Is Your Family Business’s Next Generation Stepping Up or Sitting Down?

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One thing that has become apparent in speaking with my clients over the past six months is that they are learning a lot about the next generation who works in their family business. As my colleague said in a recent blog post, this year has been trying but it is also an opportunity to look more closely at our businesses. And in a family business, the events of 2020 have offered the perfect occasion to take stock of the next generation’s potential.

Referring back to one of the key takeaways from our Family Business Survey conducted last year, we found that the biggest impediment for why family businesses have not started transition planning is typically the lack of next generation readiness. Senior generation leaders, and especially founders, navigated through a variety of experiences as they were working to grow the business. These experiences often put a significant amount of pressure on them, and they built up a base level of resilience and grit as a result.

As a family business matures, one of the desired by-products is to establish processes and systems that minimize the stress on the business so the owners can focus on longer-term strategy and growth. An unintended consequence of this, however, is that the next generation is not always tested in the same manner as its predecessors. As a result, the senior generation may have reservations about the next generation’s leadership abilities and readiness.

We have discovered that the silver lining in this once-in-a-century global pandemic is that it is providing many opportunities for the next generation to navigate difficult, new-to-them situations. And they are either leaning into those challenges, or they are running from them. As a senior generation leader, you can use this time to evaluate and take a closer look at how your next generation has responded. For instance, have you seen anyone step up and offer to help provide solutions to problems, or are employees sitting back and criticizing plans? What has their demeanor been over these past six months? Have employees remained calm, or do they seem anxious?

Many next generation leaders have been helping to lead through the numerous difficult and daunting decisions that their family businesses have been forced to make in 2020. This year has presented a distinct opportunity for the organization’s character and culture to be tested in a new way, and it will give you unique insight into how the next generation will navigate the future of your family business.

Steven E. Staugaitis is a director at Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at Email or 215.441.4600.

 

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