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Is Your Family Fit to Run the Family Business?

Check your emotions at the door before turning your company over to the next generation.
May 3, 2010
URL: http://www.entrepreneur.com/article/206408

It's quite common for sibling rivalries to ensue when kids are competing for who is perceived as their parent's favorite child. But when you add to the equation such parents (and even living grandparents) owning and operating a significant family business, the stakes become alarmingly high. The pursuit of the grand prize in terms of succession planning and ultimate control looms larger than life itself for all concerned. That may be even in cases when such a potential event is gradual and perhaps a decade (or more) in the future.

You may already have several children and other relatives gainfully employed in a multitude of positions within your company, some of whom are also being either groomed for or are already in higher-level jobs. But to stay on course, you need to periodically evaluate both the impact to date and the potential of each employee (family member or not) in the organization. There is a huge difference between filling tactical jobs within the organization with trusted family members vs. considering them as viable candidates to one day strategically lead the company or join the senior executive management team.

All too often there are no viable candidates from within the respective ownership family trees to be ideal successors. And yes, I hear you loud and clear: There are perceived checks and balances already in place. For example, you may already have (or plan to hire in the near term) professional managers from outside the family in certain pivotal operational, finance, sales and marketing positions. Nonetheless, family members are still systemically being placed in key roles or are being seriously considered without much rational thinking taking place. The emotional aspect of children or a spouses pleading on their own account or for other loved ones can take its toll on the objectivity of even the most seasoned of owners.

It is only when you look at your own life map that you realize that being born into a family business is merely the starting point. It is nothing more than drawing an inside post position for a highly competitive horse race. Regardless of the nurturing provided as a child becomes an adult in terms of education and on-the-job training, there is no guarantee that such family members will ever be suitable for the company's most prestigious positions. Ask yourself a few questions:

If all three of these questions cannot be answered in the absolute affirmative, set a new course on your life map immediately. The biggest risk here is having the next generation run the family business into the ground. It literally happens all the time. Your reward will be significant for making the extra effort to do your succession planning up front to select the right people for the job.