Family-owned or controlled U.S. companies employ 60 percent of workers, and create 78 percent of new jobs. Yet research indicates only about 30 percent of all family-owned businesses make it to the second generation. An even smaller 12 percent will survive into the third generation. So what can family businesses do to have a better chance of success?
One key to success is the early identification and nurture of future leaders, whether will be the family’s grandkids or promising non-family employees. A family-owned company’s CEO noted future leaders were once urged to gain experience outside the company, then carry that know-how back to the business. “Now there’s more encouragement to consider working for the company [from the start],” the CEO said.
These are among additional keys to successfully managing family businesses.
- Maintain a clear vision. Successfully managing the family business calls for creating a strong sense of shared purpose for both family and non-family members. This helps maintain a consistent focus as each generation replaces the previous one.
- Structure leadership roles. Family companies require leadership roles to be efficiently designed, structured and allocated. Making sure these roles are well delineated helps ensure the decisiveness and unity so crucial to success.
- Focus on ability, not bloodlines. Many family companies thrive because their leaders recognize non-family members often possess talents family members lack. This improves performance and trims resentment.
- Pursue family enjoyment outside work hours. Frequently endeavor to enjoy each other in family events, as opposed to a business environment.
These leadership principles can help your family business from generation to generation. What’s your family company’s most important leadership trait?