Read an Excerpt
Preparing Successors for Leadership
Another Kind of Hero
By Craig E. Aronoff, John L. Ward
Palgrave Macmillan Copyright © 2011 Family Business Consulting Group
All rights reserved.
Once upon a time there was a man who had a vision and began pursuing it. Two others saw that the first man had a vision and began following him. In time, the children of those who followed asked their parents to describe what they saw. But what their parents described appeared to be the coattails of the man in front of them. When the children heard this, they turned from their parents' vision, saying it was not worthy of pursuit.
— Jacob the Baker: Gentle Wisdom for a Complicated World by Noah ben Shea
If the family business is to endure, its leaders must find a way to show their children more than "the coattails of the man in front of them." They must impart understanding of the founder's vision and help their children prepare to revitalize and convey it in its full power and resonance.
Without such an effort, the current business leader's vision will begin to die with him or her.
THE IMPORTANCE OF SUCCESSOR DEVELOPMENT
In most family businesses today, developing future leaders takes low priority.
Nurturing new leadership does not come naturally to most entrepreneurs. Even if they hope for continuity, most business owners don't adequately address their children's preparation for leadership.
Instead, many take the "Let's give Jimmy a try" approach, tossing a successor candidate into a tough job with no preparation. Other families wait until the business owner is incapacitated—or dead—before letting the next generation plunge in. Another route is to have the successor plod through the organization, filling whatever jobs that open up. Others take the "silver spoon approach," sheltering the successor in newly created posts such as assistant to the president that allow little real experience.
These practices seldom equip the successor for the challenges that will face family business leaders of the future.
THE ROAD AHEAD
The next generation of owner-managers will face great challenges.
The rate of change in business has accelerated so much that a single business strategy rarely endures for a generation. Consolidation in many industries has built competitors into giants with enormous financial, marketing, and distribution muscle. Product life cycles are shortening. National boundaries are crumbling. Industry definitions are disappearing. Not only must successors prepare to run the business, but they must also equip themselves for strategic revitalization—not once, but perhaps many times during their tenure.
The successor must prepare for a job that doesn't yet exist, in an era no one can fully foresee. Add to this the timeless challenge of following in the footsteps of a successful and dominant business leader who may be idolized by the family and others, and the successor's job begins to look daunting indeed.
WANTED: ANOTHER KIND OF HERO
In creating a business, the entrepreneur already has performed an endeavor noted writer and scholar Joseph Campbell would call "heroic"—an act by "a founder of something ... (who has) to leave the old and go in quest of the ... idea that will have the potentiality of bringing forth that new thing."
To sustain that new thing into successive generations and revitalize it, the business owner must bring forth yet another new thing: "another kind of hero"—a hero who, in Campbell's words, "reinterprets the tradition and makes it valid as a living experience." This book is about building another kind of hero—a successor who is prepared not only to follow in the current leader's footsteps, but also to revitalize the family business vision by reinterpreting it for future generations.
A strong successor-development program provides the best chance of maximizing the potential of the new generation of family business leadership. It can assure the company of management depth and breadth in the future. It heightens the chances of retaining talented members of the younger generation. And it can lay the groundwork for developing and retaining important non-family managers as the company grows.
FOCUS ON DEVELOPMENTAL YEARS
While developing family business successors is a lifelong process, this book focuses on the years when the 20- to 40-year-old successor candidates are working in the business in preparation for leadership. Selection of a successor and the transition to leadership are covered in more detail in Family Business Succession: The Final Test of Greatness.
This book does not assume that you have chosen a successor. Nor does it assume that there is only one top job for which one candidate must be prepared. Instead, it uses the word "successor" to refer to anyone who may be a candidate for a variety of top jobs on the family business management team. Family businesses increasingly are managed by a team of successors, and any development program should encompass career paths for candidates for all of the jobs on the team. It is also wise to plan for more than one potential successor, as discussed later.
This book describes seven natural stages in the growth and maturation of future business leaders. It discusses the creation of an effective personal-development plan. It describes ways to cultivate successors' crucial business and leadership skills.
