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How to raise your succession game for next-gens in family business

Family business leader turned coach Philip Mackeown is calling on families to emerge from the Covid-19 crisis with an “additional font of courage within” and for their successors who must carry the businesses—and the family—forward.

Family business leader turned coach Philip Mackeown is calling on families to emerge from the Covid-19 crisis with an "additional font of courage within" and for their successors who must carry the businesses—and the family—forward.

Mackeown is a prolific family business leadership mentor and family talent adviser and authors The Successor’s Voice blog, based in Ireland. He brings to bear his 25-years’ experience in the commercial retail and wholesale operations of the Musgrave Group in Ireland and Spain, his two five-year terms as a non-executive family director on the board of the family business, plus his 12-years as a member, then head, of the group’s family council where he helped draw up the family constitution.

CampdenFB asked Mackeown to take time out from writing his book on successor talent development within business owning families to give his verdict on a variety of tough hypotheticals: What really makes a family leader and who should succeed in sibling rivalry. Noting International Women’s Day 2021 on 8 March, how can women get ahead in family enterprises.

Will the engagement that worked with millennials work with Generation-Z next-gens as they enter adulthood. How can families keep the best and the brightest on staff. How can successors encourage founders and principals to relinquish control.

What are the personal qualities in a next-generation family member which principals should nurture that make for an outstanding successor?

The number one task for any successor (and those nurturing them) is to develop credibility both with themselves and others. In the main, the foundations for this come from qualities inherited or nurtured over time.

The first is honesty, with themselves, others and in their steady commitment to the truth. Courage is an underrated quality worthy of nurture. To meet the life-long process of succession—with its inherent uncertainty and flux—requires courage: “Leap and the net will appear”.

To be supportive of other successors—those within and new to the family—is a quality usually nurtured by example. Such generosity, rare in some successors, is much valued and remarked upon especially by family members new to ownership.

Penultimately that of resourcefulness, the ability to ask and secure support for the long race. Finally, a willingness and propensity to listen, actively and intelligently, to all ‘constituents’ within the family.

How should a family principal handle two or more next-gens who want to become the successor?

The simple answer is to choose and be damned, but this seldom ends well. A longer-term approach in a similar vein is to set the successors against each other. Likewise, this seldom ends well (just ask Lear), can engender unforeseen consequences (such as the most capable leaves) and will usually be Pyrrhic in result. The third option is to hire-in a non-family leader from outside and so take the question off the table (for now).

None of these alone involves 'facilitated choice' which is desirable when time—and generosity—allow. When successors are prepared in their decision to join, fully understand the concept of value (or not) to the family enterprise and are suitably developed and supported in leadership roles, three things happen.

First, they are aware of their skills, value and potential and how these are likely to mesh (or not) with the requirements of ownership (to include the top job) over time. Second, they are more likely to be open to alternative career paths as succession unfolds. Finally, they will at the very least develop the self-awareness, support and skills to deal with disappointment if and when it arrives. The intentional cultivation and development of family talent is a long-term gain for all regardless of role.

How can women be encouraged in leadership roles in family enterprises?

As a successor, your career possibility is your own. First, take the time to inform yourself of the possibilities open to you within your family business. This will involve a self-assessment of your value to the enterprise and if your contribution is likely to be valued, regardless of gender.

Second, identify current and potential leadership roles within management, governance and value-creation. Finally, take the time to set up your support and feedback outside as well as within the enterprise.

Are you seeing changes in next-gen attitudes to joining the family enterprise due to the Covid-19 pandemic?

The possible longer-term impact of the pandemic is interesting. Research indicates an increased willingness on the part of family businesses to involve the next generation of successors in decision making. Wider research on the impact of the pandemic, highlights abundant digital potential and matching innovation from a new cohort of entrepreneurs. Possibilities for successors to join the family enterprise not only as managers, but as entrepreneurs will accelerate within and beyond the pandemic.

The most common challenge facing families with regard to succession planning, at 37% of respondents, was the discomfort in discussing the sensitive subject matter itself, according to the latest Campden Wealth Global Family Office Report. How can successors diplomatically suggest to ageing principals that it is the right time to transfer power?

Principles like to be consulted, but hate to be asked. Transfer of power is as the aging process: slowly and inexorably over time. Over time successors (and accessors) would do well to encourage informal discussion to purposefully lay suitable groundwork and (if possible) refrain from rushing to ‘that question’.

If contact between the generations is infrequent, time poor on each occasion and bereft of any consequential discussion then best to remedy before raising ‘that’ issue. Effective diplomacy—and the transfer of power—rests on functional relationships. 

Are you seeing the need for different engagements between families and their millennial and younger Generation-Z successors?

The principle that individuals believe what they discover for themselves, is particularly true for millennial and Generation-Z successors. Successors need to ‘get’ the purpose (why?) of the family company and to understand and design their ‘value’ to it over time: “Do I want to work for the family company or do I want it to work for me?”

'Incubation' to family business values alone is no longer sufficient. Successors benefit from hands-on involvement (education, visits, discussion) to discover themselves what the family business holds. Commitment follows involvement; time to giving, community activity, work experience, graduate programs, staged preparation, governance roles or (eventually) a career. Incubate, involve, commit: get that partly right and successors will thank you for it. 

What mistakes do families keep making in good governance?

Good governance:  the right conversations at the right time with the right people in the (now virtual) room. How to keep it ‘good’?

Three mistakes contrive to derail families’ best efforts. First, a failure to freshly engage the next generation of successors once protocols and policies are agreed. Energy dissipates, fresh ideas on engagement are not followed with sustained action. Second, an unwillingness or inability to review and refresh existing governance arrangements even as families, business and ownership change. The life of an effective constitution is finite.

Finally, the conflation of consensus—governance for family unity—and development—governance for the development of family leadership. These are two separate priorities, the once largely static, the other dynamic, each requiring its unique mix of oversight, business overlap, resource and expertise to be effective in the long-run.

What actions should families take to attract and retain top non-family talent?

To remain independent as a family-in-business you have to give up some of that independence. To attract talent families first should decide the nature of their desired family involvement: as managers, owners, specialists or entrepreneurs? As we move beyond Covid, families should present a narrative on their business growth aspirations, why their business is different and better and how they plan to ‘emerge stronger’ from this pandemic. Top non-family talent must see a future worth changing jobs for.

To retain talent, incentives that work, a clearly articulated and lived set of values and the demonstrated possibility to progress to the highest levels in the company based on merit.

Read more insights on family business and succession planning by Philip Mackeown in The Successor's Voice blog.

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