We are firmly entering the second half of the wave of Baby Boomers reaching traditional retirement age. Both family and non-family owned businesses are facing the inevitable reality that their next generation employees will be taking on more leadership responsibilities. But as the next generation begins to take over, the big question is, how ready are they?
Two months ago we completed our Family Business Survey. Some of the responses around the areas of next generation planning and family governance suggest that family businesses may still have some way to go in preparing the wave of future leadership. Our survey noted that more than 54 percent of the respondents functioned without any type of board structure and that only 39 percent had made formal investments to develop the next generation.
So, how do family businesses prepare the next generation? Our survey indicates that the top five activities businesses are investing in are formal mentoring programs, educational seminars and conferences, executive coaching, peer groups, and advisory board meeting attendance. These activities provide opportunities for the next generation to receive hands-on learning, feedback, and support from their network.
There are additional approaches that were not mentioned in our survey but that we often see. One example is senior generation leaders allowing the next generation to take on special projects and granting them sufficient leeway to make decisions and direct the outcome. Allowing them some missteps along the way can be impactful learning experiences. Lastly, encouraging and supporting innovation – of new products, new service offerings, or process improvements – goes a long way in developing creative problem-solving skills and greater knowledge of the business.
With at least a decade to go before the Baby Boomer generation completes its transition, there is still plenty of time to help guide and prepare your next generation for future success. However, you don’t have to go it alone. Download our Family Business Survey for more insights into how your peers are managing this transition, and feel free to contact me if you’d like to discuss ways to prepare your next generation leaders.
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