Recently I read about a young man in Michigan who had informed his father that he was not interested in taking over the family business. The son had gone to work with a major accounting firm after earning his MBA and had turned down previous offers to join the family firm. This time the 29-year-old son finally replied: ÒDad, Trans-Matic Manufacturing is your dream. ItÕs not mine.Ó
Such news can be a crushing blow to the business owner who is nearing retirement. Some parents take it as rejection by the child of all that they have built and value in their lives. For many, it means either selling the business or entrusting it to strangers.
We all know that children have minds of their own. Like us, they often want to Òdo their own thingÓ with their lives. In a free country, where children are offered many options, we have to expect that many will find their talents and interests lie outside the family business.
Lifestyle preferences frequently determine their career choices as well. For example, one company that I am acquainted with had two capable successors. But both brothers left the company because the wife of one was dissatisfied living in the small, isolated town where the company was located, and the wife of the other, who was close to her sister-in-law, wanted to move with her. The $100-million, third-generation company had to be sold.
Many frustrated parents come to me and ask how they can motivate their grownup sons and daughters to enter the family firm. This always sounds to me a little like the plea, ÒMy wife has left meÑwhat do I do?Ó When a son or daughter is 29, it is usually too late to reverse negative attitudes built up over a lifetime.
Parents who are secretive about their work, who always appear overworked and overstressed at home, or who have forever bad-mouthed the business, canÕt expect their grownup children to suddenly exhibit enthusiasm for joining the family firm. Too often, parents show only the frustrations and tensions of their work. They donÕt express the real joys and satisfactions that come from building a business. What makes Dad and Mom get up in the morning with a smile, in anticipation of going to work? ItÕs not just to eat better; money is only one of the rewards.
What inspires a person to become a priest, an airline pilot, a coach, or a business leader? It is usually a role model, an adult who has values that can be admired and who finds fulfillment in his or her work. My 10-year-old grandson sometimes accompanies me to my seminars. He doesnÕt really know much about what people do at meetings, but he thinks that meetings must be a lot of fun because Grandpa always looks happy at them. He is sure to carry that memory with him as an adult.
Yes, taking a young child to the office with you and letting him see the fun part can foster affection for the business. But a lot of parents carry this too far and give older kids meaningless jobs. Unless given real work and required to perform up to real standards, children will treat a job in the family business as Òentitlement,Ó a form of welfare that is bound to have dire effects on their future attitudes.
Many in the older generation have abdicated their responsibility for preparing leaders. They have been unwilling to establish tough rules and set high standards for their children. IÕve even seen parents who bribe their grownup children, paying hundred-thousand-dollar sal aries to 25-year-olds who are one step up from entry-level jobs. It wonÕt work. If these children do stay in the business, it will only be to continue receiving their Òrightful inheritance.Ó
A business can be preserved only if there are competent, motivated successors, inactive shareholders who are cooperative, a team of effective key managers, and a board with outsiders on it. The structure must give those in charge the power to make decisions, subject only to board review. To put that structure in place properly requires looking ahead, developing a plan, and implementing it, often over as many as 10 to 20 years, making adjustments as needed in response to developments in the bus iness and the family.
Founders are notorious for starting too late in developing such a plan and in communicating it to their successors. When they finally begin to think about letting go, these founders are often confronted with unwelcome surprisesÑas when a son or daughter who is invited to take over the business says, ÒThanks, but no thanks.Ó
The point is that parent and offspring should have been talking about these matters for a long time. The choice of new leaders for the company should not be left unresolved until it develops into crisis.
One final point. Some parents tell me that if they encourage their sons and daughters to get experience outside the business these young people may never come back. Well, if the business is of no interest to them, why should they? Many third- and fourth-generation companies present a picture of warring tribes and rampant entitlements. Ownership may be divided among scores of shareholders, and families may be fighting for jobs and perks. To attract and keep talent in this situation, the family has to bring some order out of the chaos, to get rid of the troublemakers and give the reins to those willing to work for the welfare of all.
Talented, able young people are idealistic. They want to be part of a well-managed company that has a reputation for making quality products, that is open with its employees, that serves its customers well and treats its suppliers fairly.
Today, many adults in their Thirties are tired of crawling up corporate ladders, of working long hours and sacrificing time with their families without receiving any loyalty in return. They are only too glad to come home to help run their parentsÕ business. The well-managed family company can offer them freedom with fulfillment, deserved status among their peers, opportunities for contributions to their community. Almost incidentally, it also promises financial rewards that, in many businesses, exceed corporate norms.The way to make sure they share your dream is to start early and offer them a model they can be proud of.
LŽon Danco is the founder of the Center for Family Business in Cleveland and the author of four books on family business.