Nurturing the Talent to Nurture the Legacy

Nothing could be more important to the continuity of a family business than the preparation of next-generation leaders—both family and non-family Yet, career development is often neglected in family firms. Family business founders, and CEOs frequently take an attitude of “sink or swim” toward the next generation. “That’s how I did it,” they may say. Most family business leaders want to nurture next-generation development but do not know where to begin.

Because they involve family members, family-owned companies find it harder to face the issue of career development than other businesses. If a family wishes to preserve a business in the best possible condition for the next generation, engaging in career development is imperative.

One of the most important tasks of any business is to continually develop leadership capacity for the future. When embarking on a new strategy, business owners often forget to ask such questions as: “Do we have the right employees? Will we have the right employees in time to enact the strategy? What must we do now to be ready when the employees are needed?”

The owner of a real estate business takes his three children, all under ten, on a weekly walk around the buildings that the family owns. As they walk, they play a game: for every needed repair a child spots—burned out light bulbs, stained carpets, cracked tiles—he or she gets a dollar. Sometimes it’s the youngest, a 4-year-old, who earns the most.

Let’s assume that you and other family shareholders and managers have agreed that it would be desirable to put a career-development process in place. Perhaps there are now three or four bright and eager next-generation family members in the business. They are in their mid-to-late 20s, have college degrees, and all worked elsewhere for at least three years, getting valuable experience before joining the family firm. In addition to these young family employees, there are also several talented non-family employees in the same age group.

In Chapter 3 we discussed the three stages of employment—experimentation, entry, and expansion. Career development and the maximizing of one’s talents are most concerned with the third stage, expansion. By the time they have reached the expansion stage, young leadership candidates have held summer jobs or internships in the family business, have gone to college, have several years’ worth of outside work experience, and have moved successfully into responsible jobs in the family firm. They have committed themselves to making their career in the family business and to being on a track where they can eventually be considered for senior management positions and even, perhaps, for the CEO role.

Nearly everyone plays a role in career development in a family business. Here is how those roles shape up: The family serves as the guiding light. It provides the overall vision and values that frame the entire process. If the family holds a strong belief in work-life balance, it might encourage family members to consider working part time while their children are young. By contrast, another family might say, “Anyone who chooses to work part time will never be seriously considered for a top management position.” Another family might place great emphasis on community involvement, saying, “We expect our leaders to serve the community in some way.” If so, voluntary activities would become a part of career development.

Over time, as individuals gain experience and skills, the career-development process influences company promotion decisions. At this point, the processes of performance appraisals and career development interact. As a family business grows and develops it usually becomes more formal in its performance appraisal approach. It evolves from occasional informal conversations to a strictly scheduled and highly structured process that is directly associated with salary increases. Even when businesses recognize the need to become more organized about performance appraisal, giving employees clear feedback about how they are doing, family businesses rarely include family members in that process. It is just too awkward for parents to evaluate their children or siblings to evaluate each other. The whole process is too often ignored or bypassed. As a result, discomfort is avoided but so are the important benefits of giving and receiving constructive performance feedback. Performance appraisal is vital to leadership development and must eventually interface with career development.

What if you own stock but don’t work in the business? Then your task is to be an effective owner of the business. That’s an important responsibility in itself. It becomes even more important when you take on leadership responsibilities, such as service on the family business’s board of directors, being an officer of a family council or committee, or becoming involved in community service.

A business-owning family can experience a number of common pitfalls in the career-development process. If you are mindful of them, you can take action to avoid these familiar traps. Any one of them can sabotage your career-development efforts.

Career development is essential to the continuity of any family business. If a business is to survive, it has to have the leaders it needs for future success. But career development doesn’t happen on its own. Owners, managers, board members, and individuals themselves have to make it happen. In particular, if you are the CEO, you are responsible for the development of tomorrow’s leaders. You may, of course, delegate the responsibility to others, but in the end, it’s up to you to make sure the job gets done.