Professionalising the family business: The Role of the Rising Generation
For the most part, family businesses start out pretty small. Founded by one person or one couple, the initial years of a family business are focused on growth and getting everything done – with just a few people involved in the business, no formal operational procedures are really needed. Leadership meetings can be spontaneous since everyone is on-site working in the business. Decisions can be made instantaneously since the founder(s) have a unified vision. Processes are internalised because they are learned as the business develops, by trial and error.
But there comes a time when all that 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 grows, more “professional” measures need to be incorporated. Oftentimes the rising generation is the catalyst for the family to implement 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 change needed involves technology, the current leader may be hesitant because it’s something they aren’t comfortable with. Or it is simply with a new perspective come new ideas – and the next generation can be a wealth of new ideas.
The role of the rising gen in professionalising your business
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 Gen for what may be coming. There are several ways the Rising Gen 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 Gen 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 Gen 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 Gens’ 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 Gens 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 Gen family members or would some roles need to be created? How do you manage including Rising Gen family while ensuring there is adequate skills across your employee base?
Thinking about the role Rising Gens will play 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 Gen 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 Gen 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 Rising Gens 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 Gen 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 Gen 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 Gen 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 Gens 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 Gen 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 Gen family members.
In our chat with Kristin Keffler, we discussed the struggle some Rising Gens 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 Gens 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.
So, is your business ready for the Rising Gen? 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.