Stephen Campbell, Managing Director and Head of the North America Family Office Group at Citi Private Bank, recently authored a post about successfully navigating the generational transfer of leadership in family businesses. Here are six best practices to follow:
- Actively manage the development of future family leaders. Family principals often ignore or postpone creating an effective strategy for leadership succession or put little effort and resources behind the process. Start a dialogue between key family members early on and prioritize developing a process for leadership development, role definition and succession.
- Have a clearly defined process for leadership development and succession. Set forth eligibility expectations, training and development resources, mentoring, and compensation policies. Make it clear to all what is expected of current and future family leaders.
- Identify the resources available to the next generation of family members. Invest in activities designed to identify and develop future leaders. Provide formal and informal education, along with mentoring. Use both technical education elements, such as business and finance, and personal development elements, such as self-awareness, communication and problem solving.
- Avoid autocratic family leadership and embrace a more collaborative approach. Use a collaborative approach to communication, engagement of family members and decision making. Promote involvement, particularly from younger generations, and try reaching across generations to invite input.
- Understand motivations. Not everyone desires to lead or even be involved in the family business. Avoid making assumptions and encourage open communication between the next generation, seniors and extended family about their desires to be involved in family endeavors.
- Acknowledge and correct mistakes. Understand that not all efforts will be successful and act quickly to remedy bad situations. Consider implementing formal role and performance guidelines, periodic candid feedback, remediation plans, and making swift changes in roles and responsibilities when necessary.
Read Mr. Campbell’s full article here.