Family business leaders often have the opportunity to inherit an established legacy, reputation, and resources. However, leading a family entity also comes with its own challenges.
Legacy and Expectation
Family leaders are burdened with the weight of family expectations to honor the family legacy. Aside from successfully growing the business for generations to come, family business leaders are also tasked to engage and develop the next generation, to be accountable to owners both in and out of the business, and plan for succession. All of which can naturally create disagreements and conflict among the family. The weight of these challenges can stifle business growth, create complex litigation, and even divide families for generations.
How can family business leaders equip themselves to achieve continuity for the next generation? Multi-generational families which become “families in business” invest in family leadership development skills to help steward the organization for years to come.
Successful family leaders hone skills and develop foundations in five distinct areas to lessen the burden and improve outcomes and opportunities for success.
1. Understanding Communication Preferences
To achieve desired goals and outcomes for the family business, leaders need to understand and “master” communication preferences. Effective communication skills and platforms contribute to building unity and alignment around the family’s desired mission and goals. Addressing conflicts in an open and prompt manner as well as establishing a foundation for trust and transparency are essential elements of family business leadership.
2. Leveraging the Family System
The intersection of family, ownership, and business are often where the root of tension lies in family business. Roles for family members both inside and outside of the business are numerous and constantly shifting. They are challenged to understand an issue or concern from all three perspectives – business professional, family member, and owner. Leaders who are aware of these competing dynamics and can successfully leverage them are more likely to maintain harmony and grow the business.
3. Creating Alignment
Successful family organizations that can create alignment with the family’s vision, values, and goals are better able to craft a path forward. As family or business decisions arise, family leaders and members can evaluate how these decisions will impact the family’s values and goals. An aligned vision will serve as foundational bedrock that family leaders can use to foster unity to effectively lead the family and business.
4. Developing an Effective Board
A board of directors establishes an objective operating structure to provide guidance and support for strategic growth and direction. This entity can provide resilience, stability, and clarity for the family and the business. Being equipped to create or improve a board of directors is critical for any family business leader.
5. Implementing Governance Structures
Well-designed governance structures provide a wide range of protections to a family. From setting expectations on various roles, employment policies, succession planning, or preparing the next generation, having good family governance is a best practice for successful families. Experts say having these policies established before the family or business needs them helps alleviate tension and conflict.
Invest in these areas of development for yourself and the business to ensure your family business survives the test of time. Applications are currently open for Leading Forward. Learn more about Leading Forward, West Michigan’s only family business leadership program.
Family Business Alliance, a non-profit membership organization, serves nearly 180 family-run organizations in West Michigan. We have established a platform for organizations to create connections, elevate leadership and navigate governance
