Family businesses: Mentoring the next generation
How do you get the next generation ready to lead so they can one day fill the shoes successfully?
As an expert in advising high-net worth families and their businesses on a broad range of topics, from restructuring to long-term strategic planning, from intergenerational issues to succession planning, I have seen firsthand what it can cost a family if the next generation is not ready.
Secret No.1: Outside before inside
Get them out of the business before you make them work inside of it. There are notable exceptions, among them several billionaire families we have worked with that never had their children work outside of the family, but these are still the exceptions to the rule. The best thing you can do is to have them gather experience outside of the family business first, before charting their course inside.
Why? Several benefits go along with this plan. First of all, they will not have any entitlement. Ideally, their co-workers will not even know who they are, especially if the children come from a well-known family in their home country and go work abroad first. This is important because you don’t want the kids to have any sense of entitlement. They must firmly know and feel the equation of effort=outcome=reward.
As I am sure you know already, the worst thing you can do to your kids is to spoil them. In the same way that effort and persistence are far more important than talent, so are hard work, sacrifice and a clear focus on third-order consequences far more important than their family name. You want them to earn the right to carry that name. But to do this, they have to carry their weight.
An Asian clients of ours sent their kids to various companies outside of their home country where their family and businesses were very well-known. Their kids had to stand their ground and gain valuable experience. I still remember one of the family heads complaining to me how much their kids had to work in that foreign environment, and the long hours they put in. But it paid off. Today his kids are hardworking and dedicated to applying the same effort and relentless discipline to making the family business succeed.
Secret No.2: Professionalize
Another benefit of doing this is that the children will learn how other companies function, what drives them and what makes them work efficiently. Why is that important? Because a lot of families, no matter how small or large they might be, are still not organized, set up and run most efficiently. They carry too much “family baggage” and could profit from leaner management, more efficient processes and overall, a hefty dose of professionalism.
If you read this and think “that’s us!,” you are not alone. Over 83 percent of the clients of my global management and strategy consulting firm are family businesses. We see that every day, from medium-sized firms to the multibillion-dollar family business conglomerates that operate across different countries and regions.
Secret No.3: A family business is not the best place to start
For that reason, a family business is not the best place to start. That includes your own and that of any friends who offer to take your children under their wings in their family business. You want them to learn how things are done in a highly professional environment that is not a family business. Do not be fooled by the outside success of your or others’ businesses.
Even some of the high-net worth family business conglomerates with multibillion-dollar revenues are still organized or run in many ways like a “mom and pop” store, only at a much bigger scale. All of them could become even more profitable and grow even faster without that baggage.
Secret No.4: The beginner’s mind
I am sure you have heard the saying by Shunryu Suzuki: “In the beginner’s mind there are many possibilities, but in the expert’s there are few.” This is a highly important principle in innovation. You want your children to have a beginner’s mind when they join your business in the sense that they do not come with too many preconceived or clouded notions of how things should be done in your business.
You want them to see what you or others might be missing. In every business, there are always walls the current leadership cannot see through, blind spots abound, and often, unexploited opportunities are lying within easy reach that the current leaders do not see. You want your children to see all these things so they can get the business to the next level.
This is another reason why it is, by and large, better to have them start outside of our business than inside.
I often get the question: “What if my children want to work, learn or study outside of the family business field or industry?” As someone who has been called a coach and mentor to the world’s top Fortune 500 CEOs by Fortune and a “global management guru” by Bloomberg, I know from experience that there is not only one true answer to this question.
Among the Fortune 100 CEOs, the Bachelor of Arts (BA) and Bachelor of Science (BS) are almost equally popular as the Bachelor of Business Administration (BBA).
If you take a closer look, some of the Fortune 100 CEOs even lack degrees in fields directly related to the sector in which their companies operate. Lloyd Blankfein, the CEO of Goldman Sachs, holds a degree in history. Brian Moynihan from Bank of America: same. Marvin Ellison, the CEO of Lowe’s, had a degree in marketing. Mark Parker from Nike and Brian Cornell from Target are political science graduates.
The field of tech is the only exception: Almost all of the F100 CEOs who work in tech-related sectors have undergraduate degrees in engineering.
Secret No.5: Bottom up
If you have them start in your business first, then the best start is at the bottom. Why? They will learn all sides of the business, not just what is happening at the top.
They will also have less of a sense of entitlement if they start at the bottom of the ladder. In addition, other leaders in the company who are not family will respect them more because they have “earned their keep.”
Secret No.6: The more they know, the more they grow
The more they are familiar with all different aspects of the business, including what is happening in different divisions and business units, the better leaders they will become. This means you need to rotate them through different areas within your business. Not as an observer, but as a doer.
What if you have a conglomerate? Have them assume different roles in the different businesses so they get to know the ins and outs, and especially how all of the businesses in your group play together. In my experience spanning over decades, I have yet to see a family business conglomerate that uses all of its synergies to its full potential. Having the next generation assume different roles in different businesses also prepares them to see how synergies could be used better and how to apply that strategically. INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email
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