Tag Archives: next generation

Should I Stay, Or Should I Go?

JoAnne Norton
JoAnne Norton

My nearly ninety-seven year old mother-in-law has an intriguing quote displayed prominently on her refrigerator at her home in Calgary. “One of life’s most important decisions is when to begin middle age,” it reads. My husband’s young-at-heart mother often reminds me on our evening phone calls that we’re only as young as we feel.

Today we can work as long as we want to, especially if we are blessed with good health, a clear mind, and our own business. But how long should we? That’s one of the many questions members of the senior generation sometimes ponder in the middle of the night and sometimes discuss with their spouses in the middle of the day.

Would the business be better off with or without me, they wonder. Do I continue to add value? Are my ideas still relevant? What if I raise the subject of my retirement and then change my mind about leaving?  How do I deal with the pain in my heart as I consider letting go of something so dear?

The next generation grapples with its own set of challenges. How long can they afford to carry someone who they perceive is no longer pulling their weight? How do they bring up the topic of a parent’s retirement without sounding ungrateful or uncaring? How do they ignore the gnawing in their gut as resentment grows and the silence between the generations becomes deafening?

The good news is that we’re living longer, we’re staying healthier, and we’re looking better than at any other time in history. So we must now wrestle with the question of when or even if to begin a new chapter away from work—a better chapter than our parents and grandparents have ever had the opportunity to write. This is new stuff for both generations, and we’re short on role models, experience, and theories.

Barbara Walters was still working at age 84, but could we? Should we? In a family business both generations need to have candid discussions periodically at both the family and the board levels regarding retirement. The decision about when a parent should move on drastically depends on the industry as well as the desires of both generations for the future.

Sometimes these conversations are already taking place, not with family members in the senior generation who are mulling over what they might do next, but among frustrated future owners. Whether they are thinking about grandparenting, golfing, starting a charity, or beginning to play Chopsticks it is crucial for parents to share their plans, so their adult children can make theirs. Both generations will be much more open to this discussion if it is approached with patience, appreciation, and love.

Next-Generation Leadership in the Family Enterprise Part 2

Steve Miller
Steve Miller

In a two-part blog post, Family Business Group consultant Stephen P. Miller highlights some key findings from his recently completed research on how nextgeneration family leaders develop leadership skills.

My research on nextgeneration family business leaders demonstrates the importance of family climate on the degree to which nextgeneration family members learn leadership skills.  Ironically, some of the leadership characteristics we often observe in entrepreneurs who build successful family firms may actually work against them in their efforts to prepare the next generation for leadership responsibilities.  The kind of hardcharging authoritative leadership style that may have helped a senior family entrepreneur overcome the significant challenges of establishing a successful family firm negatively affects the development of nextgeneration leaders.  Nextgen family leaders need age and experience appropriate opportunities to practice decision making, take risks, enjoy successes, and recover from failures.  A senior generation leader who makes all the decisions and sets all the rules can unintentionally deny nextgeneration family members the experiences they need to develop their own leadership skills.

The study further suggests that nextgeneration family members interested in playing a leadership role in the family business should consider taking responsibility for their own development of leadership skills, particularly emotional and social intelligence competencies.  If the family climate is one characterized by senior generation leaders who exercise unquestioned authority, nextgen leaders would be well served to suggest or create some area of the business for which they could be responsible and held accountable by others.  If the senior generation refuses to allow it, then the potential nextgeneration leader may be wise to seek experience with genuine responsibility and accountability outside of the family firm.  The research is abundantly clear that shouldering real responsibility is strongly related to emotional and social intelligence competencies demonstrated by the most effective leaders.

Accessing Next Generation Wisdom

Norbert Schwarz
Norbert Schwarz

The senior generation of a family business was in the process of developing an employment policy for family members wanting to apply for a position. They interviewed next generation family members for their input and found some very interesting suggestions. Many of the suggestions coming from the next generation were surprisingly similar to those suggested by the senior generation. There was one comment that was unique to the next generation. Many of them thought that any family member being considered for employment in the family business should have the trust of his/her cousins. This input led to some very interesting discussion among the generations. What constitutes trust? How do you know when it is there? If it is not present, how can it be gained? Some of the results of the subsequent conversation on this very important subject are worth sharing.

