Learning the ropes before taking the reins
A smooth transition requires the successor in a family business to know all areas
Grooming a successor in any business setting can be difficult, but it can be especially tricky in a family business. Explaining to your adult child or other heir that he or she lacks a specific skill set is considerably harder than telling a nonfamily member successor.
To help make the transition as seamless as possible, your successor needs to know your family business from the bottom up. To achieve this, your transition plan should include a multidisciplined approach.
Climbing the ladder
To help your next-in-line become an effective leader, he or she should climb the company ladder. This is especially important in family businesses, because company leaders should be able to step into just about any role when needed, such as when a key person leaves. As you know, your workers often have several duties, and many employees are cross-trained in other areas.
This may be especially true of you. You can probably recall times when you had to fill in at a moment’s notice to handle an urgent order or make a sales call. If your successor forgoes this training and starts employment at the management level, he or she probably will not be decisive in a pinch.
Above all, a multidisciplined approach shows your successor the responsibilities and pressures each employee handles, which can help him or her make practical decisions in any area of the company. For example, your next-in-line should accompany you and other top sales executives on client and prospect visits. This experience will teach him or her to quote product or service prices, develop sales skills, and follow procedures for opening and closing accounts. To teach the value of accuracy and timely service, have your successor observe co-workers working with clients.
A successor who lacks customer service skills can be deadly for a family business that is competing against larger companies. A family business owner can rely on the input of other employees, but he or she must understand customers’ needs and wants. By working with clients, your successor will learn how to handle multiple orders (or tasks) and develop empathy for clients. Firsthand experience in this area will also help him or her hire individuals suited to your company’s values.
It is critical for your next-in-line to understand everything affecting the bottom line, such as taxes, salaries and expenses. Without this knowledge, it would be difficult to plan strategically.
Your company’s greatest resources are your employees, so understanding the ins and outs of human resources is also important. Working in this department can teach your successor how to handle HR matters, including hiring and retention. Moreover, your successor will become equipped to handle delicate employee issues (such as performance difficulties) or personal problems (for example, drug addiction).
Finally, even though your family business may not focus on marketing, have your next-in-line train in this area. He or she should gain experience developing special offers (such as sales and customer incentive programs) and creating advertising materials. These tasks will help your successor develop project management skills and understand how marketing can help expand your family business.
Going outside the family business
Many family business owners require successors to gain outside experience before they hire them. But this rule could hamper your efforts to train your next-in-line in multiple company areas.
To help your successor gain outside business experience without slowing down your training efforts too much, have him or her intern at other companies during college. After graduation, your successor can begin the family business training. Or you can just briefly delay company employment until he or she spends two or three years working for another business.
Giving your successor all of the tools
You have worked hard to make your family business a success, and you want to do everything possible to ensure that your successor has a smooth transition. Having your adult child or other family member train in all areas of your company can help ease the succession process.