The emerging context for successors

What are the factors affecting the decisions of successors in your family business?

Before we consider the development requirement of family successors, it is worth describing the main factors that shape the context in which they find themselves as members of a family-in-business.

The following are seven key factors that make up the emerging context for successors, as they collectively or individually manage their relationship with the family business and design their own contribution to it.

Count

As families transition to later generations, the inevitable growth in the number of family members. With this comes a spread in education, in knowledge of the family business and in the location of individuals. This variation in background and knowledge will benefit from time spent to address the development needs of individual successors for them to understand possibility and decide on their contribution.

Contribution

An increase in the number and ways to contribute as a family member within the family company and outside of it. Business growth (both in home and external markets), new venture (economic, social) possibilities and the structuring of family governance all require family leadership. For family members to be interested in these role opportunities, they need to be informed and appraised of the requirements in parallel with evaluation of career possibilities outside of the family company.

Complexity

Persistent volatility, uncertainty and ambiguity of the commercial environment, with ongoing implications for strategic value and ownership decision-making. For successors the need to understand strategic advantage of their family company, the potential for value creation and the particular opportunities that come with family ownership.

Character

Importance of family reputation and the “Family Brand” with the potential scrutiny of the suitability of successors and the application of credibility tests. For successors the added complications that come with conflict-of-interest, on-line reputation and potential damage to the ‘family brand” for those who are unprepared.

Competition

An increase in the reliance in non-family “professional” managers for those family companies intending to grow. Non-family managers bring unique experience, professional accreditation, informal networks and single-system decision making (business). To succeed in this context, family managers must learn how to navigate and thrive in the resulting’ meritocratic’ culture, alongside those with experience and skills.

Cultivation

The recent increase in, and sophistication of, resources for talent development as a differentiator for companies. These methods include more structured career development, coaching as standard, continuous and informal feedback on performance punctuated by bespoke professional development. These are opportunities for successors as well as non-family managers, to enable them develop skills and optimise performance.

Coequals

Availability and energy of peer-to-peer networks as a source of support and inspiration. Active encouragement both to participate in, and contribute to, family business and industry networks. For successors, professional and family business peers offer the availability of support and opportunities to learn in a group environment.