Trust is one of those fundamental notions that is claimed to be understood by everyone, yet it is hard to explain or precisely define.  Trust starts with the individual. Character captures a number of concepts inherent in the basic values of integrity, honesty, and credibility; being perceived as a “good” person. Trust is a level of comfort that someone is being genuine. It was also suggested that trust and vulnerability are partners; hence confidentiality might be an element of trust. Both generations agreed that it was of paramount importance that anyone employed in the business must have demonstrated the skills required for the position. Therefore competence is a critical element of trust. Competence includes skills, expertise, and performance as well as sound judgment and decision-making abilities. There was also agreement regarding the need for a family members’ commitment to the values, vision and mission of the family and the business in order to warrant trust. Such a commitment would also include a willingness to set individual wants aside for the benefit of the group. In a word, by caring for others. Trust is something you earn by giving.

This family is well on its way to understanding and practicing one of the very important foundations of any policy or relationship. Trust is the centerpiece of the family business system. Where it is present, the family and the business are well equipped to meet any challenge. Without it, conflict often overshadows opportunity.

Life Long Development

Jennifer Pendergast
Jennifer Pendergast

A few weeks ago, I had the opportunity to participate in a family business conference.  I was struck by the number of sessions devoted to the topic of education – educating the next generation of owners, educating the next generation of leaders, educating responsible stewards of wealth.  The audience was clearly attuned to the importance educating the next generation to ensure they are prepared to carry on the family business…  Yet, they didn’t seem to think much about what they, the current generation, may need to be doing themselves to ensure they were doing the best possible job as owners and leaders.

One of the experts leading a session raised the point that the words training and development, often inter-changeably, are actually not the same.  Training refers to a set of exercises or activities that are designed to lead to mastery of a topic. Many of the conference attendees were seeking advice on how to train their next generation members, so they would be well-prepared owners and leaders.

 Development, on the other hand, is an ongoing pursuit, with no end point.  While one may work on development of leadership skills, leadership will never be fully mastered.  There are always opportunities to learn ways to become a better leader.  So, while preparing the next generation is important to the perpetuation of a family enterprise, we shouldn’t forget the importance of the ongoing development of the current generation. 

We know that the best way to perpetuate a desired behavior in a younger person is to model that behavior.  The old adage “Do as I say, not as I do”, is NOT a recipe for success. 

If you are a member of the current generation of family business leaders and owners are concerned about the next generation, consider what you can be doing to develop yourself.  Ask yourself the question – “What could I work on that would help me be a better mentor and teacher for the next generation?” “How could I model the behavior that I hope to see in them?” By expanding the focus of your education programs beyond those that come after you to include yourself, you are setting the best example of what you hope for – owners who are constantly thinking about how to develop themselves.

Are you Providing Decision Making Opportunities to the Next Generation?

Kelly LeCouvie
Kelly LeCouvie

Junior generation family members sometimes tell us that they believe no decision-making authority will come to them before senior generation family members either exit the business or die. And in some cases, they’re right. That is somewhat discouraging, and also a deterrent for next generation engagement.

We have found that decisions are difficult for the next generation to manage when their “transition” goes from making no decisions to making all decisions.

Why not provide the next generation with opportunities to make decisions (either related to the business or the family) before you make your exit? You might not want to start with key strategic decisions, or life-altering decisions on behalf of the family, but there are many options. Here are some examples:

  • Planning the next family meeting (location, social time, draft agenda);
  • Making a hiring decision without your stamp of approval;
  • Designing a family website or newsletter;
  • Selecting his own mentor in the business;
  • Choosing recipients of philanthropic donations;
  • Setting up a pilot project for a new product or service;
  • Identifying development workshops/conferences that are most appropriate for her generation;
  • Make some investment decisions with other members of the junior generation with a fixed sum of money;

There are many opportunities to build confidence and establish credibility among the next generation through increased decision-making. What decisions can you identify in your family that might engage them, while developing decision-making competence?

Knowing Your History is (Psychologically) Valuable!

by John L. Ward

Emory University research professor Marshall Duke and colleagues show the value of children knowing the family history. The benefits?

  • Better functioning family;
  • More resilient children;
  • Higher self-esteem of children, and
  • More self-confidence and self-competence for them.

This happens, they argue, because knowing your family’s history provides:

  • Meaning beyond the self, which brings feelings of strength and stability (intergenerational self);
  • Stronger belief that one is able to influence one’s destiny (locus of control);
  • A security from a longer perspective on time (anchoring).

