Successor development foundations

What are the key foundations in developing your next generation of successors?

Foundation 1: Impact of Ownership

An understanding of and appreciation for how membership of a family-in-business influences those who carry the name. The challenge for all successors to families-in-business is to identify, asses and mitigate the impact that membership of a family-in-business may have on decisions, relationships, self-image and opportunities.

This ‘impact of ownership’ for the Successor manifests in four ways as being life-long, unique, complex and important.

Life-long relationships with family members change over time, pass through various life-stages all under the umbrella of ownership. This is the reality which must be recognised and managed by successors, which never leaves or dissipates.

Unique in terms of the scope and scale of the family enterprise (types of business), the family approach to succession and the availability (or promise) of independent wealth. No two cases will be alike; as we often hear ‘all families are different’.

Complex refers to the overlap between the family (emotion) and the company (practicality), the existence and pull of competing commitments and the impact of life-stages on personal needs, roles and decisions. For successors, the existence and pull of competing commitments (business, family, self) is a recognised impact of ownership, with the follow-on effect on personal needs and decisions.

Important due to the ‘impact of ownership’ on income, career choice, life-style, the closeness of relationships and emotional and personal well-being.

Thus the ‘impact of ownership’ recognises that decisions as to career choice, self-actualisation and contribution are influenced by and taken alongside the family company. All are important, and potentially life changing. Decisions that involve continuous challenge and adaptation; alongside a family company these decisions can assume a new dimension which at times can be difficult to manage.

Foundation 2: Informed Opportunity

An opportunity is that combination of time and circumstance which make it possible to do something.

As a successor there are usually a number of positive 'circumstances' which individually and collectively present as ‘opportunity’: wealth, family capital, access to networks, education, a stable home environment, a family business, the family’s reputation.

An 'opportunity' becomes a 'possibility' only as and when successors are fully informed about the circumstances, have sufficient variation of input to the decision in front of them and have considered the potential impact of the decision on them. A 'possibility' is a thing that may be done or chosen out of several viable alternatives.

‘Informed opportunity’ is about directing the attention and skills of the individual family members to learning, career opportunity, ownership responsibility, family and company governance and to match these to individual aspirations and plans.

The first step towards ‘informed opportunity’ is the responsibility of the family, to educate and prepare successors. Inclusive and non-preferential, the aim is to encourage and prompt participation and the taking of time for them to understand the company, the family and the aspirations for ownership.

Foundation 3: Value to the Family Enterprise

Appreciation of individual value to the family business involves the careful consideration of three areas:

First, aptitude (or otherwise) for business in general and the type of business in which the family company trades.

Second, qualifications; the conditions for involvement required by the family and abilities in comparison with those of family and non-family management peers in the family company.

Finally, timing; active awareness of successor career stage and the current and possible future family leadership requirements of the family and company.

Foundation 4: Successor Credibility

A full understanding of the importance (and attainment) of credibility being legitimate self-confidence, related to self-esteem and accuracy of role-perception. A self-confidence which can be legitimately validated by third parties – employers, senior managers and family members. To include an awareness of successor ‘testing’ for credibility and how families and businesses do this.

Foundation 5: Family Business Leadership

What is needed (and expected) to meet the specific challenge of ownership of a family business is an understanding of and appreciation for personal leadership in the context of ownership .Development of a nuanced understanding of leadership within the context of ownership and the demands of the family business. An understanding that includes self-awareness, successor development and role satisfaction and contribution over the span of a ‘career’.

Foundation 6: Six Successor Role Profiles

An awareness of the six possible role profiles occupied by a successor over a lifetime. A successor may occupy more than one role at a time and may pass through a number of role combinations over a lifetime.

Uninvolved Successors are those individuals who are not (yet) involved in either the family company or family activities.

Career Successors are those either considering or currently developing a management career in the family company.

Entrepreneur Successors refer to those who are either considering or currently developing a career as a commercial or social entrepreneur either independent of or alongside the core family company.

Transition Successors are those considering or working through a change in career direction or personal fulfilment each which require a fundamental adjustment in their relationship with the family business (and possibly with the family).

Unifier Successors are those either considering or currently developing a position of leadership within the family as a family council member or Head, chair of a sub-committee, or as Family Office leaders.

Ownership Successors are those considering or currently developing a position as non-executive director of the family business or family office and/or are owners and beneficiaries of family assets.