Children may not automatically want to be part of the family business. Sometimes children who have grown up in the business become bored, uninterested or lack the desire and drive necessary to successfully run the business in the future. They may actually take the business for granted, assuming it will always be there for them. Understanding this going in, a family business can more effectively plan for generational issues in the growth and future of the business.
Preparing the Next Generation
The questions to ask are: Why do children join a family business? What are their motivations?
— To Influence the Family: This can be a good thing or a bad thing, depending on the kid’s underlying motivations. A Family Business should foster a mission which positively influences family members, not provide ammo for the children to attack each other. Positive Influences include:
– Family Education Fund/ Emphasis on Continuing Education
– Foster an Atmosphere of Openness & Learning
– Set good examples for kids to aspire toward
– Ingrain the values of Business Integrity and Ethical Responsibility
– Foster & Promote Civic Duty
– Promote & Support Community Volunteer Work, Projects and Board representation
— To Help the Family Succeed: Success for the Family Business should translate to the success of the Family. Future generations can have better lives, pursue their passions and be happier if part of a cohesive team striving for a better future for the entire family- not just those in the business.
— An Opportunity to Further one’s Career: It isn’t necessary for every family member to remain with the business. Family members should be encouraged to pursue their passions, and the family business can be the proving grounds, the incubator, for family who want to pursue other careers or possible spin off another related business. Often, children find that after working for other companies early in their careers, the Family Business is a great career destination, allowing them to reach their full potential and constructively apply their expertise and experience.
— Like the Family Business: Having a passion for the industry and business the family enterprise occupies is often a major reason why family members join the Company. What also plays into this is the requirement to work outside the Company to gain expertise and experience. When the family member returns to the family business, there is inherent respect for the opportunity given and the successful growth history of their predecessors before them. Having a firm understanding of what makes the family business special and unique creates a strong loyalty and passion for it.
— The Challenge: If family members worked in the family business from a young age, were taught the value of a dollar, went off to college and to work for an outside Company for a several year period, then returning to the family enterprise can be a fantastic challenge to pursue. For this reason, it is important the family business provides qualified family members with a real growth opportunity, a challenge to inspire drive, loyalty and passion in their career maturation.
— Sense of Duty and Responsibility: Some of the older children in the family’s next generations may feel the duty and responsibility to serve their family interests and ensure future succession success of the business. This becomes apparent after the younger children become involved in the Company and sometimes the older child moves onto another career since his or her passion was extinguished by the stress and forbearance of fiduciary responsibility. Or, it is sometimes the older children who spin off a subsidiary or new Company after feeling they have accomplished their role in the Company. It is important to encourage the family’s children to pursue their passions, no matter what industry, and gain outside experience; however, sometimes it is a necessity to have the older child assume responsibilities early on if resources are scarce in the Company’s particular Growth Stage.
— To Make Money: While this is often the number one reason family members join the family business, it is closely followed by the “Liking the Business” category. This relationship certainly makes sense: making money is a major requirement of any career but it is strongly linked to liking what you are doing, the passion factor. A well-prepared family business provides ample growth opportunities for family members to nurture their passion and be well rewarded for it through a competitive Compensation Package.