When Dad (or Mom) No Longer Calls The Shots

Preparing the next generation to take over the family business and make decisions as a team must start before the family’s entrepreneurial leader is gone.  Business founders too often spend their entire careers making the difficult decisions by themselves, doing the difficult work, and dictating orders to the next generation.  When the strong leadership and decision-making abilities that made the founder’s business successful at first go unchecked as the next generation comes along, the next generation may not learn how to work through conflict, make decisions as a group, or do the difficult work of leading the organization.

Recently, we heard from a second-generation family business. The family had five siblings, their spouses, and several third generation family members working in the business.  As we talked with each family member, everyone expressed the same sentiment: “Before Dad passed away, we never had conflict.  Dad told us how it was and how it was going to be.”  When we spoke to them, about two years after the father’s death, the second generation was at a true stalemate. They were unable to make a decision as a group.  They could not decide who should lead the business.  Every conversation ended in unresolved conflict.  Sad to say, over the years following their father’s passing, mistrust, conflict, and a decline of respect for each other forced the siblings to the only decision upon which they could all agree: liquidate the business and go their separate ways.

So how can an entrepreneur and his/her family prepare for the future when Dad or Mom no longer calls the shots?

1.       As a family, engage in open communication to define why you want to be a business family.

2.       Be humble and respect your family members for who they are and the knowledge, skills, and abilities they posses.

3.     Commit to truly listen to each other.

4.     Establish communication guidelines that all family members can agree to follow when conflict creeps in or decisions need to be made.

5.     Be a safe family member, including by demonstrating openness to feedback, asking questions, and avoiding reactive behavior.

6.     Create a participatory culture, such as getting all family members in the game and seeking their opinion.

7.     Handle conflicts as they occur by walking toward conflict, handling the “right” problem, and working to move toward mutual agreement.

8.     Remember the counter intuitive requirements. If you want to be heard, first be willing to listen. If you want to be trusted, you must first be willing to show trust.

9.     Be willing to give grace and forgiveness.

10.  Commit to your family.

Following the guidelines above will help set the framework for the next generation to take over the family enterprise and continue the family’s legacy.  If your family is stuck, it might be helpful to have an independent third party come along side your family on this journey.         

This can be the journey of a lifetime.