While succession planning has been the focus and obsession of the family business field for almost three decades, discussion around the topic has been targeted too narrowly on preparing the next CEO of the company. This approach is too simplistic for families who strive for success across generations.
Instead, a family business that wants to survive from one generation to the next needs to see the family as one of its greatest assets and instill a multigenerational culture.
Advisors who advocate for inclusivity versus exclusivity, support personal growth and development, help family members live their core values and encourage leadership at all levels contribute to the longevity of a healthy family culture and a successful family business.
Fred Sasser, CEO and chairman of Sasser Family Holdings, is a third-generation family business leader. After graduating from Purdue University, he began to learn, prove himself and move up the ranks in his family’s business. The company was founded in 1928 and has grown from a locally operated freight car and rail services company into a global, multifaceted corporation.
We interviewed Sasser recently, and he had this to say about instilling a multigenerational culture within his family:
“We make the effort to be as inclusive as possible,” he says. “We have two full-family meetings per year. They are kid-friendly and designed to be interesting to all generations. We encourage participation in family business events and seminars. We have an associate director position on our company board of directors so a family member can gain exposure to governance and business issues. This position also has the responsibility to communicate to the rest of the family by issuing a family report. It covers some of the topics discussed at the board meetings in a language that is more readable to younger and non-business family members.”
We also asked him what he viewed as the most important duties for the leader of a family enterprise.
“Keeping on track with the long-term goals of the family,” he says. “Communicating and reinforcing the family values to the business. Developing and culturing an effective oversight mechanism in the board of directors to back up the long-term goals and values. Being inclusive and transparent to family members, especially those that don’t work in the business.”
Sasser also spoke of the biggest challenges facing family enterprise leaders.
“The biggest challenge is developing and utilizing other family members to share the load, whether next generation or current generations,” he says. “I also think keeping the family and business on track with our own goals and values, while the outside world creates distractions and negative examples.”
Some families develop and cultivate a strong group of next-generation leaders. How? By helping each family member find his or her role in the family and in the world—which may or may not be in the family business. Ideally, family members will fill a role they are passionate about—one that leans on their talents and allows them to express themselves. Next generation family members who recognize their strengths and weaknesses, who have the courage to pursue their dreams, and who understand that actions have consequences, can be effective contributors and leaders, not only to the family business, but to the world.
At the same time, it is important to create opportunities for next-generation leaders so they can align their passions, goals and interests with the work of the family business. This can be accomplished by exposing them to the business—by building in them a sense of pride and responsibility for the business, its people, its products and the impact it has on the community. Advisors should consider several strategies that families can use to foster inclusion and the development of leadership skills:
• Develop internship programs for all ages.
• Implement junior boards to introduce the next generation to the role of a director.
• Send a group of cousins to a leadership adventure summer camp.
• Register family members in college leadership programs and skill-building training classes.
• Define leadership competencies and customized family training programs.
• Create personal development plans and an accountability loop.
In an effort to get family members interested in the business and to develop next-generation leadership skills, a third generation manufacturing company created a menu of activities for family members to choose from. The menu was based on a person’s age and stage of life. For example, at 10 years old and up, family members can tour the manufacturing plant and become acquainted with the products. At 15 years old, family members can participate in new employee orientation and communication meetings and are encouraged to write about their experience for the company newsletter—which was created as a summer project by a young family member with an interest in communications. In college, family members can “shadow” a director or executive for a day and learn about different roles in the business.
Sasser, meanwhile, says his family offers educational scholarships to family members.
“We stress the importance [of developing the next generation’s leaders] to the entire family at each of our meetings and in communications,” he says. “We encourage participation at family business events and seminars.”
Leadership skills are the cornerstone of personal growth and family business performance. Financial advisors can support a multigenerational culture by reinforcing the importance of inclusion, personal growth and family leadership development.
If a family business wants to be successful, it must view the family as an asset and invest in the family just like it invests in equipment, marketing and sales. The individual and collective reward is worth it.
