The Importance of Preparing the Next Generation for the Family Business
Imagine a father and son sitting at opposite sides of a desk. On the one hand, the father has seen his business and boy grow in front of his eyes. He is proud of them both. Yet, how do you transition from being father and son to colleagues? He has taught right from wrong, said no, and led the way. How can he look at this boy as a man? As an equal?
Then, we have the son, trying to fill in his father’s shoes. There are many things to learn, like how respect must be earned and how the father's success has many lessons to be discovered. At the same time, he is eager to bring new ideas and his company vision. He wants to make changes and adjust to the future.
There are many challenges in passing a family business to the next generation. About 40% of family-owned companies transition into second-generation businesses, and approximately 13% are passed down successfully to a third generation. In comparison, 3% survive to a fourth or beyond.
What is causing this increasingly small number of successful family transitions? Many factors in play could hurt the chances of being able to pass on the business to the next generation. We’ll explore some of the main obstacles that get in the way.
Communication
Let’s tackle the most significant and most challenging of obstacles first. Research has taught us that it is the key to be able to have a successful transition of the family business. What are some communication problems that we can encounter?
- Lack of clarity. This can be seen as expectations of children taking over without clear communication of those expectations. When you assume, you fail to plan and prepare. This can lead to many more problems down the line.
- Lack of transparency. Many departments and components come into play for a business to run successfully. Children are not often exposed to the inner workings of the company. When their time comes, they feel out of place and out of touch with the business.
- Lack of direction. Not having a clear vision of what the company’s purpose can impact the transition. If they don’t know where they are going or why they are going there, it is easy to lose the way.
To counteract these communication problems, we need to be clear, transparent, and direct. These skills can be learned, and an executive coach can help as a third party to help ease communication problems
Planning
There are two crucial things needed to plan for a successful family business transition. Let’s call the first: early transition planning. This involves all the strategies we can put in place before the real transition starts to take place to increase the involvement of the succeeding generation in integrating into the business. For example, internships programs, bring your children to work events, family and business bonding activities, etc.
The second is the real transition plan. We cannot just expect the new generation to come in and hit the ground running. Shadowing programs, visiting the different departments, building rapport, and learning how to be open-minded and respect each other in a work setting are essential elements to consider.
Generation Gaps and Family Dynamics
The last element we will discuss is how generation gaps play a role in the family transition. The opening of this article was about a relationship between father and son and how they see each other.
The older generations often feel like their wisdom goes unheard, and the same goes for the new generation. The truth is that both generations hold their own kind of wisdom and deserve to be heard. There can be so much power to move forward in learning to respect, listen and consider each other. Instead of allowing dysfunctional patterns to emerge where either party feels unseen or unheard.
One of the crucial lessons to learn here is to successfully transition from one generation to the next: we must begin with transparent conversations from an early age. At a place as casual as the dinner table, we can include and expose our children to what goes on with the business and how it's vital to the family. We observe that family and company values are connected in many successful businesses.
Tiara Hoquee
Psychologist and Emotional Intelligence Coach
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Transition coaching helps leaders to dive underneath and see what are the critical areas of the concerns of a family business. See more about Transition coaching HERE.
How to Create Goals for Long Lasting Change?
As many people do, I set some New Year’s resolutions this 2023. A couple of weeks in, I am feeling good about keeping up with what I decided to do. Yet, I must admit that part of me is scared that it all comes tumbling down at the first sign of trouble. This, to be honest, is a valid thought considering that 80% of New Year’s resolutions fail by February.
There are a few things we can do to tip the scales in our favor and become part of the 20% that keeps going, and I’m going to share with you what these are.
Tip #1: Focus on Goals that MATTER
There are many times we find ourselves setting goals that are to meet other people’s expectations. It could be for our family, work, friends, or just society; the bottom line is that the root is not YOU.
When the motivation for change comes from elsewhere, you are much less likely to follow through as opposed to it coming from yourself. For example, if your boss complains that you’re always late, you aim to get to work on time to avoid getting scolded. Chances are you might get up earlier a few times, but it won’t stick.
