In our previous installment, we have highlighted the challenges of CEO succession. Talent development is another sensitive topic, which requires a broad approach strategy to ensure that the next generation will thoroughly understand its role in the firm’s future.
Learning the ropes
Some family-run businesses have decided to start educating the successors well before they come of age to take up a company position. The idea is to gradually introduce them to the corporate environment and culture and slowly allow them to acquire those skills necessary to become future business leaders. The first step should be creating protocols dealing with subjects such as next-generation talent development processes and inheritance of shares of family members without direct heirs. Guidelines should also be established for family members' employment, requiring them, for instance, to work in external organisations for a minimum number of years and demonstrate skill before being allowed to join the business. One idea is to create a family council to maintain a communication channel between the family and the board of directors, allowing the next generation to learn about aspects of the business. Other companies allow young family members to participate in meetings while they are still in high school or college.
Dealing with underperforming family members
The process of nurturing young talent can be facilitated by the constitution of a committee overseeing family member development and which also includes individuals not forming part of the family. Such a committee should also oversee the fair compensation of family members in relation to each other and the workforce. Another relevant issue is dealing with underperforming individuals. Non-family supervisors should be in charge of overseeing the performance of family members and assign business mentors (these could be senior independent directors). However, in specific instances, the involvement of an overseeing committee of board members may become necessary. Struggling individuals should be placed on a performance plan to allow them to improve (this information should not be shared with the broader family). Where this could not be possible, their exit should be planned carefully in order not to create friction with the family.
There is no one-size-fits-all approach
Our solutions for family enterprises focus on aligning all aspects of the family and business, including culture, vision, mission, values, governance, ownership, leadership, communication and policy development. As there is no off-the-shelf solution to supporting family businesses, whenever a new client approaches us, our family business advisors leverage the type of business, organization size and different personalities involved in the enterprise to produce a plan capable of meeting the specific needs of the client, and ensure that ownership issues are dealt with in a practical and structured approach. Get in touch with one of our experts and find out how we can help your business grow.