in order to put their successors on the right path.
If you expose your children to educational family business events or their special roles in the family business, then you are grooming them as well as enhancing their careers. Meanwhile, despite what might seem an overly contrived process, they will still form unique identities. So why risk waiting to see how strong, committed or unclear the next generation is? Invest in it.
The second benefit to both generations is improve communication. A structured communication process allows the older generation to establish how to best invest in the next generation, while the younger generation can articulate its requirements. Without a strong and structured two-way communication process – what I call the highway platform – it's difficult for the old guard to get useful or unbiased information from their would-be successors. The next generation, who in some cases are very young, may neither know what to say nor how to describe their feelings. Indeed, they may simply say nothing or, wrongly, tell their inquisitors want they think they want them to hear.
Investing in events and roles helps bridge the (generational) communications gap. After talking to their peers and gaining their own family business experience, the next generation can then muster the courage to improve how they communicate with senior family business members. The highway approach brings other benefits too: the next generation can create its own network of contacts, and gain experience on the family business matters in general.
Signposts to clarity
Formal next-generation highway structures already exist in many family businesses, and of course within the Family Business Network. The FBN's next generation model can be likened to a highway with several junctions, and where a family firm's children are involved and active on several levels.
The typical first 'business' steps for next generation members are carried out through educational events that offer both a social and business setting for them to meet their peers and, at the same time, come under the guiding hand of senior family business leaders. This has been particularly effective in what we term 'identity breeding' among junior family business members as well as creating strong two-way communication between senior and junior family business members.
The investment has yielded concrete results, including the Next Generation Trainee Programme (Building the Future) as well as the Annual International Next Generation Spring Event, among others. On an individual level, our investment has attracted several new members to the organisation.
Similar structures exist within the FBN's national chapters and present next generation family members with opportunities to become involved with various national, employer or industry organisations, as well as with other FBN chapters. Indeed, there is even scope for developing roles in national politics.
Highway junctions for family business members
On a family business level, a well-prepared governance structure is an excellent example of a next-generation highway. But the structure should be clear to all family members, so clear that everyone understands who is in what role (which junction) and when. It is crucial that family members recognise opportunities when they arise. Step by step involvement of the next generation invariably bears fruit in a family business.
The above are just three examples of possible highways and alternative junctions on offer. On all highways everyone chooses their own junctions; some are a must for all and some are not.
If you are inspired by the examples, family business members should capitalise on the opportunities these business models offer. Our ongoing development of the next generation highway model not only helps successors sharpen their identity within the family business, it clarifies senior family business members' understanding of their children's strengths and weaknesses, business vision and, indeed, their basic needs.
We believe the 'highways' of family businesses are the very foundation on which the next generation plans its future successfully. For seniors, it is the structure through which they can reap the rewards of investing in the family.