Throughout my career, I have had the opportunity to form relationships with other second-generation and third-generation professionals in the distribution industry. I spent more than half of my professional life as the second-generation heir apparent in my family’s business. Although I did not stay with the company, I received quite an education in what it feels like to be the next in line. I also discovered several gaps in my education that would have left me unprepared for the responsibility. The more you can fill the gaps in your education and follow best practices, the better chance your company will have for a successful leadership transition.
Like many others who work in family businesses, I started working in the warehouse at an early age. I often joke that my father broke a few child labor laws to get me involved. I drove a forklift long before I could legally drive a car. I worked in the warehouse many summers and eventually at the front counter. Again, this is nothing new for kids in a family business. Most of my peers had similar experiences. Before joining the company full time after college, I did one of the best things I could for my development— I left.
My brother and I both left the company for a period of time after college. I went overseas for a year and he spent a couple of years working in a mountain town. Upon reflection, my departure helped shape my respect for the family business and made me a much better contributor when I returned. My more successful peers echo similar sentiments. Some of them left for 18 months. A couple of friends spent more than five years in other industries. Most family business consultants believe that some separation is a very healthy way to prepare for a transition.
During my time away, I learned how to make it on my own. I had to hustle and perform without the safety net of the family checkbook. I learned to work for someone who was not related to me and ultimately learned how to be a good employee. Time away also made me confident that I could survive and even thrive on my own. This is not a bad skill set for a future leader to have. Several of my peers who spent time in other industries brought back very specific skill sets to help their family businesses evolve. Time away, provided that it is well spent, can also improve how senior employees view the next generation. You’re no longer the silver spoon heir to the throne and you actually have something to bring to the table.
Upon returning to the fold, emerging leaders must continue their education. Too often, we see business owners struggling to provide the necessary tools for success. They let their children move along the same job progression as others in the company and fail to take them aside for the additional training vital for company owners. One of the most common gaps in education is in the area of financial management. I recently spoke on the phone with one of the next-generationers I coach. He told me that he and his father had been reviewing the monthly profit and loss statements at their company, which is fantastic. Understanding the basic financials will help him recognize patterns and ratios for various income and expense lines. These ratios will serve him well.
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Finance, particularly how cash flows, is not an easy subject to teach. Some people learned about it in school, but translating theory into the nuances of the family business can be difficult. I recommend second-generation professionals spend some time with a well-meaning chief financial officer or controller. Furthermore, it would behoove them to learn how banking relationships and credit lines work. When the next-generation leader eventually takes the reins, he/she is going to borrow some money. Finally, I suggest next-generation professionals take a “finance for non-financial managers” course. A quick Google search will yield several different courses from which to choose.
While financial education is fairly concrete, learning the nuances of managing people is a bit more fluid. I recently spent a lot of time researching leadership and management. A mentor of mine, Dr. Rick Johnson, was heavily invested in the congruence and divide between these two activities. One of the profound things he taught me was that leaders do not necessarily have to be great managers, but managers have to be solid leaders. I don’t want to go too far into the differences between leadership and management. The common thread between the two skills is relationship building.
As I reflect on the success of my family’s business, I have come to realize that my father invested in people. Although competent in all aspects of business, such as sales and operations, his true gift was building a solid team of managers for every aspect of the business. Teaching nextgeneration leaders how to encourage, inspire and relate to people is one of the best things an owner can do.
When developing a future leader, focus on communication skills and particularly on generational differences. Generational differences can make communicating expectations and forging relationships within the company very difficult. Members of every generation are guilty of dismissing the core values of those outside of their generation. Learning how to overcome generational challenges in the workplace is one of the most profound pieces of my education. It did not come naturally. I was a secondgeneration manager flailing in my role until a researcher named Claire Raines saved me. Learn more about her work at generationsatwork.com.
There are several other subjects next-generation owners should study. One of the most valuable is humility. Humility is often confused with “being less than” or other negative characteristics, but this could not be further from the truth. My favorite definition of humility is the ability to remain teachable.
Educational gaps are not filled in days, months or years. They are filled by remaining on an educational journey. If I can be of service to you in this endeavor, know that I am always here to help.