I have some family owned businesses as clients. They do have an extra critical dynamic which makes them different from other businesses. As one owner said to me when trying to make a difficult retain/fire decision about a family member, “If Pat goes and then works for a competitor that would make Thanksgivings very awkward.”
showbox iosThough the extra layer of family issues can be seen as a detriment, businesses that want to stay family owned and/or operated have the advantage of being able to plan succession well into the future (assuming commitment by younger family members). This can include education, cross-training assignments, and working for other companies. The important point is that family owned businesses should focus on succession planning in management as part of the ownership transition.gmail Login Sure, deciding what it takes to be the next Director of Midwest Regional Sales isn’t as sexy as the next CEO, but it is a necessary step.
When I read about how family businesses conduct succession planning well, what strikes me is that additional role definition is a key. This article provides some good examples. The lesson is that governance and individual responsibilities need to be even clearer for family members in the succession path than for employees. Besides giving confidence to investors and other stakeholders, this really tells brothers, sisters, nieces, nephews, etc. not to make assumptions about when they get to run the business, but rather what milestones to hit so they can earn the opportunity to run the business.
Of course, clear role definition and long term succession planning are great tools for any business. Being clear about selection criteria, knowledge and skill acquisition, and experience set standards for all employees who want to advance in a company. But, for family-owned businesses, they can mean the difference between transitioning a business to future generations or having them stop with the founder.