You’ve picked a new CEO; now don’t forget the others
by James Lea
Writing a plan, laying out a time frame, grooming the next chief executive – a senior family business owner with an eye on the horizon takes steps to get the right people ready to assume responsibility for family business leadership. He or she makes some thoughtful decisions and then devotes resources and attention to helping the selected successor prepare to head the family company for the next 20 to 30 years.
That very sensible process can, however, create family tensions, or worse, if it makes other bright and capable sons and daughters feel a bit second-rate. Usually, nothing is further from the truth. So it’s important to give those other members of the family team their fair share of support, encouragement and reassurance. There should be family agreement on four crucial points.
The roles they’ll play
“I knew my sister was probably in line to take over the business,” a young family member said, “but I still had my ambitions. I felt disappointed and at loose ends when Dad made it official.” Succession planning should include consideration of the roles of all members of the successor generation, not just the CEO-designate. The plan should outline the prospective roles they’re qualified for but allow them the choice of joining the family business or pursuing another option. If they choose to stay with the family company, their place on the team – executive, manager, director, advisor or other – should be made perfectly clear.
The abilities they’ll need
Business and professional skills, people skills, special technical skills. This is the same sorting out exercise that a family business goes through to determine what’s needed in the next president of the company. It’s also important to match the roles to be played by other team members with the abilities they’ll need to play those roles well. Along with basic business knowledge and skills, consider the other team members’ needs for big picture understanding of how the company functions as a system and how it fits into its market, industry and community. And every member of the team, as well as every company employee, should have an attitude that values performance and upholds the family’s ethical standards.
The preparation they should have
Other members of the successor generation can sometimes feel left out of the preparation process as a family business gears up the approach to succession transition. John Brozovich of the Pacific Family Business Institute urges senior family business owners to provide as many career preparation opportunities for children not going into the business as they provide for those who’ll be running the company. That includes formal education, specialized training and systematic mentoring.
In addition, it’s important to help those other members of the family team to keep their self-esteem and motivation high. Give them plenty of encouragement to live their professional and personal lives fully and to be the best they can be, whether or not they’re active in the family business.
The rewards they deserve
This is a good time to remember that when distributing the benefits of business ownership among family members, “fair” doesn’t always mean “equal.” Younger family members deserve the rewards they earn, no more and certainly no less. But the person who in a mature and unselfish manner acknowledges and accepts the fact that a sibling or other relative really is the best choice to lead the family business deserves a reward. The one who shows that being vice president or sales manager or a board member is a gratifying role deserves a reward. The one who chooses a professional life outside the family business but remains a solid supporter deserves a reward.
And what rewards do they deserve? If they’re shareholders in the business, they deserve an honest accounting of business returns and a timely distribution of their share. If they’re executive, management or line employees, they deserve compensation that’s competitive in the marketplace and tied to their performance. If they’re uninvolved except as members of the family whose name is over the door, they deserve to be kept informed on the business’s progress so they can be proud of their family’s achievements.
The other members of the family team, those not selected to lead the family business enterprise, need and deserve thanks for every one of their active and passive contributions and, now and then, sincere recognition that “we couldn’t do it without you.”
James Lea is a professor at the University of North Carolina at Chapel Hill and a nationally known family business speaker, author, and advisor.
Grimes, McGovern & Associates provides expert advice during all phases of a transaction. Contact us today for a confidential consultation: John McGovern, CEO, firstname.lastname@example.org, (917) 881-6563.
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