Ready, Willing And Able
2nd January 2010 Paul Andrews
This report captures the variation and complexity of different models of next generation involvement through in-depth case studies of eight family firms, chosen to cover the widest possible range of family business types. Ready, Willing and Able" means
Any family firm that wishes to continue its existence as a family enterprise relies on the next generation. Yet, the paths that connect next generation members with their family business are not easy to tread – they are fraught with choices and challenges, largely unexplored in the literature. In this context, “Ready, Willing and Able” means choices about what kind of business the family wants to build, the role of the family in a changing enterprise, and the next generation’s roles and careers in relation to the family and its business.
This report is the first to draw attention to these important and difficult questions.
The research captures the variation and complexity of different models of next generation involvement through in-depth case studies of eight family firms, chosen to cover the widest possible range of family business types.
Our findings are rich and diverse. They are discussed around 13 themes, under three headings. Key conclusions are as follows:
A: Ties between next generation members and the firm
1. Emotional ownership. Regardless of whether the next generation (NxG) hold shares or work in the business, measures need to be employed that retain an emotional connection and avoid the possibility of damaging splits developing.
2. Inclusion vs. exclusion. It is important that formal and informal governance systems are developed to help avoid the family segment into insider and outsider groups that set their interests in conflict.
3. Perceptions of nepotism. Actual nepotism can be avoided by transparency and clear standards, but to counter inhibiting perceptions of nepotism, confidence building strategies and enhanced communications are needed.
4. Entry and involvement. This needs to be managed within the framework of an accepted model that fits the family culture and business needs, incorporating education and other processes to support adjustment.
B: Family relationships
1. Succession and intergenerational relations. There is a need for clarity about the process and greater awareness among the seniors about the NxG’s perceptions and interests. Seniors need to be role models of good process.
2. Sibling and cousin relationships. To replace conflict with constructive challenge, there is need for higher shared goals, appreciation of the validity of different realities and communications that promote learning. Professional help may be needed to resolve deep-seated issues.
3. Conservative vs. liberal values. Different perspectives can help a firm keep in touch with the times, and underlying values do not have to be compromised by reflecting on and sharing differences.
4. The “difficult” person. Beware of scapegoating individuals for family wide problems, and work to repair specific relationships by avoiding blame and keeping communication lines open.
5. Family vs. business. If the business is destroying the family then bring in theprofessionals; give the NxG an active voice in debates about the fundamentals of the family firm.
6. Spouses. Explicit policies about their role are needed; if excluded from the governance processes then other channels for information and involvement need to be devised.
C: Decision-making styles and process
1. Autocratic vs. democratic style. Norms of authority for one period may be less appropriate for another; there is much to be gained and little to be lost from practices that empower, involve and delegate to the NxG.
2. Procedural vs. distributive justice. Be aware that fair process matters as much as fair outcomes; accountability and transparency go hand in hand; high involvement strategies prevent later problems.
3. NxG involvement in governance. This is vital, and can be effected in several ways. The goal is to build capability, self-determination and choice, consistent with a strong values-led family business culture.
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