“What’s wrong with kids these days?” Tim said in exasperation. “He’s always on the computer.” Referring to his son, he went on. “Reads constantly, gets good grades, but doesn’t work hard. He’s always looking for the easy way.”

We sat there, each reflecting on his comments. I knew the statements didn’t need an answer, and Tim didn’t expect one. This father of three was expressing frustration with his oldest son’s behavior. The young man was just completing his freshman year of college, and wanted to return to the dealership as a parts-runner during summer break.

The son’s ultimate career goal was management in the family business – though, at twenty-one, he knew it would be a long time. Tim had challenged him to get a college degree, and then go to work for a manufacturer or a large farming operation before returning to the family dealership. The experience, Tim suggested, would enhance his son’s leadership ability, give him credibility with other employees and build-up his confidence.

Although the son was following Tim’s suggestions, it was apparent this father was bothered by the differences between his own work ethic and his son’s commitment. I met his son on several occasions in the past and, through interviews and observations, I know he is committed to preparing for a career in the family business.

“Reads constantly, gets good grades”…………  Works hard, perseveres and is tenacious 

“Always on the computer”……………………......   Welcomes technological advances

“Always looking for the easy way”………………   Effectively utilizes the latest tools

Like many of us, this entrepreneurial parent didn’t recognize, nor appreciate, the leadership traits his son is displaying. As I was researching material to share with him I came across, “The Development of Successors From Followers to Leaders in Small Family Firms” by John James Cater III and Robert T. Justis, Family Business Review, June 2009. As I read it, I was amazed at how many seemingly obvious learning points I found. Below, I’ve taken the liberty of sharing 10 important points in selecting a successor for your operation.  

1. Successors are not entrepreneurs starting their own businesses; successors are managers who assume a going-concern with its own set of complex challenges. Entrepreneurs are risk takers who thrive on the edge and revel in challenge. Next generation leaders must be adept at creating systematic processes, financial control and team building. 

a)    Family firms have different goals than publicly owned companies. Family operations are oriented to serve a broad set of objectives that serve familial demands and personal issues.

b)    Family operations have a greater potential for long-term conflict. People are emotional beings; it is the atmosphere of the family business that causes some to respond inappropriately to disagreement and conflict. 

c)    Leadership succession is far more important for family firms than nonfamily firms because the risk may be absolute survival. Due to the personal nature of the endeavor and the breadth of family that may be actively involved, failure may be devastating – especially when you consider that most family operations comprise an overwhelming majority of the family’s net worth.

3. Integrity and commitment are the most important traits of a leader. Nothing trumps honesty, hard-work and perseverance.

4. Upon entering the family business, the leadership successor must become a student of the organization – learning about its value proposition, processes and people. He/she must also become a student of leadership, motivation, management and business.

5. In preparation for a leadership position, a successor may benefit from a mentor, coach, or advisor. Don’t ever overlook the value of a good mentor. The opportunity to learn from the experience of another person is priceless. It increases effectiveness while stabilizing the learning curve.

6. The senior generation must delegate responsibility and allow the successor to make decisions and suffer mistakes. Learning requires the consequence of real risk/reward tradeoffs.  

7. The generational shadow of the founder may be the primary reason for conflict in a second-generation family business. The controlling generation must become mentors to the next generation, allowing them to grow in a nonjudgmental environment.

8. Imagine the succession process as a relay race – success depends on four factors:

a)    Sequence – preparing the successor with the leadership skills and business experiences to lead the operation. Preparing the operation and the current owner for a seamless transition.  

b)    Timing – incrementally passing the torch of leadership from one generation to the next over a pre-determined period of time.

c)    Baton passing – managing the business and familial details of the process for a smooth and seamless transition. 

d)    Communication – the actual information exchange between the senior generation and successor[s]. In many cases owners choose to communicate with active and inactive family as well.  

9. The foundation of succession is trust between the current and the successor generations. If the operation is the goose that lays the golden eggs for the family all hands must be committed to preserving and growing the operation.

10. Succession planning is predicated on the assumption each active family member acts in the best interests of the firm. Succession planning is built on the assumptions that,

a) The integrity of the operation is paramount.

b) The process will enhance the family’s financial security.

c) The next generation is committed to developing the leadership abilities of the next generation.

Leadership is not an exact science based on behavioral formulas; rather it’s an art of activity, communication, interaction, commitment and experience. Leadership is the key to growth and development. Leaders create vision, motivate action and guide efforts.