Keep in mind that young people are not always born entrepreneurs; they need extra training and careful guidance. Here are some guidelines to remember when grooming tomorrow’s leaders.
- Successors are not entrepreneurs starting their own businesses; successors are managers who assume a going concern with its own set of complex challenges. Entrepreneurs are risk takers who thrive on the edge and revel in challenge. Next-generation leaders must be adept at creating systematic processes, financial control and team building.
- Leadership does matter, for three reasons:
- Family firms have different goals than publicly owned companies. Family operations are oriented to serve a broad set of objectives that serve familial demands and personal issues.
- Family operations have a greater potential for long-term conflict. People are emotional beings; it is the atmosphere of the family business that causes some to respond inappropriately to disagreement and conflict.
- Leadership succession is far more important for family firms than nonfamily firms because what is at risk may be absolute survival. Due to the personal nature of the endeavor and the breadth of family that may be actively involved, failure can be devastating—especially when you consider that most family operations comprise an overwhelming majority of the family’s net worth.
- Integrity and commitment are the most important traits of a leader. Nothing trumps honesty, hard work and perseverance.
- Upon entering the family business, the leadership successor must become a student of the organization—learning about its value proposition, processes and people. He or she must also become a student of leadership, motivation, management and business.
- In preparation for a leadership position, a successor may benefit from a mentor, coach or adviser. Don’t ever overlook the value of a good mentor. The opportunity to learn from the experience of another person is priceless. It increases effectiveness while stabilizing the learning curve.
- The senior generation must delegate responsibility and allow the successor to make decisions and suffer mistakes. Learning requires the consequence of real risk/reward trade-offs.
- The generational shadow of the founder may be the primary reason for conflict in a second-generation family business. The controlling generation must become mentors to the next generation, allowing them to grow in a nonjudgmental environment.
These guidelines are part of the Legacy Project Workbook.