Family businesses benefit by leveraging knowledgeable senior family leaders with innovative members of the next generation –David Harland, Managing Director of FINH
Research shows that family business protégés — the incoming younger generation — report being most satisfied with mentors who were “still directly involved and active in their family companies rather than retired.” Those same protégés wanted a mentor who seemed invested and interested in their personal development.
Mentoring is a critical issue for sustaining a multi-generational family business. Guidance has to be given to younger, less experienced workers. More importantly, the next generation of leaders needs to learn what it means to run a business, juggle employee personalities, and make difficult decisions.
Fortunately, many family businesses already have the resources to solve this problem themselves. If a family business stays around long enough it is going to have seasoned members who become less active (on one hand), and it is going to have younger members who are more innovative and tech savvy (on the other).
For senior members in particular, this mentor-protégé model creates a dignified process of passing the torch from one generation to the next. Leveraged the right way, these two groups can partner up to improve the chances that a family business survives for years to come.
The Co-Mentoring Model
Pairing an old industry veteran with an upcoming practitioner pre-dates modern businesses. Feudal systems relied on a master and apprentice to keep trade secrets alive over many generations. Today’s co-mentoring model improves on the traditional model, thanks to advances in the understanding of human psychology.
Co-mentoring uses the gifts, talents, and understanding of both mentor and protégé. Instead of a rigid, hierarchical relationship between master and apprentice, each is co-mentor to the other. Seasoned family members stay active and can counsel the young about business practices and professionalism, as well as pitfalls to avoid. Younger family members receive crucial advice while bringing new ideas and innovative processes to their elders.
Family and Tradition
If you investigate successful family businesses, one recurring theme you’ll encounter is a sense of pride and understanding of family values. With the help of a co-mentoring process, older family members can impart that pride and understanding to the next generation.
When McKinsey & Company published The five attributes of enduring family businesses, it noted that multi-generational businesses “make sure to permeate their ethos of ownership with a strong sense of purpose.” In other words, they deliberately build structures and processes to transmit important family values.
Finding the Right Mentor and Protégé
The most successful businesses tend to handle relationships more effectively. This is no secret. In this circumstance, that means pairing the right mentor(s) with the right protégé(s) to achieve the maximum results.
Mentors don’t have to be family members per se. Neither do innovative protégés. But it tends to be the case that family members occupy both spots, especially for smaller or newer family businesses.
Barbara Weitman, who has authored more than half a dozen books on small business planning, cautions against founding parents serving as direct mentors to their children. In her J.K. Lasser’s Finance & Tax for Your Family Business, Weitman writes that sometimes “mentoring is better left to nonfamily members” because young workers may take family instruction as criticism or judgment, even when it isn’t intended that way.
This is sometimes true. Parents remain parents no matter the age of the children. But it’s also true that parents are biologically designed to help their children become more successful. What’s right for one family business isn’t necessarily right for another, and sometimes parents make the best mentors.
It’s impossible to tell each family business which individual mentor best pairs with which younger family member, but I know the most successful businesses will tend to figure it out for themselves.
Perhaps the most significant byproduct of a robust mentor-protégé system is better succession planning. We know that open communication is key to engaging the next generation, but it’s also key when it’s time to choose the next leader. A good mentor-protégé system encourages trust and honest dealings between generations, and Lord knows succession planning is easier when the kids get along better with Mom & Dad.
Between 65 and 75 per cent of family-owned businesses fail or are sold before the second generation gets a chance to take over, depending on the country. No matter where you look, the failure rate reaches 90 per cent before a third generation takes over. Good mentoring is one more levee against that tidal wave of failure.
For Advice on best practices for your family business please call FINH 07 3229 7333