The wonderful thing about family businesses is that … they are family businesses. We love our children, we nurture them, educate them, all in the hope that they grow up to be self-sufficient, confident and happy adults. How nice to be able to work with them also.
There is a difference, however, between working with your children and lining up your succession plan with your kids in mind. I believe there are some basic tenets that can be followed to prepare them to take over the business.
First, they must spend some time at the bottom. And I mean on the very bottom. I had a client who was one of the top heating, ventilation and air conditioning and plumbing companies in the area. The kids all had great potential, but none had spent any time in the field. After discussing with the owners, we decided they needed to begin going out with the crews, getting dirty, digging ditches, working with their hands and understanding the business at the root level. Now they not only understand that part of the business but are respected by all the employees.
Next, expose your kids to various aspects of the business. Although not everyone is inclined to be an accountant, sitting behind a desk doing debits and credits will help them understand a core component of the business. Once through all departments, they will not only understand the specific functions but be able to see how they all fit together.
At Olan Mills, our family photography business, my first job was to collect and process film canisters. Not thrilling work, but I did get to interface with every department in the company and demonstrate that I was not above doing the dirty work. The next summer I was moved to the office, processing orders.
Now comes the question of education: Does your child need a college degree? It depends on the type of work the company does, and the type of work your child would like to do there.
However, this is the wrong way to look at education. If your child is really attracted to a particular field – even if it’s different from the family business – she should pursue it, provided that she knows she will need to get a job in the field after college. Members of the next generation should feel free to explore professions and not feel committed to work for the family business.
But if there is some interest in the family business, your child should take courses that align with the company’s mission. If your child is really interested in the business, he should take a lot.
Now your children have graduated. What now? Send them to go work somewhere other than the family business. They are young and need to find themselves. They should feel 100 percent free to do whatever they want and work in whatever field they like. That includes relocating to another city, state or even country.
If they are truly intent on joining the family business at some point, they should join a company that has some relation to the business. On top of this, research shows the highest correlation to succession success is the next generation spending some time working outside the business – because now they are their own people, not just dad’s kids.
When they rejoin the company, it is preferable that they enter where there is an opening that matches their skills. Or the newbie can enter the company near the bottom for a while to demonstrate that he is learning the basics.
Children should be humble and be good listeners. Most of all, they should volunteer to take or lead projects.
Finally, while these next-generation members may have been educated in college and had great outside jobs, running a company is complex, so they must always be learning. Encourage your children to attend industry association educational conferences and to read industry and business magazines and books. They should always try to be at the top of their field.
Henry Hutcheson is a speaker and author and president of the consulting firm Family Business Carolina. Email your questions about family business to Henry@familybusinesscarolina.com
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