They recommend:

  • Tell family stories over dinner…
  • …especially stories about the parents before the children were born, and
  • Relate where grandparents came from and what their work was.

Business families have remarkable and compelling stories to share with their children, for great value to the family and the business.

Family Owners and/or Managers?

by John L. Ward

52% say that the next generation will be owners and managers
24% say next generation family will own but not manage
7% are currently owned by family but not managed by family

A recent survey[1] by PwC discovered these succession plans. They also learned that 25% will transfer ownership in the next five (5) years.

There are some interesting questions:

  • How well does non-managing family ownership work?
  • What is the role of the non-managing family owners?

We don’t’ know if non-managing family ownership works better or worse. But we have learned much about what family owners do:

  • Set the Vision and Values;
  • Establish the Owners’ Goals;
  • Design the Board;
  • Communicate Other Family Expectations – the Family Constitution;
  • Add Value by Supporting the Management and the Culture Whenever Possible.

We also offer this advice to family owners: “nose in, fingers out.”

[1] The survey was of more than 1,000 family businesses with a median size of $200m and a median firm age of 55 years.

How Research on the Brain is Helping Forge our Understanding of Good Leadership

Wendy Sage-Hayward
Wendy Sage-Hayward

I am particularly intrigued by the recent research being conducted in the world of neuroscience. We are learning more about our brain and how it functions everyday (not just when something goes wrong with it). I believe this body of knowledge is particularly relevant to leadership and to families running businesses together.

We know for example that when we recognize someone for a job well done that their brain releases a chemical called Dopamine. Dopamine rewards us with a sense of pleasure. Likewise we can also experience a downward spiral in our confidence and performance when we do not receive positive feedback over a long period of time.

We also know that our brain receives and processes negative comments and rejection in the same way as it receives physical pain. The old saying “sticks and stones may break my bones but words will never hurt me” is not true as far as our brain is concerned.

For me the most exciting aspect of this research is that it provides the evidence for why leadership development is so critical for the next generation of leaders. Leaders are not just born, they are also developed. Some of the executives and business owners I have worked with in the past have needed proof of why good leadership principles work. For those less relationship oriented personalities, the new discoveries in neuroscience are providing the evidence they need to lead in a more powerful and effective way.

No one can ever be dad or mom

Leaders must be able to communicate with those they need to influence and often next generation leaders in a family business need to adjust their communication for effective leadership.  While founders often have a charismatic and legitimate “right” to leadership, next generation leaders must earn their right to leadership independently.  First, acknowledge that no one can ever be dad or mom again and you shouldn’t try.  Second, work on your listening skills to make sure others understand that you understand their point of view.  Finally, you can work on developing your own “charisma” in your communication to others.  Professor John Antanakis and his colleagues at the University of Lausanne in Switzerland have identified several communication habits that make a speaker appear more like a leader.  These discoveries are actually rooted in classical rhetoric as defined by Aristotle:  1. Establish your credentials and build rapport with those you are speaking to; 2. Use logic to present your arguments; 3. Use emotional appeals to persuade your listeners.  While people generally need a logical framework in which to “understand”, use emotional appeals to persuade your listeners.  While people generally need a logical framework in which to “understand” your appeal, they actually respond emotionally to the “goodness” of a proposal. Make sure you understand the emotional connection that will need to be made with those you want to lead.

Is leadership earned or is it granted?

Chris Eckrich

This month’s Family Business Advisor article entitled, “Must the Prince Kill the King?” by Albert Jan Thomassen strikes at the heart of the question, “Is leadership earned or is it granted?”

Those who believe it is granted do their very best to accomplish assigned roles and responsibilities to please the senior leader, hoping that more authority will be granted.

Those who believe it is earned do their very best to do the right thing for the company, sometimes believing that ousting the senior leader is necessary regardless of the fall out.

Thomassen’s article offers a glimpse of what true leadership can look like in a family business, where the love of the  senior leader by the junior leader is shown by doing what is best for the company (earned leadership), while seeking to please the senior generation leader by involving him or her in the big decisions (thus being granted trust and authority).  In this way, the business is able to capitalize on the wisdom of both leaders, and the family is stabilized by the mutual respect felt between the two leaders.

The key leadership question family business owners must ask is, “What is best for our business and our family?”  Then, plans can be made to drive towards that answer.

 Read the September issue of The Family Business Advisor.  Click Here.