HOW TO ENGAGE THE NEXT GENERATION IN A FAMILY BUSINESS
Handing over or inheriting control of a family business requires planning and preparation. According to Collegiate Entrepreneurs Organization, many “next generation family members” are not interested in taking over or working in the family business.
by Art McNeil LSI Publisher
Contributing factors:
- Rejection of their parent’s hectic and risk filled lifestyle
- Potential of conflict with siblings
- Controlling parent not willing to let go
- Operating systems exist only in the owner’s head
Steps for a successful hand off
1. Distinguish between shareholder and employee rights
2. Set standards for family roles and business rules:
Declare what will and will not be discussed, where, when, and with whom
3. Establish a conflict resolution protocol—appoint a mediator
4. Consider ownership contingencies such as divorce, death
5. Establish a buy-out formula
6. Engage an external resource to make an unbiased assessment of each siblings interest in the business and capacity to contribute as an employee
7. Clarify cultural-values, create an ethics platform, master brand, and corporate vision
8. Document operational processes
9. Put somebody in charge—select a CEO
10 Create a board of directors (or advisory group) made up of all shareholders and a few trusted advisors.
Allocate family ownership and assign employment responsibilities:
Conclusion
fairness can only be achieved through the allocation of stock and the distribution of returns
equality in terms of employment compensation and authority should not be attempted—pay what each job is worth on the open market