The Unexplored Road to Professionalizing your Family Business
For the most part, family businesses start out pretty small. Founded by one person or a couple, the initial years of a family business are focused on growth and getting everything done. Fewer people are involved in the business and hence no formal operational procedures are needed. Leadership meetings happen spontaneously since everyone is on-site working in the business. Decisions are made instantaneously since the founder(s) have a unified vision. Processes are internalised because they are learned and adopted as the business develops, by trial and error.
But there comes a time when all this changes.
New hires come on board. Additional positions are added to the leadership team. Complexities develop with new people, products, locations, lines of revenue, etc. And a new generation of owners rise to adulthood.
As the business evolves, more “professional” measures need to be incorporated. Oftentimes the rising generation is the catalyst for the family to implement these much-needed changes. This can be because the founder is “old school” and stuck in their ways, or they believe everything is running fine as is (and it may be) so why change it. Sometimes, if the required change involves technology, the current leader may be hesitant because it’s something they are uncomfortable with. Or it is simply that with any new perspective comes a flurry of new ideas – and the rising generation can be a wealth of new ideas.
Empowering the rising generation For Family Continuity
Professionalising the business can come in many forms and look unique to each business family. Oftentimes it means incorporating advisors or independent board members. Sometimes it is simply hiring a human resources professional to ensure best practices in hiring, onboarding and employee management are being followed. Or it could be establishing internal family policies to better prepare the Rising Generation for what may be coming. There are several ways the Rising Generation family members can play a role in professionalising the family business – whether it comes as a suggestion directly from them or simply a development in the business because the Rising Generation is present and need to find their role.
Develop education for Rising Gens to become an ambassador for the business
Even before Rising Gens reach their teen and young adult years, community members will recognise them as part of the family. It’s important that they begin understanding the core values and traditions the family holds close so they can be the best ambassadors possible. While parents and family members exemplifying these values is great, having tangible discussions with the Rising Generation and creating some curriculum or activities around the values and traditions will help to solidify the connection they feel with the family history.
Education of values can be shared in multiple ways – through shared stories and history of family members, through coordinated activities with multiple family members at a family retreat or reunion, or through information and readings shared on the internal family business platform. Providing bits and pieces of information throughout the Rising Generation’s childhood and early adulthood will better prepare them to step into any role in the family business and maintain the value system – whether in an active or passive role.
Establish requirements for each role in the business
Once Rising Generation members start reaching an age where they are able to work in the business, it can be a question as to which roles they should take on. Do you move them through all roles to find their strengths? Do they immediately start working with the long-term intent of leading the business? Do you have enough roles for all interested Rising Generation family members or would some roles need to be created? How do you manage including Rising Generation family while ensuring there is adequate skills across your employee base?
Thinking about the role of the Rising Generation members in the family business is an ideal time to professionalise job descriptions across all departments. As family businesses start, many times formal job descriptions aren’t developed and each role takes on various duties because someone needs to do it and there is more of a “startup” mentality to the work. But as a business grows and you start hiring more people, more concrete job descriptions – with education and experience qualifications – become necessary.
Having defined roles and qualifications will help to ensure more equality across family and non-family employees. This also gives the Rising Generation specific goals to strive for if they are wanting to follow a specific path in the family business. A great way to share this information is through an internal family portal, like the Trusted Family platform, and facilitate some discussions around career paths for Rising Generation members. This can give them some structure and guidance around what courses to take in higher education or what skills they want to develop to be a contributing family member.
Define talent needs for the future
As your family business grows and matures, you will need new roles and skills based on the direction and trajectory of your business. This means you may have needs in the future that you currently don’t have. Attempting to take a forecasting perspective and define what your future needs may be can give the Rising Generation members more direction on how they can be a pivotal player in the business in the future.
Perhaps you plan to expand business dealings in the future that would require you to have in-house counsel. A Rising Generation member could see that forecast and pursue legal education in order to be able to fulfil that need when it arises. Or maybe you forecast large gains in your market and expect your future CFO will need to have experience managing a $100 million+ size company. Instead of getting some outside experience in a small local business, a Rising Generation member may consider this future need and apply for finance positions at large companies to gain the needed experience to eventually step into this future role.
Without having thought through your business’ future growth trajectory and needs, your Rising Generation may be getting inadequate education and experience to meet your future needs. And then you will end up in a position of either hiring family and struggling to keep up with what is needed, or you may need to hire non-family simply because the skill needs weren’t mapped out in advance.
Create opportunities for Rising Gens to be involved while not having an active role in the business
Sometimes, regardless of the opportunities available within the family business, some Rising Generations will have other interests and not want to take on an active role within the business. This is totally okay! As you professionalise your business and establish governance, a family office, or perhaps a foundation, there can be many roles that Rising Generations can take on that keep them involved with the family business while still pursuing other interests. Establishing some governance structures not only help prepare the business for better operations and succession, but also expands the types of roles available for Rising Generation family members.
In our chat with Kristin Keffler, we discussed the struggle some Rising Generations may face in discovering their identity and who they are in this world. This can be especially difficult when there is a family legacy or wealth on top of the typical experiences young adults need to navigate. For Rising Generations trying to find their role in the family business, having ample opportunities in a variety of capacities can help them explore their interests while still maintaining their connection to the family business.
The Way Forward
Empowering the rising generation is not just essential for family continuity but also for the long-term success and growth of family businesses. By providing them with the right tools, education, and support, we pave the way for a seamless transition and a strong, united family legacy. The rising generation brings fresh perspectives, innovative ideas, and a deep sense of commitment to uphold the family’s values. Nurturing their leadership abilities and encouraging open communication will foster a collaborative environment, enabling them to effectively navigate challenges and capitalise on opportunities.
So, is your business ready for the Rising Generation? Do you have the needed tools to prepare them and manage the governance of your business as well? If a customised and secure platform could help you get there, reach out for a demo of what we can offer.