For the past decade or so, the prevailing wisdom among family business consultants is that second generation (and beyond) family members should work a minimum of three years outside of the family business before joining. Many are now recommending a five-year minimum.
Of course, similar to all best practices, this guideline must be applied thoughtfully to every situation based on the specifics of that organization, and, in this case, the individual.
Generally speaking however, the following list provides support for this practice of having family members work elsewhere before joining the family business as their primary job. It:
- Increases credibility of family member among non-family employees. Others can see that this individual has actual experience rather than just a family connection.
- Provides outside knowledge and processes that can be brought into the family business. Innovation doesn’t come by avoiding new ideas…it is the byproduct of it.
- Minimizes individual’s insecurity of feeling that they have no skills or value outside of the family business. My book, Trapped in the Family Business, was written, in large part, for those who doubted their ability to get a job elsewhere because never had to write a resume, go on a job interview or have an annual performance review.
- Allows the child to explore other potential career paths that might be a better fit based on personality, interests, or goals.
- Potentially increases the individual’s appreciation of the value and opportunities provided to them by being a member of their family’s business. How can they appreciate what they have if they never experience living without it?
Included in the recommendation to work outside of the family business first is often the requirement for individual family members to demonstrate success. This can be through a promotion, increased responsibility, or some other tangible measure of growth. Without this, family members may not truly explore and engage in this outside job and simply be waiting for their time to run out.
Similarly, if a family member fails to demonstrate success in another work environment, this could indicate that they have problems with authority, collaboration, motivation or some other area that could have extremely negative consequences once they are in the family business.
To be fair and balanced, it is critical to note that there are many advantages to joining the family business soon after graduation. It:
- Expedites development of individual’s specific knowledge and processes of the family owned/operated business. They won’t be spending their time learning potentially irrelevant knowledge at another business.
- Accelerates the building of working relationships with key customers as well as employees. Relationships take time to build, and this provides the opportunity to start (or continue) building them rather than waiting for years.
- Provides additional time to get to know the business “from the mailroom to the boardroom” by rotating through various departments before taking on management/leadership responsibility. If the next generation starts young, there may be less hesitance to start them at the bottom than bringing them to do that after they have already “paid their dues” elsewhere.
- Provides career/management development opportunities (whether by position or project) that would not likely exist in other companies until mid-career or later because of family-member status. They might be trusted more to experiment or apply academic knowledge because they are family rather than having to climb the ladder at another company.
- Expedites succession planning by developing individuals for specific leadership roles in the family business or, alternatively, determining that they do not possess the necessary personality traits, values, or skills for such positions.
Clearly, a case can be made for either decision. However, being open, honest, and realistic while having ongoing discussions on this topic is always going to be the right decision in a family business.
Dr. Michael A. Klein is the author of “Trapped in the Family Business: A Practical Guide To Uncovering and Managing this Hidden Dilemma” (trappedinfambiz.com). He has more than17 years of experience as a business consultant and organizational psychologist. Klein helps businesses make effective hiring decisions, develop the skills of their managers and grow trusting and collaborative teams. He also advises individuals on issues related to professional growth and development, with a specialty in family business.