Next generation development is a critical component of multi-generational continuity. An effective process for developing the next generation of leaders requires a significant commitment of family resources. A test of whether your next generation development process is being effective involves answering three questions:
- Are family members developing the competencies to perform in their current and future family enterprise role(s)?
- Are family members developing the confidence that they can deliver in their current and future family enterprise role(s)?
- Are family members building credibility with family members, non-family executives and independent directors?
Development of competency, confidence and credibility go hand-in-hand. Competency is the combination of behaviors, knowledge and skills necessary to be well-qualified to perform in a particular family enterprise role, whether it be management or ownership. The opportunity to demonstrate competency combined with accurate feedback on performance is essential to developing confidence. Experiencing demonstrated competency sets the stage for family members to trust in themselves to further develop and prepare for increasingly complex roles. Experiences where learning is taking place and value is being created for the family enterprise is a powerful combination which builds family member credibility.
As individual family member competency and confidence build, credibility with other family enterprise stakeholders also increases as they come to believe and trust in the family member. Essential to building credibility includes having, and applying, a well-defined next generation development process which is understood and accepted throughout the family. This helps ensure that stakeholders believe decisions regarding access to development opportunities, including employment roles, are in line with what has been agreed upon.
As your family considers the significant commitment you are making to your next generation development process, test its effectiveness through assessment of the impact on developing competency, confidence and credibility in the family’s next generation of family leaders. This assessment will provide you with important feedback to drive needed adjustments and to encourage your family to continue to invest in this critical component of multi-generational continuity.