The topic here is transition of Ownership and Management from older people to younger people. In a publicly-traded corporation, the processes of transition revolve around the skills of younger people, the politics, or interpersonal relationships and maneuvering skills of the individuals, and the changing external factors affecting every business.
It is important to understand that the “world” as we define our immediate circle of friends, family, employers, customer, suppliers and so on, is in constant change; it always has been, and always will be. Most of theses changes are gradual, and they can sneak up on us if we aren’t watching. People born in the late 1990’s early 2000’s have never known how to live without a hand-held device which enables instant communication with family, friends and all the world’s knowledge. Thirty years ago, this was science fiction: a personal communication device, access to a computer which contained all the world’s knowledge, was introduced to us in the Star Trek TV series and then movies, and seemed wildly futuristic at the time. Would we ever see space travel or instant personal communication in our lifetimes? Yes, it’s all here and much more. Thirty years ago a mobile phone cost $3,000 and there were only ten channels available in any city: only ten conversations could occur at any one time.
Big corporations have developed strategic planning processes that implicitly and specifically ask, “What is going on in the outside world (External), competitors, technology development, government, whatever, that might impact our business?” Smaller companies rarely have such processes formally built into their management processes. Many people in management of smaller companies think about such things and consider whether these changes might impact the business. However, many business managers are so focused on working ‘In the business”, getting things done every day, that the rarely work “On the business”, thinking about changes needed, or actually planning for the future and adapting to it, which means implementing change. Change is hard. Even when you know what you want it is difficult to implement. The inertia and resistance can be overwhelming.
An even bigger challenge in small business is that generational differences are more pronounced. Big corporations don’t generally experience generational shifts. They have people of all ages in their employment. We still see resistance to change, “we’ve always done it that way” but there is influence coming from management of all ages. A manager may be five or perhaps even ten years older than her subordinates.
In Family Businesses, however, not only are the younger managers a full generation different in age (20 years +/-) they are also related to the managers, who are their parents. In addition to the age differences and the inevitable differences in how the generations see the world (millennials vs. baby-boomers, for example) there is also significant impact of the personal relationships: Parent / child is a very strong personal relationship. How we were raised, the personal values instilled in us by parents, or our rebellion against the values espoused by our parents, our view of the world through the paradigms of our generation and our personal experiences, all impact how we deal with each other in a work relationship. Mixing business and family is a very natural thing but is fraught with peril. The complications of being in a professional career relationship with the person who used to change your diapers or taught you how to drive can significantly complicate the professional relationship.
Management and ownership transition are bigger steps for the Family Business. They require more planning over a longer time frame. And they require thoughtful, planned management development. In a big corporation the best people stand out and are rewarded. If the company does a good job of building a culture which challenges, motivates and rewards people for their contributions and innovation there will be choices and options for promotion to the next higher level of management or to fill new opportunities from growth. And each promotion provides development opportunities for the new manager. Even though formal management development and education programs are all but extinct, there are still many opportunities for people to grow and learn.
In a Family Business this can happen, but it happens differently and requires more conscious thought and planning. The owner only retires once in a lifetime, so opportunities to be promoted to the next higher level of management are less frequent. So, how many times does s/he delegate a major responsibility to a younger person? That is one way for a business owner to develop talent: delegate a significant responsibility to each of your offspring who work in your company. This works even better if you have non-family managers at senior levels, who can tutor and coach a younger person.
If you, the business owner, are 40 years old or older (plus or minus) with one or more twenty- to thirty-year old children who might want to work in the Family Business someday (or already do) here are some suggestions:
- If possible, encourage them to work somewhere else for five years or so. First of all, seeing how Enterprise Car Rental, Bank of America or 3M does things is a great education. Think of it as earning an MBA in real-world management, Secondly, any son or daughter who is hired into the Family Business after a successful career path working for an unrelated company will automatically earn respect from the non-family employees of your business – they weren’t hired because Mom owns the business, they were hired because they have proven talent and skills that are needed by your business.
- Plan every new employee’s development path to become a manager, officer, or future leader. And in case this is not obvious, we are not talking about developing technical skills, we are talking about making managers and leaders.
- Keep your eyes open for potential among any and all of your employees. More than one assistant operator or apprentice has ended up owning the company.