How to successfully incorporate the next generation into the business Featured

9:01pm EDT July 31, 2011
How to successfully incorporate the next generation into the business

Bringing children into a family business, if not done correctly, can cause undue stress upon the family and negatively impact the business.

“Parents may wonder if their child will have what it takes to be their successor, worry about creating a sense of entitlement or be concerned that company managers may resent having to train a family member who might take their job in the future,” says Ricci M. Victorio, CSP, managing partner at Mosaic Family Business Center.

“Any time you mix family and business, you are going to be challenged,” Victorio says. “Family is all about unconditional love and acceptance. Business is all about results and productivity. The challenge is to define your expectations for your children at work so you can protect your relationships at home.”

Smart Business spoke with Victorio about how to successfully bring your children into your business without risking family harmony or business success.

When should a child ideally enter the family business?

We usually recommend family members work outside the business at least two to five years in an industry-related field, other than for part-time or summer jobs. If he or she has gained experience and had success on his or her own elsewhere, making the transition from scholastic to professional life will help avoid the stigma of also being the ‘boss’s kid.’ Doing so will give children a chance to prove themselves professionally and allow them to contribute new insights to the company, and they will have earned the right to be there with the other employees.

What are the first steps for bringing a child into a family business?

A succession professional with experience facilitating and integrating family members into family-owned companies can help structure this process. The consulting adviser will want to first interview the parents to get a clear understanding of their respective objectives and perceived obstacles. Next, one-on-one interviews with family members and key managers should be conducted to discuss their goals, expectations, education and work-related experiences. Even high school students can benefit in knowing what they need to do to be prepared, what skill sets and education they need and what requirements they will be expected to fulfill if they want to be considered qualified for a future leadership role in the family business.

The management team will provide perspective on the family goals of bringing young members into the company, the current strengths and opportunities within the team and how the family currently interacts in the business, and provide insight for developing interested and qualified family members.

As part of the interview process, we have found that profiling personality styles is very useful to gain an understanding of the potential strengths and challenges within the family and business team dynamic.

How important is it to find the right position for a child entering the family’s business?

Whether it is your child or someone you hired off the street, you want to do everything you can to ensure a good fit between the new employee’s personality and skills and the demands and characteristics of the job. Parents typically make one of two mistakes. First, they think their child should be just like them and can’t understand why they’re not, creating frustration on both sides. Or, they sometimes demand too much of their children, all too often causing them to quit, fail or give up.

Failing to match individuals with the right entry position and not providing a helpful training program to give them the skills they need usually undermines success and will strain family and business relationships.

How do you get the buy-in of managers?

Your management team is the leadership bridge to the next generation. Let them know they are critical to building the success of the business, with or without you. Match the right manager to mentor each family member to provide optimum opportunities to have positive experiences together. And never manage your own child if there is any way to avoid it.

How can families balance working together without damaging family relationships?

Draw up an agreement of expectations detailing how you want everyone to work together. Create mentor teams with executive managers and a development plan for how each family member is going to progress and learn the business. Unmet expectations will poison a golden opportunity, so it is vital to communicate what is expected of all involved. Having an experienced facilitator to help with this is essential.

Why do we need an outside adviser to facilitate?

Your succession adviser can raise issues you can’t and help you to have the honest discussions that very few families have the skills and experience to do on their own. A good facilitator will be able to get everyone together to communicate their expectations and help untangle the issues that inevitably tie families up into knots. An outside adviser offers objectivity and fairness to all parties, and will help avoid the predictable traps and pitfalls of family conversations.

What if you don’t think your child would be a good fit for the business?

Keep in mind that family and business are two separate entities. Not every child is suited to work in their family’s business and a bad experience can stress family relationships beyond repair. Most parents are very concerned about doing the right thing by their kids as well as needing to protect the success of the family enterprise. Ultimately, you may have to decide whether or not the adage is true that, ‘there is no business gain worth a family loss.’

Ricci M. Victorio, CSP, is managing partner at Mosaic Family Business Center. Reach her at (415) 788- 1952.