Are the kids alright?
Where management talent is harnessed primarily from family members, the family life cycle will impact on future potential family business careers. Every child born is a future potential employee. Most parents who own a business want to pass it on to their offspring. While this may be the plan that many business owners have in their own mind, the goals and objectives of their children may not be in harmony with their parent’s wishes.
Alternatively, some children may be overlooked as successors as their views and general outlook on the business may differ greatly from that of their parents. It is important to determine whether business succession within the family is a viable alternative.
Central questions are:
- Are my children interested in succeeding to the business?
- Are my children capable of running the business?
It is very difficult for a parent to be objective in both assessing a child’s interest in the business and in assessing a child’s ability. Firstly, the business is often another “baby” of the owner, they have devoted a great part of their lives to its success and it is a source of pride.
This can obviously create obstacles in determining a child’s interest in the business, as that child may very well find it difficult to communicate to you that they are not interested in the business, knowing how much it means to you.
The converse being that you, as the owner of the business, can find it hard to accept that your child would not share your enthusiasm or passion for it. An outside facilitator may enable family members to share their feelings more openly, resulting in a more open decision being made as opposed to issues lurking in the background, which may lead to resentment due to miscommunication on both sides.
Where a child does wish to work in the business, succession will still only succeed where they have the appropriate skill set to manage it successfully.
This can become more complicated where more than one child is involved. However, if there is only one obvious interested candidate, the process is straightforward. Their abilities can be assessed and any development needs identified. An appropriate assessment and development plan could be devised by a third party adviser or member of management to bring a degree of objectivity to the process.
Difficulty tends to arise where there is more than one child who is interested in pursuing a family business career and is capable of doing the top job. Parents wish to treat children equally. In our view children should be treated fairly and a significant difference arises between fair treatment and equal treatment.
The reality is you will have to pick one child as your successor if you wish the process to operate successfully. However, that does not necessarily mean being unfair to the other children who do not get the top position. Where you have to choose between children, obtaining help in assessing their relative strengths and weaknesses can provide a sounding board to assist you in the process.
At the end of the day, you may have children who are interested and capable of succeeding to you, you may have no children who are interested or capable of succeeding you, or you may have children who have the potential to succeed you but are not yet ready.
All of these situations will drive your ultimate succession plan and the future of the business.