What must they do to progress in their careers? Is anything in this different from what professional managers must do?
Short answer: Yes.
It must be more difficult, the standards higher, the challenges more exacting because your child is an owner and so must be an example-setter. Also that is how he will gain respect in the system. Remember that ultimately the professionals will report to him and you want them to do that with pride, confidence and knowing that he knows the business better than they do. That way they will look up to him and not see him as being dependent on them. After all this is how the founder earned his own prestige and respect, by clearly being superior, inspirational and seen as someone who adds value to anyone who is fortunate enough to be associated with him. I have seen too many family businesses which would not last one week if key professionals walked away. And they know it and demand their pound of flesh which is willy-nilly given. I have even known where professionals have literally held owners to ransom as it were and then walked out and set up in competition.
This will never happen if you develop your family members such that each becomes an expert in his or her own right. Career progression must also be on the same terms as it is for other professionals with only one difference: the family member has the opportunity to sit on the Family Board one day. Opportunity, not certainty. Within the organization promotions must be need and merit based. Remember that a promotion is not a reward. It is an opportunity to do a job that is more complex and difficult and a great learning opportunity. So people who are promoted must be monitored and coached and supported.
How is succession determined?
The one who is best for the organization must succeed.
The only acceptable criterion for succession is to see who would be best for the organization. Not who is the oldest or any other criterion. There are two essential mindsets that must be in place to ensure smooth succession.
1. The ‘Family’ depends on the business and needs the business.
2. Inside the business, the only factor for preference is contribution.
This is often the most difficult of decisions because it is an issue of power. In the desire to hold onto power people don’t share information, resent being questioned on the performance of their businesses and generally act as if they were running personal fiefdoms. Like the GE airplane interview method for selecting successors, if you create a system where the superior will actually lose his job if he does not develop successors you will build a culture that enforces empowerment and subordinate development. Organizations where you need to persuade or force superiors to train subordinates or to delegate some powers are organizations with a ticking time clock waiting to be taken over.
Leaders who become indispensable are usually very poor at developing people. They take pride in the fact that the place can’t run without them. Such people must be put on a monitoring plan to shape up or ship out. It is better to fire someone who will not develop others early in the game rather than be faced with a leadership vacuum when you actually need to hand over to successors. Show me a company where the CEO’s job is threatened if he does not develop someone to take his place and I will show you a company which is well suited to outlasting its founders. This culture must be propagated strongly and seriously all down the line. Delegation and people development suffers because it is treated as a ‘nice to do’ rather than as a ‘critical to personal success’ issue. Where there is a reward for developing subordinates and a price to pay for those who don’t you will find that people development is taken very seriously.
To encourage collaboration, create peer rating and reward performance. Openly sharing information, offering to help each other to succeed and shared responsibility for decision making are the keys both to business success as well to keep the family together and these must be institutionalized in the system and not left to anyone’s individual inclinations. I have described how to do this later in my book where I have suggested several things that business families can do.