Tag. You’re It! Defining Future Roles in the Family Business

“In real-life, few family businesses really formally prepare the next generation for leadership”

As the younger generation takes on a more active role in the family business we need to better define their job positions and responsibilities to avoid conflict. In real-life, few family businesses really formally prepare the next generation for leadership, because it’s a little like succession planning where it’s often treated as a process you need but don’t want to work on. Avoiding the discussions increases the likelihood of future job role confusion and conflict and having a higher number of family members entering the company than the business can support.

What risks are there to DOING it?

  • Spark up family conflict
  • Create unhealthy competition between family members vying for increased responsibility
  • Potential for compensation discrepancy issues between family members

 What risks are there to NOT DOING it?

  • No real strategic direction for the leadership of the company
  • Not financially viable without having the right people in the wings to manage and grow the family business successfully
  • Risk not having next leadership prepared for taking over in an orderly way
  • Create concern for outside lenders with no clear founder succession plan
  • Might create the unplanned need for an interim CEO
  • Risk over-hiring family members and having to grow the business faster than desired to absorb higher payroll or worse have to terminate family members and “prune the tree”

Five Takeaways to make the transition work

  1. Identify Future Top Job Positions – Create a Future Organization Chart
  2. Determine the Best Job Candidates – Family and non-family Members-Be objective
  3. Anticipate Potential Trouble Spots – Sibling conflict, compensation inequalities, role competition
  4. Prepare Comprehensive Development Plans for Incoming Generation-Skill, education and experience gaps
  5. Gain  Acceptance from Related Parties-Family members, employees, suppliers, customers, advisors

Entering the Family Business – Working Your Way Up or Landing in Management

Hazing in the Family Business

I’ll never forget my first day in our family business when I had completed my morning shift and took a break for lunch.  The warehouse manager asked me if my father was going to take me out for the customary steak lunch for all new hires.  I went upstairs, walked into my father’s office and told him I was ready to go for my steak lunch. He looked at me with a confused stare and told me he never takes a new employee out for lunch on the first day. His confused stare was only matched by the laughter of the warehouse manager when I returned to my post after lunch. I realized I had been hazed by the warehouse manager as part of the ritual for new employees.

What job positions do family members assume when they first enter the family business?

Some of us come in at the bottom of the organization chart in a line position and work their way up, while others land into management level positions and take control more quickly. Here are some of the differences: More…