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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.

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Next-Generation Leadership in the Family Enterprise Part 1

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.

Engineering a successful generational transition is often the issue that most concerns family business entrepreneurs who hope the businesses they have created will thrive through multiple generations of family ownership.  Family firms that develop effective nextgeneration leaders often employ the following leadership development strategies:

  • Ensure next-generation leaders have job assignments with real responsibility, accountability, and risk; inside or outside the family business.  Nextgeneration leaders need opportunities to make complex decisions and experience the results of those decisions.
  • Provide accurate feedback on performance, often from trusted non-family leaders in the business.  Nextgeneration leaders benefit from knowing how others perceive their leadership practices in order to learn the emotional and social intelligence competencies that account for over 85% of top leaders’ performance.
  • Create a positive and supportive family culture.  Families that work hard to foster open communication, establish effective conflict resolution and governance processes, and create an overall positive family climate enhance the chances that nextgeneration family members will develop leadership skills.
  • Start early:  Learning leadership skills takes decades, so wise family business owners encourage nextgeneration family members to gain leadership experience in activities in which they are personally interested in school and early in their careers.

The good news is that leadership skills can be learned.  Forwardthinking family enterprise owners focus as much or more on the development of their human capital, including nextgeneration family leaders, as they do on their financial capital.

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