Developing next-gen owners is a critical task to ensuring the continuity of a family enterprise across generations. Involving young family members early making them aware of the family’s legacy and what they can do to sustain it can be a joyful task, but it is not one without challenges.
When we think of next-gens entering the family business, our first impulse is to focus on issues related to the transition of power. After all, succession impacts a family enterprise on every level, with both personal and systematic implications. However, succession is just one of many topics next-generation owners need to understand to be effective stewards and value-added members of their tribe.
One of the most significant factors that can either support or impede the success of next-gens is their mindset. Some assume they can simply absorb what they need to learn about running a business through observation of the status quo, rather than teaching them how to be strong and adaptive leaders in any scenario. The latter requires a holistic approach to shareholder development, combining direct apprenticeship and a deep understanding of the key strategic drivers of family enterprise continuity. Simply watching a good leader doesn’t always make a good leader.
In this episode of the LGA Lighthouse, Family Enterprise Strategist and LGA Managing Partner Devin DeCiantis, along with Governance Design and Succession Planning Specialist and LGA Partner Nicolas Hollanders, discuss the importance of shareholder development initiatives, sharing ways to engage the next generation in the design and delivery of these programs so that they become responsible and proficient future owners. Other topics addressed in this podcast include:
- How introducing family members to the business at an early stage powerful shapes their perspectives and can enhance their emotional connection to the enterprise.
- The traps families can fall into when attempting to develop their next generation of leaders – in particular the often narrow focus on leadership within the business, rather than all key roles throughout enterprise (e.g. Boards, Family Council, Family Foundation, Trustees) where qualified family leaders will be required.
- How families increase their chances at continuity when they expand the bench of talent both willing and able to lead throughout the enterprise.
- The similarities and differences between the roles future owners can play throughout the system both in management and in governance.
- The importance of interpersonal skills and how to develop them in the next generation nurturing more effective communication, collaboration, conflict resolution and even professional development
- Ways to sustain the unit and commitment of next-generation family members who stand to inherit the business regardless of whether or not they are actively involved
- How to prepare next-gen leaders to navigate future crises helping families become more agile and leverage emerging technologies and processes to help manage uncertainty.
Launching a comprehensive family shareholder development program can seem daunting. However, a candid and structured conversation about the expectations for family leadership today and in the future is a good place to start. Also remember that there are many ways of engaging family members in educational programming that is both good for them as individuals and supports the continuity of the broader enterprise. Among our most successful clients, education is considered a lifelong journey that requires a sustained commitment. The outcome is well worth the effort, so long as families respect the challenge.
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