Over one-third of the workforce is now made up of the Millennial generation, which is defined by individuals who were born roughly between the years 1980 and 1994. As Baby Boomers (those born roughly between 1944 and 1964) who own businesses prepare to retire, their children stand to inherit the wealth and the operations of these family-run companies. These two massive generations have beliefs and views that are distinctly different from one another, creating both an age and a philosophical gap between worldviews and work perspectives. These differences often lead to challenges with passing down the family business. But the good news is, a smooth and successful process is possible and can be found when both generations approach the gap with a few specific tools in their transitional tool belts.
If You Are Passing Down Your Business
Provide accountability
Set concrete goals for the person inheriting your business. Make them achievable while still incorporating an element of risk. When benchmarks are paired with definable consequences, motivation is driven, both by the desire to reach success and the desire to avoid failure. Additionally, giving a young leader real responsibility with real stakes is a display of trust that makes them feel appreciated and respected, sparking even more motivation to succeed in the new position.
Keep the lines of communication open
Striking a balance between stepping away enough to clearly transfer responsibility and respect to your younger family member while still being available for guidance can be a challenge. Pass on as much of your knowledge as you can before you make your exit, even details you might assume they already know. Tribal knowledge can greatly hinder these kinds of transitions, and you can avoid that by both documenting everything you can and being available to fill in any remaining gaps.
Balance anxiety and enthusiasm
Foster the enthusiasm early on by building up both the next generation leader and the employees of the business with excitement over the transition. Both the young leader and the rest of the company around bound to feel pressure and anxiety over such a significant change. The best first step for setting the tone across the business is to lead by example. Your attitude toward your exit and your young family member’s entrance will impact the attitude and expectation of everyone around you.
If You are Inheriting the Reins
Seek unbiased feedback
Until this transition, your mentor has likely been the person who is about to pass this business down to you. They have spent time grooming you and teaching you everything they know. Now is an important time to find a fresh pair of unbiased eyes to mentor you through this transition. Someone outside of the family who can provide honest and actionable unbiased feedback is key to striking a balance between familial ties and a new perspective.
Incite strategic change
You undoubtedly have new ideas for how to run this business you have inherited. The questions you need to ask yourself before charging forward with these ideas are:
How can I implement change while maintaining the elements of this business that people love?
How can I make sure everyone is being heard?
What are my priorities for change?
How will I handle pushback to my ideas?
Finding the right mix of old and new will be one of the most important, yet challenging, obstacles you will have to overcome when taking the reins. Paying respect to what’s working while identifying and changing what isn’t will be a key to setting the stage for your success.
Set expectations for your own management style
As discussed above, change is bound to happen during this transition. Change can make people uncomfortable, which is why it is important to make sure that change doesn’t come as a surprise. Work with your predecessor to set expectations and roll them out together. Maybe you prefer emails for quick touch bases while your retiring family member loved when people stopped by their office in person. Establish a tone for your management style early on so people know what to expect, how to best communicate with you, and how that compares and contrasts to the way things were being done in the past.
Every family is unique, and so is the business your family has worked hard to build and grow. Dr. Delligatti can help you create an actionable plan for passing your business to the next generation and putting a smooth and successful transition in place. Contact her for more information.