As the economy begins to re-open following the COVID-19 shutdown, many professional sports leagues are still trying to figure out what they will do. During the course of the pandemic, some professional baseball teams decided to stop paying their minor league players. At a fundamental level, decisions like this communicate a withdrawal from investing in the future.
Family owned enterprises cannot afford to stop investing in developing their bench for the next leadership team. Building the bench for a family business, which may include both family and non-family members, brings unique challenges and complexities.
For a business family that desires to build a legacy and grow profitably well into the future, the following principles will help:
1. Develop a Family Employment Policy that encourages family members who desire a leadership role to gain work experience outside of the family business and specifically defines the objective criteria necessary for employment and leadership.
2. Nurture mentoring and coaching between the current CEO and the next generation of leaders.
3. Clearly define, in writing, the job description for the leadership team roles. Identify the expectations and metrics to which each position will be held accountable. This should also include the knowledge, skills, and abilities expected in each role, as well as a commitment to the family’s values and objectives. Have the senior generation guide the process of selecting their successors before they leave.
4. Seek the support of non-biased, third party perspectives in evaluating and selecting the next CEO and leadership team. This may mean soliciting input from non-family directors, members of the advisory board, or qualified advisors.
5. Be open to a non-family CEO for a season if a family member is not ready to assume leadership.
6. Set the leadership team and the next CEO up for success. Develop a communication structure and a governance system that efficiently and effectively outlines the processes for the family, the ownership, and the business to keep focused on the correct goals and objectives.
7. Revisit these guidelines annually.
As a family, commit to a process that will build the best bench and develop the most qualified leadership team for the future of your family business.
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