Successor training: Take it slow

It is said that failing to plan is planning to fail. Nowhere is this axiom truer than in family businesses. Family businesses operate on a generational time scale, meaning that our planning must include a vision for 20 or 30 years out. When your children are 15, you must consider how to prepare them for a range of roles they might assume in your business when they are 45 — from the CEO to a shareholder who does not work in the family firm. 

We all want to provide our children with a great education, no matter what path their career will take. In addition to school, internships and work experience outside the family business can also help cultivate a broader understanding of business issues. Too many business leaders push their children directly into their own businesses as soon as the kids receive their diplomas, depriving them of valuable learning opportunities.

When it comes time for the next generation to join the family firm, it is important to take the process slowly. Bring your children into the business in roles that match their experience, skillsets and interests. Throwing them into jobs they are not yet prepared for is a recipe for disaster, shaking their confidence and fostering other employees’ doubts about their abilities. 

It is also a good idea to have them report to non-relatives for as long as possible. Family members’ opinions of the next generation’s performance are likely to be biased, and their feedback will be less helpful in developing new skills. 

Set expectations

As their career progresses, set clear expectations for your children and clarify the responsibilities of each role they assume. Help them understand what will be expected of them in order to move up in the organization, clearly laying out what it will take to obtain promotions. As they grow, continue to evaluate their competence and their commitment. Incorporate the views of other managers and board members in these evaluations to help offset any biases you have in their evaluations.

Finally, have a well-prepared and clearly communicated succession plan. Your vision and legacy are too important to be left up to chance. Let your board, key managers and, of course, your child know your wishes for your successor. 

This is easy if you have deemed that your heir apparent is up for the task, but what if they are not? Many generational leaders face this dilemma. There are three courses of action you can consider.

1. Allow them to try. Hope that your evaluation is wrong and give them a shot. Work to mentor them and help them become as successful as they can be. A risk, to be sure, but possibly not as risky as causing a rift in the family.
2. Install a non-family successor. Transition the business away from family management. Often, this structure will involve seats on the board for family members, potentially a better fit for your child’s skills. 
3. Sell the business. The proceeds can be used to fund other family endeavors — ventures that are a better fit for your child’s interests and skills. There may be grief, but selling may be the best decision for the family and the business.

Begin preparing your next generation as soon as possible. Whether they are 5 or 50, there are valuable lessons you can impart that will help them become the leader your business needs. Planning purposefully will be much easier than just hoping it will all work out.