Can your family business survive the next generation?

Can your family business survive the next generation?

One of the greatest concerns in families who own businesses and families of wealth is how to assure that their assets will add value to their next generation`s lives, not hurt them. One of the particular challenges in parenting is how to give the next generation the right opportunities, often, equated to giving with gifts, setting things up for our kids, or making opportunities for them. However, these kinds of gifts may, in fact, be taking away opportunities for their growth, not adding to them.
For example when children don’t learn to use their own muscles (to talk, walk, or work) these muscles atrophy in the same way other “muscles” atrophy when children don’t learn to use them on their own.If the next generation don’t gain the motivation to do for themselves, they have little practice in developing their own competence (and thus their self-esteem), and then they lack a sense of responsibility for themselves or others. So preparing our next generation includes giving them the opportunity to do as much as they can for themselves, with coaching along the way. Many business owning families have a deep desire to perpetuate the family legacy.
Sometimes this legacy includes an asset such as a family business that has been in the family for a long time, a ranch or a farm that ancestors and parents cultivated, or a philosophy which has defined the family for several generations. So the question arises, “How do we perpetuate our legacy and our assets in future generations? The following are a few considerations in so doing which lay in the realms of education. Preparing the next generation includes three areas of learning; the family’s spiritual legacy, the asset legacy and stewardship skills.
The family`s spiritual legacy includes the values which characterize the family and which many in the family believe contribute to the well-being of the family and success in the business. In an article in the Economist magazine on family business dynasties, Simon Berry, of Berry Bros & Rudd`s of London who represents the 7th generation of the Berry family business, says ‘patience, distinctiveness, thrift and trust still counts” seven generations later. This spiritual philosophy is often manifested in stories which the family hears over and over again (the oral history of the family) during one’s growing up years. Often the stories describe how hard work and perseverance (two common values) helped a parent or an ancestor overcome the odds to lay the foundation for the family. Faith is another common feature of these stories. Documenting and sharing the family values and history is an important component of the education of the next generation. The spiritual history describes how the family has lived.
The asset legacy describes what the family has built. This may include family business (es), financial assets outside of a business, real estate holdings, artwork, homes, boats, etc. As children and the next generation are growing up, gradually it is important for them to learn about just what the family has and the responsibilities for managing the legacy. This is one great challenge we have among family business founders in Africa. The lack of or late disclosure of the status of affairs is a key source of family feuds and conflicts sensationally depicted in the Kenyan media.
This brings us to the third aspect of education: stewardship skills. This category includes how one develops the capacity to be a diligent steward of the family business assets so as not to lose them or have them destroy one’s life. The now famous “nut rage” incident associated with Heather Cho, who had to step down as a senior executive of Korean Airlines typifies challenges associated with stewardship by the next generation of a family business. She used her position as the daughter of the owner of the airline to stop the taxing plane and get a steward off the plane for serving her macademia nuts in a paper bag and not a plate. This raises issues about teamwork, leadership skills and self-management. The next generation leaders need to exercise prudent and transformational leadership and act as visionaries in the company. This education of the next generation starts when the children and next generation are very young. At that point, children and the next generation are impressionable and can begin to take in the family stories which begin to establish an interest and appreciation of family history and stewardship skills.
Family business stories in the form of case studies continue to be used in top business schools worldwide as learning stories shared with adults to establish interest and appreciation of family business learning lessons for sustainable legacies. At each stage of the next generation`s lives the content and nature of learning varies, but the lessons should help these successors to learn about what they have physically and spiritually and what it takes to manage ones life and family business assets responsibly.

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