Children across the country have started back to school. They'll be learning reading, writing, and arithmetic. But what will they be learning about the family business? When my father offered me a job in his business, I had learned enough to know that I didn't want the job he was offering me! However, I had also learned enough to play a vital role as an owner of the business after my father died. So what kind of curriculum can you design for your children so they can make more informed choices about whether or not to work for the family business and so they can be contributing owners of the business? Here are a few suggestions.  (Read more from Karen Vinton and add comments.)

How can you increase your chances of a successful transition to the next generation? By planning and mentoring.
Not every parent can wear three hats: parent, employer, and mentor. Many find that they have to discard one of these roles; however, this is much more easily said than done. Obviously, the parent hat would not be the prime choice to shed. If the parent is already the employer, expecting the child to leave the business so the employer hat can be shed is not a great choice either. However, the third hat, the mentor hat, is the least problematic hat to remove and therefore, that role can be turned over to someone else.  (Read more from Scott Heintzelman

The family business, as it enters the second generation, faces particularly daunting tasks in continuing to foster a true sense of entrepreneurism amongst its class of would-be successors. Can the spirit of entrepreneurism, so essential to the founder class, be transferred and even fostered within a second generation? Businesses (even successful ones) thrive on the ability to innovate. If you stand still, you die! With globalization, and the complexities and competitive challenges it presents, it is fairly said that the business of tomorrow will require more entrepreneurial skills---and not less---than those originally brought to bear by the founder class.  (Read more from Frank Seyferth and add comments.)

Normal uncertainty about what others will do is at the root of most human conflict. This is an insight we advisers can use in helping to resolve particular conflicts and turn some chronically frustrating, distrustful relationships into more trusting and trustworthy ones: "You folks aren't 'dysfunctional,' you're just labeling 'failure to meet expectations' as 'betrayal of trust.' You can pull back and try some less risky tests of one another's reliability."

Family business relations, no less than other relationships, are a continual process of weighing the pros and cons of trusting versus skepticism, situationally. Trusting and trustworthiness are not wide-ranging attributes of a person or family. On the contrary, the likelihood of one member trusting another depends on a prediction of the other's trustworthiness in that particular situation.

 

I don't use the phrase "increasing trust." Our goal is to improve clients' effectiveness at advancing shared goals. To that end, they have to try to maximize the benefits of interdependence relative to its risks, which means calibrating the extent of trusting someone in a role to the likelihood of the other's performance. There's no intrinsic good in trusting someone who isn't yet trustworthy for a particular role. Distrust is wise when the risk is high compared to the expected value of the other's contribution.  (Read more from Kenneth Kaye and add comments.)

The new trend we are seeing as family business advisors is groups of families promoting the creation of new entrepreneurial spirit among their offspring and various ways and means of starting new ventures both within and outside the main business. Simply stated, while maintaining the essence of the founder and his (her) successors in terms of their work ethics and values, we have to inject new blood, ideas and dynamism to the families in terms of new businesses.

Of course the same principle applies to those members who will continue managing the main business, helping to professionalize the company in a flexible way, but as mentioned before, it would be suicidal to have all members of each new generation working in the same business, even with rules, protocols and estate planning. Rivalries, envy and other conflicts may arise, not withstanding the enterprise ability to generate enough resources to sustain several families.

We have been working with various groups to create Family Trusts devoted to providing start up funds to those members who pass a professional and thorough review of their projects, their business plan, or to create New Venture divisions within the business dedicated to opportunities of interest to the group, under the supervision of an effective Board of Directors and Advisors.  (Read more from Salo Grabinsky and add comments.)