Getting Management Help From the Next Generation

Making Changes Wisely

But change is difficult in a family business because employees tied to the previous generation (related or not) resist change. It's almost considered an affront to the family to change the direction, process or personnel that worked so well for the new leader's older relative. To make it easier for successors to carry out changes the senior generation couldn't or didn't want to institute, the family business consultants we spoke with had these suggestions:

  • Go slowly. The changes that will professionalize the business (such as delegating responsibility, working in teams, conducting performance reviews and instituting different compensation plans) are going to meet with resistance from the old-timers who were used to a kind of benign dictatorship. The goal is to retain the strengths of the company's culture, such as employee loyalty, while implementing needed changes.
  • Work with siblings and family peers in your own generation. "Unless the siblings can develop a common vision of what the business means to them, conflict will break out quickly and needed changes will be sabotaged," says Lombard Hoover.

Ed Hoover adds, "They also have to redefine their relationship as business partners, not just relatives, and decide who's going to have control over what and who's going to make decisions. Family rules don't work here because in a family, people operate under the presumption of equality. It's quite different in a business setting."

  • Utilize the experience of your board of directors or advisors. Successors aren't experienced in the dynamics of change, but individual members of their boards may be. Seek out their counsel and feedback to help make the changes more palatable and easier for the company, its customers and employees, and the senior generation.

Contact Sources

Crowe Chizek and Co. LLP, (630) 575-4233, choover@crowechizek.com

Fox Racing Inc., 18400 Sutter Blvd., Morgan Hill, CA 95037, (888) FOX-RACE

Hubler Family Business Consultants, (612) 375-0640, hubler@mm.com

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This article was originally published in the June 1999 print edition of Entrepreneur with the headline: New Blood.

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