The book lays out some alternative routes up the management ladder to give successors the breadth and depth of experience they need. It offers suggestions on family relations and communications during successor development. And it details special personal challenges to both incumbent leaders and successors throughout this 5- to 15-year process.
THE SEVEN STAGES IN SUCCESSOR DEVELOPMENT
The making of a new generation of leaders typically encompasses seven stages.
1. Attitude Preparation. Important attitudes toward work and the family business are formed during a child's first 25 years of life. Usually this stage includes part-time work in the family business and occasional business-related trips with the business owner or a mentor. Ideally, it also incorporates three to five years of outside work experience.
2. Entry. Serious, detailed discussions of succession usually shouldn't begin until the young person enters the business. This usually occurs when the successor is between 20 and 30 years of age and takes an existing, necessary job in the business. It includes training, orientation, and developing relationships with other employees.
3. Business Development. This phase usually occurs between 25 and 35 years of age, when the successor should obtain the best job experience possible. He or she should be cultivating needed skills and abilities, including some that are complementary to those of the incumbent. On-the-job education about the business's history, culture, strategy, and philosophy should occur. If a successor isn't the best candidate for leadership, it will usually become obvious during this stage.
4. Leadership Development. Between the ages of 30 and 40, the successor's plans stretch beyond any one job to the time when he or she will be responsible for the entire business. At this stage, the successor may develop skills of team building and shared decision making. If more than one successor candidate exists, this also may be the period when a natural leader emerges and self-selection occurs, as discussed in Family Business Succession: The Final Test of Greatness.
5. Selection. If multiple candidates exist, selection should occur at this stage or sooner. A choice can be made in any of several ways, ranging from an early choice by the incumbent, to selection by the outside board or the family executive team, to consensus among family, board, and executives.
6. Transition. This period is when authority and responsibility are transferred to the successor. This may be the time when the successor gets involved in setting strategy and names his or her own management team.
7. The Next Round. Succession in the family business is a cyclical process that should never be neglected for long. Not long after transition, the business's new leaders should begin talking about developing the next generation of leaders.CHAPTER 2
The Early Years
Almost every family business leader beyond the first generation has vivid memories of how the family business affected his or her childhood.
One may remember sweeping the floors of the supply room, listening to the easy talk of employees. Another may have tucked in a drawer a tattered photo of himself as a child perched on a piece of heavy equipment, a parent smiling proudly nearby. Another recalls playing near an idle assembly line on a Sunday afternoon while his father worked in an office nearby.
Preparation of a family business successor does not begin when the incumbent leader starts to plan retirement. Preparation is a lifelong process that starts as soon as the child becomes conscious of the activities of the adults around him. Work habits, attitudes toward the business, values, and relationships all take root in the soil of childhood and are formed over the years, long before successor development begins in any formal way.
Though nurturing young children for leadership is beyond the scope of this book, some concepts basic to the attitude preparation stage can be helpful in framing a personal-development plan for the adult successor as well.
The Importance of Childhood Experience. Providing a home environment where a child experiences a sense of security and respect will best enable him or her to grow and develop individuality. Childhood experiences that instill family values are a crucial element of successor preparation as well.
For three generations, the Hess family, who once owned Parisian, a chain of specialty retail stores, "learned the business at the family dinner table," says Donald Hess, who was third-generation president. He described the foundation of the family business as "generosity, respect for human values, sensitivity to the feelings of others, and commitment and dedication to improving the quality of life" for customers, vendors, and employees. The result was successful growth, excellent service, and a low turnover rate among employees.
When fourth-generation members of the Sulzberger family, which controls the New York Times Company, were growing up, the family frequently convened at Hillendale, a family-owned estate in Connecticut. There, the family heritage "was lightly but constantly present," one family member says.
Work habits are acquired by performing chores that contribute to the household, such as mowing lawns or babysitting. Children develop leadership and teamwork skills through activities such as scouting and sports. They learn accountability and self-reliance when they are given opportunities to make mistakes, create choices for themselves, and see themselves as others see them.
Parents also convey values and attitudes to their children by example. They may assume leadership posts in community organizations. Some take responsibility for helping the poor. Others encourage an enterprising approach to problems of all kinds, showing their offspring how to "create something from nothing."
