This document discusses the importance of selecting the right successor for a family business. It outlines some general qualities that family business leaders look for in potential successors, such as working outside the business first to develop independent thinking, being involved in the community, and demonstrating leadership skills. The process of selecting a successor is complicated and can be overwhelming. It is best to let successors naturally emerge through demonstrating their skills and qualities in both the work and social environments. Using trained professionals can help families work through any conflicts that arise and ensure the smooth transition of leadership to the next generation.
1. Family Business
Successor Identification & Qualifications
In the demanding and conflict-ridden world of family business, it is vital that the
values and beliefs, upon which the family is founded, are manifest within the
business philosophy, too. These values and beliefs are the mortar, which hold
the foundation together. This foundation is comprised of emotional, social and
financial needs that must be satisfied in order for the business to remain
competitive, and the family, harmonious. All family members must understand
the tradition and history of a family business, before clear, progressive future
growth can be explored, and realized. A primary challenge for a family-business
is deciding who will be the successor for the next generation. Who can balance
the traditional values of the business with the progressive and innovative ideas
that will allow the business to grow…and succeed?
Amidst the multitude of issues confronting family businesses, successor selection
is perhaps the most sensitive. Selecting an appropriately qualified successor
requires a clear, integrated decision-making process. Pressing business
responsibilities, and delicate family issues are two formidable roadblocks that
inhibit this decision-making process, yet it is entirely possible to convert this
conflicting energy into pro-active, sustained growth.
The responsibility of choosing a successor is a generalized process. Some of the
general qualities that leaders look for are as follows:
• Successor should work outside of the family business for 2-5 years. This
allows the individual to cultivate autonomous thinking, outside of the family
structure.
• Successor should be involved with peer groups within the business field, as
well as community-based organizations that address others needs. This
allows for peer support, and serves to re-enforce humanistic values, and
guiding philosophies, that are essential for effective leadership.
• Successor realizes, and actively cultivates, “inter-dependent” relationships
within the business. This allows for effective teamwork and re-enforces
“accountability” within the team dynamic.
• Successor demonstrates vital cognitive and emotional competency through
successful leadership in a “stand-alone” business. This allows for direct
experience in business management, and serves as a valuable forum to
monitor change and growth within the successor.
• Successor must commit to family business continuity via Family Mission
Statement. This allows the successor to be innovative with future growth
Page 1 of 3
2. policy, while maintaining the traditional values the business was founded
upon.
These are some generalized qualifications, yet the entire process is very
complicated, and can prove to be overwhelming for even the most competent
decision-maker.
While many top family executives actively cultivate leadership qualities within
their children, and many children actively pursue successor roles within the
family business, it is essential that each family member be allowed to determine
the extent of their involvement in the family business. Forcing an unwanted role
within a family business will compromise the integrity of the business, and the
family dynamic. Diplomacy is of the essence for the founder, in relation to the
successor role. Earl Deane Kanaly, founder of Houston-based Kanaly Trust
Company, and a proponent of Humanistic, family-oriented business practices,
suggests, “family business owners can provide an atmosphere in which
motivated people, self-actuating people, and self starters, can function. This
implies a process of natural selection, in an environment where natural leaders
will emerge, respective to their goals and beliefs. This also creates a supportive
environment for those family members who choose to pursue other goals,
outside the family business.
Within the work environment, each individual will display the emotional, mental,
intellectual and social strengths that make them unique. It is important to let the
autonomy of each individual flourish, while supporting their needs as a family
member, too. With this supportive, humanistic approach, the successor will
naturally evolve. This natural selection process will yield a proficient, well-
balanced successor, and will also cultivate acceptance, support and respect
within the family dynamic. And so the problems are converted into solutions,
because the solutions are embedded within the problems.
As successor candidates reveal themselves in the work environment, they also
re-enforce their management and leadership qualities in the social forum. To
successfully manage a business, an individual must be able to create, and
sustain, long-term relationships. Commitment and trust, forged over time, allow
for successful, enduring business relationships, infused with integrity and
tradition. These vital personal skills can be refined through participation in
professional organizations, civic groups and volunteer services. An individual that
is active in the community, and pro-active in problem solving and conflict-
resolution, with-in that role, will prove to be a resourceful, competent successor.
Individuals, who actively pursue other developmental mediums such as
continuing education, further job-training, extra-curricular team sports, etc., are
prime candidates for the challenging role of successor. Astute observation of a
potential successor, both in the work culture, and the social forum, will prove to
be more reliable than any standardized testing instrument.
Page 2 of 3
3. The successor identification process is a formidable challenge. By utilizing
outside resources to confront the difficult issues that create roadblocks, top
family executives can clarify goals and reduce overall stress levels. Family
businesses should avail themselves to the expertise of trained professionals, so
that financial, social and emotional needs can be explored, and any conflicts
resolved. Exploring these deeply engrained issues can be very threatening, yet
with the assured guidance of a competent consultant, planner or strategist, these
perceived liabilities could be converted into assets.
In essence, a successful family business is built upon a solid foundation of open-
communication, adherence to traditional values and beliefs, striving for common
goals and respect for differences. The family and the family business are
inextricably bound, and therefore, it is essential to focus on the quality of the
relationships within the family. In turn, that quality will resonate throughout the
family business. Whether it be estate planning, successor decisions, financial
strategies, wealth management or any other demanding business issue, the
need for healthy, inter-dependent family relations is essential. Conventional
wisdom dictates that it is wise to be aggressive with your competitors, not your
family members. Concerted, informed decisions are vital to success within the
ever-changing dynamic of the family, and the family business. After all, a unified,
spirited effort will yield the most valuable dividend in family relations, and a
concurrent bottom-line success for the family business.
Page 3 of 3