Month: January 2017

Younger generations in family business

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Grant Goodvin, Guest writer

Families who run a business, a foundation or are in a transition stage hesitate sometimes to talk about the future. Non-family businesses struggle with the same dynamic. However, families will have multi-generational questions that impact each generation differently. For younger generations whose families own businesses, there are decisions to be made about pursuing careers.

The first question for this younger generation is: If the family business did not exist, how would you choose a career trajectory? This is a critical question because it forces each individual to think beyond the boundaries of a family business. One of the worst scenarios I’ve encountered is a family member imprisoned in a family business because he has severe doubts that he could succeed in the outside business world. Also the younger generation family member may feel she deserves a position in the family business simply by being a member of the family.

In exploring this question, we are not minimizing or dismissing the family business. We want to explore how the younger generation member strengthens his capabilities for two reasons: 1) In answering the question of capabilities and preparation, the younger generation may discover a passion outside the family business or a passion inside the family business, thereby introducing the context of what makes the family member marketable in the general business world and/or how the family member gains skills that strengthen the family business. 2) Problems arise for the younger generation if the family business is viewed as the sole source of making a living because the family member lacks the confidence to work outside the family business.

How does the younger generation decide whether his plan for the future aligns with the future of the family business? An optimized plan for younger generations is for the senior generations to outline specific skill sets and educational objectives for positions within the family business.

The second reason can be and often is the source of severe family conflicts because if the older generation fails to plan or doesn’t disclose succession plans, the younger member will fight intensely, demanding that the family business meets his/her needs. This approach serves neither the family member nor the business. The family business must be designed to strengthen the family members and the business in a variety of ways.

The other issue for families in business is how the senior generation is handling transition and succession. Many times the plan is either non-existent or hidden because of a reluctance to bring the discussion into full view of the entire family. This reluctance may result from the fact that not all family members are involved in the family business. It may be due to the senior generation’s struggle with how to treat family members fairly. Many times the senior generation does not want to start a discussion that can result in conflict in the family. The flaw in that thinking is that there is a high likelihood of conflict if the senior generation does not take the lead in proactively mentoring the younger generations through the transition process.

However, the issue is: How does the younger generation decide whether his plan for the future aligns with the future of the family business? An optimized plan for younger generations is for the senior generations to outline specific skill sets and educational objectives for positions within the family business. This could be the discussion that allows subsequent conversations about what the senior generation is thinking about succession.

The younger generation should always remember to honor parents, founders or senior generations. Younger generations do not always appreciate how deeply ingrained the family business is in the senior generation, especially if the senior generation is the founding generation. Christian teaching on honoring parents is not a frivolous statement; it is foundational in wholesome family testimony to the world. The Christian distinctive provides avenues to honor family and maintain a business that perpetuates values that are everlasting.

One of the ways the younger generation honors the senior generation is to remove demands about planning for the future, replacing them with an open discussion of what is in the best interest of each family member and the family business. As children become adults, honoring is not defined as absolute obedience to the senior generation in all matters, because if adult children marry they must also honor their spouses. Also, I tell families in business it is useless to prevent spouses from being involved in the family business discussion table. The spouses are involved by virtue of the definition of marriage, which is one flesh. Boundaries may be set on what is discussed based on age and successful operation of the business but as the younger generation matures, the discussions become more comprehensive.

To summarize, if you are a college student considering entering the family business, here are some suggestions:

  • Work for a summer somewhere other than at your family business.  Discover what it is like to work for someone outside your family.
  • Tell the senior generation your ideas about a career and ask to be mentored in your planning.  Ask if there are specific educational objectives which will strengthen the family business.
  • Talk to the Harding Waldron Center for Entrepreneurship and Family Business about resources and advisors that can assist you and your family in this critical discussion.

One of the greatest things about working in a family business is working with family. One of the most challenging things about working in a family business is working with family.

Grant Goodvin is an attorney and friend of the Waldron Center in Wichita, Kansas, where he operates Family Legacy Consultant Group.

Senior generations in family businesses

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Grant Goodvin,  Guest writer

Who will lead your family? The dynamics of a family in business and/or with a foundation or wealth transition take this question to a deeper level. On a family level, the senior generation occupies the natural position of leaders and mentors. However, add a business, foundation or wealth transition element to the equation and the relationships are subject to forces that seem insurmountable. While I’m focusing on families in business, the same advice may be employed for families with foundations and those considering wealth transition.

Are you as a senior family member hesitant to talk about the future of family and business for fear of conflict? You are not alone. You can benefit from knowing that other families have encountered the same fear and mentored younger generations with the result of a stronger family and business.

On a family level, the senior generation occupies a natural position of leaders and mentors. However, add a business, foundation, or wealth transition element to the equation and the relationships are subject to forces that seem insurmountable.

The culture today speaks to individual fulfillment. Such statements as “You can be anything you want to be,” or “Your individual happiness is the most important element in your life” ignore an obvious question that must be answered: What is your purpose in life? Failing to define purpose results in a discussion of individual success or happiness in a vacuum, producing little value.

Have you, as the senior generation, documented your purpose in life? Have you had family discussions about what really matters in life? A Christian approach deals with what values and purposes truly matter. Scriptures talk about glory. Glory is a term that defines what matters. Non-Christians talk about glory without understanding its true meaning. Everyone makes decisions every day about what matters, what purpose or value is applied in a variety of situations.

A family business that has a murky view of the purpose of wealth, business and family will struggle in planning for the future. My first advice to senior generations is to go through the challenging process of documenting what matters to them. This process can serve as a basis for a family mission statement.  Non-family businesses deal with this issue also. In my experience as an attorney helping establish new corporations, there was a line on every state corporation filing asking for the corporation’s purpose. I have never seen, in all of the filings I participated in or viewed, the purpose statement of “making as much money as possible.” Making money is part of what a corporation does, but that production flows from the corporation’s meeting some need — by producing products or providing services that customers view as valuable and needed. That is the corporate purpose.

Families in business weave into the business values the family desires to perpetuate. The values need to last forever to really matter. A belief in the God of Scripture inherently places values in the realm of lasting beyond death, especially death of the senior generation. It is not the value that is important; it is the source of the value.

Bringing a third party in to help with these family discussions is usually invaluable. I always challenge families in business that are reluctant to hire an adviser for family meetings to try it once. They will immediately see the dynamics of the meeting change. This mediation is often very positive if the family has had difficulty moving beyond the emotional baggage of family into concrete, substantive discussions about issues that can strengthen the family and business.

The senior generation can strengthen the family and family business by outlining for younger generations skill sets and educational objectives for specific positions in the business. This process prevents younger generations from thinking that, having made no preparations, they automatically have a job in the family business. Another benefit is that the process allows the senior generation to start meaningful conversations with the younger generations about the future. The goal is to direct the conversation toward specific educational needs and preparation. If the younger generation is not willing or able to meet the requirements of work in the family business, the situation should be addressed sooner rather than later. The worst scenario is for the younger generations to think they deserve positions in the family business by simply being family. The ramifications of such a scenario negatively impact all members of the family and the success of the business.

In summary, here are some important steps for you as the senior generation to take:

  • What is your purpose? What is the mission of the family? What is the purpose of wealth? What is the purpose of the family business?
  • Establish educational objectives for positions in the family business.
  • Begin thinking about transition, succession of the business and how it will be developed and communicated. A closed plan that is not communicated allowing time for you to mentor the younger generation has a high likelihood of causing irreparable fracturing of your family.

Grant Goodvin is a friend of the Waldron Center who founded Family Legacy Consultant Group in Wichita, KS.