Children also receive a powerful message from parents who achieve balance in their own lives between having fun and enjoying work. Healthy attitudes toward the business spring from the enthusiasm and joy parents display in accomplishment, hard work, responsibility, and sacrifice.
Communicating about the Child's Future Role. The tone of any early discussions about the family business might be, "This work is exciting and worthwhile, and you may want to consider it when deciding what to do with your life." Key ideas to communicate are that the child is welcome in the family business, that his or her participation is voluntary, and that the parent will support the child in any decision he or she makes. The possibility of "being the boss someday" probably shouldn't be raised until the child enters college or later. And it shouldn't be presented as a certainty. Rather than conveying a sense of entitlement, the parent should communicate the need for commitment, hard work, and a sense of responsibility.
The Importance of Education. "Education" for the family business successor should not be defined simply as an M.B.A. or any other particular degree or diploma. Rather, it should be viewed as a lifelong process.
A college education may not be essential for every successor. Sometimes, honing skills within the business and keeping abreast of trends through industry seminars and trade gatherings can be sound preparation for succession. Leadership can be exercised through trade association meetings and conventions.
A college education can, however, offer opportunities to develop important skills as well as formal disciplines such as finance and marketing. The seven skills of leadership, writing and communication, planning and organization, gathering information, solving problems, making decisions, and exercising creativity are critical general management abilities and can be developed throughout school.
If the successor does decide to attend college, many parents raise questions that will help him or her begin setting developmental goals beyond choosing the "right" major or fraternity. What are the purposes of the college years? Are they a time to sow wild oats? To learn how to live independently? To manage one's time? To interact with good thinkers? To gain new life experiences? To choose a mate who can share or support your goals? Such questions can encourage a young person to think about personal objectives in broad terms.
The Value of Outside Experience. Psychologists say one of the most common problems facing family business successors is a sense of inertia. They may be reluctant or afraid to venture into the outside world. They may not feel they have any real choices about their career. They may feel they lack either the freedom or the ability to compete in the outside world. These feelings can be enervating and even disabling, leading to a lifetime of frustration.
A powerful antidote is experience in an outside job. Most family business advisors strongly recommend that successors get three to five years of work experience outside the family business. This gives the successor a chance to hear honest feedback, to be judged on his or her merits, and to learn different approaches to management.
Outside experience gives the successor an opportunity to make youthful mistakes on someone else's turf, where he or she is just another employee—not an heir to the throne. The successor also learns that all bosses are not like Dad—they are often worse. An understanding that the grass is not always greener on the other side of the fence can be invaluable in securing the successor's commitment through tough times.
In all of our research, no one who worked outside the family business regretted doing so. Many who did not wished that they had. Encouraging successors to get outside experience can, however, foster a certain tension.
Andé Evers, founder of a Georgia maker of custom vehicles, wanted his son Tom to earn his own business credentials before joining the family business. Tom wasn't very interested in the family company at that point and went on to score some major successes in sales for a large business-products concern.
When Andé asked Tom to join the family firm six years later, his son turned him down. "At that point, I was having fun and I had lots of opportunities," Tom says. Andé took the rejection as a challenge and set about changing Tom's mind. "My incentive was to grow this company to the point where it would be interesting to my son," he says. After two years of growth of the family business and intense father-son discussions, Tom returned as heir apparent in what father and son agree was "a business decision."
For all its value, some successors don't have a chance to acquire outside experience; they may be called home from college when the incumbent falls ill or dies. Others may acquire similar experience inside the family business if it is big enough, perhaps by being groomed in various divisions by non-family executives.
If the successor does stay close to home, special care should be taken to help him or her develop leadership, empathy for coworkers, and an understanding of the stresses on supervisors. This can be accomplished through personal-development planning, as discussed later. The successor should also take time to visit people at other businesses, to continue education, and to be active in civic, trade, and professional groups.
Excerpted from Preparing Successors for Leadership by Craig E. Aronoff, John L. Ward. Copyright © 2011 Family Business Consulting Group. Excerpted by permission of Palgrave Macmillan.
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