Leadership Succession and Business Continuation for Family-Owned Firms
Leadership dynamics are a key to success in all businesses, whether publicly held or privately owned. However, in no arena are the leadership issues tougher or murkier than in businesses owned and run by families.
Changes are taking place at lightening speed in business technology, the use of human resources, marketing strategies, operations management and systems design.
Maintaining the status quo, even if successful in the past, can be a dangerous strategy for corporate organizations. Some family business owners may feel the need to react and change quickly is in direct conflict with family goals. This is another instance demonstrating the confusion that may exist between “family” and “business” goals.
The role of the family is to provide stability. The role of a business is to provide value to a customer in return for payment. Strong family business leaders need to understand this dichotomy. Profits generated by a business can provide the family with financial stability.
On the other hand, profits can only be generated by flexible and change-oriented thinking behaviors.
Successful business leaders are those with some combination of proven natural talent or a demonstrated capacity to learn and use leadership skills. In family-owned businesses, there is a propensity for using criteria other than talent or skill in selecting the company leader.
The most common criteria used by family business are traits such as gender (sons vs. daughters), birth order (oldest rather than youngest), and birthright (family member vs. an outsider). Another common path is to choose the son or daughter with behavior or personality similar to the founder of the company. When these traits are used as the sole criteria, leaders are selected without regard to the set of skills needed at this stage in the corporate development of the family’s company.
There are many factors that contribute to the ability of a family business to successfully continue and leave a lasting legacy for all those involved. At minimum these are:
•The willingness of the business leadership to engage in the development of plans for the succession of leadership and ownership, and the most efficient and cost-effective deployment of both.
•The skillful management of the business' assets and holdings, human resources, products and market potential. This includes the development and transfer of wealth and knowledge to effectively fund the retirement and futures of the present owners and to resource the turn of the enterprise to the next generation.
•The identification of family relationships and values and working with them to identify and establish a family mission for the firm's daily dealings and a basis of trust upon which a lasting legacy will empower future generations.
The first of these factors makes the succession of leadership and business continuation of the firm possible. The second empowers the forward motion of the effort. But, the third, a powerful family vision, based on a faithful trust in all of their assets, is that which secures the durability of a legacy for the future.
In summary, leader selection, corporate flexibility and vision setting are only three of many leadership issues facing family-owned businesses. The key to analyzing problems and identifying successful solutions is to develop a keen ability for viewing the business as an entity separate and apart from the family unit.
Leadership dynamics are a key to success in all businesses, whether publicly held or privately owned. However, in no arena are the leadership issues tougher or murkier than in businesses owned and run by families.
Changes are taking place at lightening speed in business technology, the use of human resources, marketing strategies, operations management and systems design.
Maintaining the status quo, even if successful in the past, can be a dangerous strategy for corporate organizations. Some family business owners may feel the need to react and change quickly is in direct conflict with family goals. This is another instance demonstrating the confusion that may exist between “family” and “business” goals.
The role of the family is to provide stability. The role of a business is to provide value to a customer in return for payment. Strong family business leaders need to understand this dichotomy. Profits generated by a business can provide the family with financial stability.
On the other hand, profits can only be generated by flexible and change-oriented thinking behaviors.
Successful business leaders are those with some combination of proven natural talent or a demonstrated capacity to learn and use leadership skills. In family-owned businesses, there is a propensity for using criteria other than talent or skill in selecting the company leader.
The most common criteria used by family business are traits such as gender (sons vs. daughters), birth order (oldest rather than youngest), and birthright (family member vs. an outsider). Another common path is to choose the son or daughter with behavior or personality similar to the founder of the company. When these traits are used as the sole criteria, leaders are selected without regard to the set of skills needed at this stage in the corporate development of the family’s company.
There are many factors that contribute to the ability of a family business to successfully continue and leave a lasting legacy for all those involved. At minimum these are:
•The willingness of the business leadership to engage in the development of plans for the succession of leadership and ownership, and the most efficient and cost-effective deployment of both.
•The skillful management of the business' assets and holdings, human resources, products and market potential. This includes the development and transfer of wealth and knowledge to effectively fund the retirement and futures of the present owners and to resource the turn of the enterprise to the next generation.
•The identification of family relationships and values and working with them to identify and establish a family mission for the firm's daily dealings and a basis of trust upon which a lasting legacy will empower future generations.
The first of these factors makes the succession of leadership and business continuation of the firm possible. The second empowers the forward motion of the effort. But, the third, a powerful family vision, based on a faithful trust in all of their assets, is that which secures the durability of a legacy for the future.
In summary, leader selection, corporate flexibility and vision setting are only three of many leadership issues facing family-owned businesses. The key to analyzing problems and identifying successful solutions is to develop a keen ability for viewing the business as an entity separate and apart from the family unit.