The family business – New blood?

Posted: July 16, 2013 in Business startup
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There usually is never any question about succession in a family business. The newest (family) members will take over – some day! I’ve worked around family businesses most of my career and here are some of my observations:

  1. The new family members assume their positions by virtue of DNA, not ability. This isn’t a critique as much as a statement of fact.
  2. The new members may bring some new and fresh ideas but they are usually marginalized by the scion of the family.
  3. There isn’t a clear time frame for the current family ownership to transition out.
  4. The mantra is “follow my lead.”

The key issue in any family business transition is the preservation of the family business name. It should be to ensure the business can survive and prosper going forward. What worked for Dad or Grandpa’s era may not (and probably doesn’t) work in Junior’s era.  There is too much information and too much choice now.

It seems ironic that most well run businesses spend a lot of time scrutinizing the resumes of prospective hires for managerial positions yet don’t perform the same due diligence when a family member joins the firm?  There are different sets of rules of course and this could signal the end of the business.

I recommend that the newest family member “learn the ropes” by getting to know how the business operates. It could entail wearing blue jeans at the loading dock or getting dressed up in a suit to meet key clients. That’s the probationary period.

Then, I recommend assessing the shortcomings and making sure that they get proper training. This training could be expensive but it will pay dividends in the long run. The big issue is whether current family management thinks that training is an investment or a cost.

More in a future post.

 

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