I recently facilitated a meeting of five business owners, all of whom lead a business with other family members involved. They were gathered to share best (and worst) practices based on their own experiences. The discussion focused on bringing the next generation into the business, and preparing them to take the helm. Here are the most significant truths that emerged:
- The next-generation family member should start out “mopping the floors”. They need to earn the respect of other employees.
- Establish the discipline from Day One of differentiating between “talking business” as employer-employee, and “talking personal” as mother-son.
- A young family member in their teens entering the business, even on a part time basis, creates special challenges. Their lack of real-world work experience makes it harder for them to understand the necessary separation between family and business relationships.
- They need exposure, over time, to all areas of the business. Ascertain whether the organization can compensate for their weaknesses and allow them to play to their strengths if and when they assume the leadership position. Be willing to accept the fact that they may not be cut out to eventually run the business.
- You must manage your expectations, which may be distorted because you are personally close to the family member. Allow them to surprise or disappoint you, and make necessary adjustments to your expectations and plans as they do.
- Differentiate between compensation and business ownership. Compensate based on contribution to business results. Allocate ownership based on any family considerations you deem to be fair.
Running a business is challenging. Leading a family business adds another layer of complexity which only family business owners can fully appreciate.
It may look easy, but it’s not.
“I shouldn’t have to manage managers, and this really honks me off!”
That comment, from a business owner, was an expression of utter frustration upon discovering a major oversight by the manager in question – one that was quite damaging to business performance the past year.
When your business reaches the stage where you manage managers, how does your job as CEO change? In one sense, it does not change. You are still responsible for setting the company vision, for recruiting and onboarding the best managers possible, for establishing corporate strategies, for protecting corporate assets, and for integrating operational activities across department lines where necessary. Although your key accountabilities have not changed, how you achieve those accountabilities has changed.
Do you remember Peter Falk’s character, homicide detective Lt. Colombo? In almost every episode of that TV series he would interview the suspect in a non-threatening manner, start to leave, then turn and ask that incisive question that began, “Oh, just one more thing…”
As CEO, you often play the role of the suspect in the Colombo dance. And an employee, or customer, or vendor, or creditor plays the role of Colombo. They are wrapping up an important meeting with you when they say those fateful words, “Oh, just one more thing…”
What follows is generally another piece of information or a request, rather than the type of interrogation question that Colombo would spring on his unsuspecting target. But it is just as important as the Colombo question, and your senses should be on full alert.
Even though the deal has all but been done, they are about to toss a grenade that they hope you will ignore in your haste to tie a bow around a decision finally reached. Don’t be too hasty.
“Just one more thing” is often way more than an incidental comment. “Just one more thing” is often the real crux of the matter for your Colombo character.
Being the chief decision maker in your company can wear you down. Make sure that your weariness on any given day, regarding any important decision, doesn’t lead to your dropping your guard at the critical “just one more thing” moment.