On the other hand, if you want to get up earlier to create a morning routine and start the day with things you like: a cup of coffee or more time with loved ones. This appeals to your brain as attractive; there is more internal motivation to stick to this change. You are doing it for yourself and not for others.
Tip #2: Follow the 3 R’s of Habit Change
When we set our new goals, we seldom create a plan for exactly what behaviors are going to happen for us to actually to stick to these goals. Without a plan, it’s so easy to fall off track. “We don’t rise to the level of our goals; we fall to the level of our systems,” says James Clear, best-selling author of Atomic Habits.
New goals don’t equal change or a new lifestyle. New systems, and by systems, I mean a collection of small daily habits, are how we create real change. So without any further ado, these are the 3 R’s of Habit Change.
Reminder
When we are looking to add a new thing to our life, we must create a reminder since this new thing is NEW. If we were not doing this before, how would we remember to do it now?
The reminder can take many shapes or forms:
- Habit Stacking. You can add a new habit to an old habit. For example, after you brush your teeth (old habit), you drink a glass of water (new habit) to improve your overall hydration.
- Alarms. You can set the alarm on your phone to remind yourself to do this. For example, if you are trying to go to sleep earlier. Set the alarm for bedtime that will remind you to turn everything off and start your bedtime routine.
- Accountability Buddy. If someone in your life wants to add the same habit as you, you can help keep each other accountable. Alternatively, you can ask a friend who already has the habit of keeping you in check. For example, when starting a running habit, find someone who wants to run or already runs.
- Be the Architect of Your Environment. Adjust your surroundings to do more of what you want:
- If you want to read more, put a good book near your bed.
- If you want to drink more water, make it visible or easier to get.
- If you want to do yoga in the morning, set the mat on the way to the bathroom.
Without a reminder, prompt, or cue, your new goals or habit will be easily forgotten, so do yourself a favor and find ways to make the new habit as obvious as possible.
Routine
Humans are very much set in their ways. It’s hard to change because so much of our behavior is on autopilot, so it requires much effort to turn it off and create new behaviors.
The way we can help ourselves to stick to the changes we want to is to make the new behaviors small. We are conditioned to aim big, and that often leads to failure. If we start small and build up from there, there is a much bigger chance of success.
First, consider the number of goals or habits. The best place to start is one, yet if you’re feeling ambitious, I would say no more than three. If you want to do everything, you end up doing nothing,
Second, go small. For my three resolutions this year, I choose meditation, exercise, and activity that enforce growth or learning. For all three of them, I picked small goals:
- 5-minute meditation
- 30 minutes of exercise
- 10 minutes of growth of learning
It may sound like little. However, small changes compound over time. If I meditate for 5 minutes every day, in a year, I will have meditated for over 30 hours. If I work out for 30 minutes five times a week, that is 150 minutes a week, which is the recommendation of the American Heart Association to prevent disease and increase longevity. Spending 10 minutes reading a book daily adds up to about 12 books a year!
Finally, I suggest to set a time and place like a date with yourself. We are good at keeping our word to others. Let’s keep up our word to ourselves. For example, I will meditate for 5 minutes after I brush my teeth in the morning in the living room.
Reward
The brain is programmed to repeat behavior that feels good. Make sure to let the reward of keeping your word to yourself sink in, or create a reward. It could be that coffee place you love, a massage, or whatever makes you feel good.
Tip #3: Track Them!
I have found one of the best ways to motivate myself is to keep track of the habits I’m doing. I have a whiteboard that’s a monthly planner, and I tick my completed habits every day. It creates a sense of accomplishment and reminds me of my progress.
Armed with all this knowledge, you now have the tools to create great systems and become part of that 20% that creates long-lasting change!
Tiara Hoquee
Psychologist and Emotional Intelligence Coach
Our Destiny Mapping 2023 is a complimentary service to assist you in planning for your New Year resolutions. Our coach will help you to focus on your goals that matter, remind you to follow the 3 R's of habit change and help you to keep track with your goals consistently. Click HERE for details.