Last week, Bradley’s Family Business Advocates team co-hosted Transitions in the Family Business: A Conversation with Family Business Owners and Leaders with Warren Averett. The event consisted of three panel discussions: Transitioning to the Next Generation, Transitioning to Non-Family Executive Management, and Transitioning to a New Owner. This three-part series of posts will summarize and explore each of these panels.
The first panel focused on how to plan and execute the intra-familial transition of leadership and control of the family business. One panelist analogized the family business to the famous goose from Aesop’s fable The Goose with the Golden Eggs. You know the story: One morning, a countryman goes to the nest of his goose and finds a glittering egg made of pure gold. This pattern of behavior repeats itself daily. Then, as the fable says, “As he grew rich he grew greedy; and thinking to get at once all the gold the Goose could give, he killed it and opened it only to find nothing.” The wisdom of this fable was not lost on these panelists; teaching younger generations the desire and skills to care for the goose may prevent them from killing it. How can the older generation instill in the younger generation these values?
First, the family can draft and use a mission statement to organize multiple generations around a common goal. This statement gives purpose and focus to the operation of the family business and the family’s management of it. Involving younger generations in the drafting of a mission statement can create buy-in at an early age, which may ward off a “kill-the-goose” mentality.
In addition to mission statements, families can also draft and implement specific policies to help align the generations. For example, some families may have an employment policy that requires family members to work outside of the family business for a certain amount of time or at a certain level of success prior to working for the family business. Family members then must prove themselves outside the family business, which may ease an intra-family management transition at a later date.
Other families may have a policy requiring a certain number of all-family meetings per year. A policy addressing how equity in the family business will be divided at each generational level could also be important. An independent family consultant may be hired to assist in drafting these policies. Having pre-determined policies in place can help prevent conflict down the road.