One of the biggest delays I see when it comes to transitioning a family business is the next generation’s perceived lack of readiness. The senior generation may be hesitant to hand over the reins because they are looking for signs of initiative and drive in their successors. More often than not, I see the next generation having to cautiously pull a little to keep the process moving. But if successors are too passive, it can come across to the senior generation as a sense of entitlement, rather than a sign of respect.
To alleviate some of the senior generation’s concerns, the next generation can engage in a variety of activities to prepare and demonstrate their readiness for a key leadership role. The more common types of activities tend to involve some form of mentoring, experience, and additional education.
We often see next generation leaders participating in peer-to-peer learning groups. There are family business specific organizations that are run locally as well as at a national level. Either way, this peer-to-peer learning platform offers a way for individuals to share ideas and get advice from others in a similar situation.
Another common avenue is developing relationships with mentors or business coaches who next generation leaders can meet with on a regular basis. These mentors can either be in the family organization or come from outside. These relationships offer more one-on-one guidance as well as an opportunity to leverage others’ experience and get another perspective on business and family matters.
Another way to develop skills by leveraging the knowledge and experience of others is through the use of a board. This often comes in the form of an advisory board comprised of a mix of senior generation family members and outside members and advisors. The group meets regularly and is there to serve as a sounding board for ideas and issues, as well as provide a level of accountability for the next generation. Boards are often formed post-transition, when the senior generation is looking to play a continued role in the business but is moving away from their day-to-day responsibilities.
Also, don’t underestimate the value in rotating through various departments of the business. Having exposure to operations, sales, and administrative functions can be invaluable for someone moving up the ranks. Not only does it provide relevant hands-on work experience, but it also offers insight into the inner workings of the business. This knowledge can prove to be invaluable later on when the next generation is in a leadership role and is making decisions that affect these areas of the business.
Pursuing an advanced degree – either an MBA or other degree in a related field – is a great way to obtain more formal learning. Not only do you get higher-level education you’ll need to manage a business, but you have a chance to build a broader professional network while doing so. These advanced degrees are a larger investment – in dollars as well as time – since they can take several years to complete. But that investment is often well worth it.
Depending upon your stage of life, pursuing a multi-year advanced degree may not be practical. If that’s the case, there are a variety of smaller commitment activities that can add up over time. These include attending business and leadership seminars, reading books, or listening to podcasts on a variety of topics. These can be a great way to get targeted doses of learning, but at a lower cost.
As you can see, there are a variety of activities that the next generation can engage in to develop themselves while preparing for transition. Not only do these activities result in a more well-rounded leader, but they also can help to alleviate some of the angst felt by the senior generation and keep the transition process moving.
Steven E. Staugaitis is a director at Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at Email.
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