Family Business

Successor Identification & Qualifications

In the demanding and conflict-ridden world of family business, it is vital that the values and beliefs, upon which the family is founded, are manifest within the business philosophy, too. These values and beliefs are the mortar, which hold the foundation together. This foundation is comprised of emotional, social and financial needs that must be satisfied in order for the business to remain competitive, and the family, harmonious. All family members must understand the tradition and history of a family business, before clear, progressive future growth can be explored, and realized. A primary challenge for a family-business is deciding who will be the successor for the next generation. Who can balance the traditional values of the business with the progressive and innovative ideas that will allow the business to grow…and succeed?

Amidst the multitude of issues confronting family businesses, successor selection is perhaps the most sensitive. Selecting an appropriately qualified successor requires a clear, integrated decision-making process. Pressing business responsibilities, and delicate family issues are two formidable roadblocks that inhibit this decision-making process, yet it is entirely possible to convert this conflicting energy into pro-active, sustained growth.

The responsibility of choosing a successor is a generalized process. Some of the general qualities that leaders look for are as follows:

• Successor should work outside of the family business for 2-5 years. This allows the individual to cultivate autonomous thinking, outside of the family structure.

• Successor should be involved with peer groups within the business field, as well as community-based organizations that address others needs. This allows for peer support, and serves to re-enforce humanistic values, and guiding philosophies, that are essential for effective leadership.

• Successor realizes, and actively cultivates, “inter-dependent” relationships within the business. This allows for effective teamwork and re-enforces “accountability” within the team dynamic.

• Successor demonstrates vital cognitive and emotional competency through successful leadership in a “stand-alone” business. This allows for direct experience in business management, and serves as a valuable forum to monitor change and growth within the successor.

• Successor must commit to family business continuity via Family Mission Statement. This allows the successor to be innovative with future growth

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policy, while maintaining the traditional values the business was founded upon.

These are some generalized qualifications, yet the entire process is very complicated, and can prove to be overwhelming for even the most competent decision-maker.

While many top family executives actively cultivate leadership qualities within their children, and many children actively pursue successor roles within the family business, it is essential that each family member be allowed to determine the extent of their involvement in the family business. Forcing an unwanted role within a family business will compromise the integrity of the business, and the family dynamic. Diplomacy is of the essence for the founder, in relation to the successor role. Earl Deane Kanaly, founder of Houston-based Kanaly Trust Company, and a proponent of Humanistic, family-oriented business practices, suggests, “family business owners can provide an atmosphere in which motivated people, self-actuating people, and self starters, can function. This implies a process of natural selection, in an environment where natural leaders will emerge, respective to their goals and beliefs. This also creates a supportive environment for those family members who choose to pursue other goals, outside the family business.

Within the work environment, each individual will display the emotional, mental, intellectual and social strengths that make them unique. It is important to let the autonomy of each individual flourish, while supporting their needs as a family member, too. With this supportive, humanistic approach, the successor will naturally evolve. This natural selection process will yield a proficient, well-balanced successor, and will also cultivate acceptance, support and respect within the family dynamic. And so the problems are converted into solutions, because the solutions are embedded within the problems.

As successor candidates reveal themselves in the work environment, they also re-enforce their management and leadership qualities in the social forum. To successfully manage a business, an individual must be able to create, and sustain, long-term relationships. Commitment and trust, forged over time, allow for successful, enduring business relationships, infused with integrity and tradition. These vital personal skills can be refined through participation in professional organizations, civic groups and volunteer services. An individual that is active in the community, and pro-active in problem solving and conflict-resolution, with-in that role, will prove to be a resourceful, competent successor. Individuals, who actively pursue other developmental mediums such as continuing education, further job-training, extra-curricular team sports, etc., are prime candidates for the challenging role of successor. Astute observation of a potential successor, both in the work culture, and the social forum, will prove to be more reliable than any standardized testing instrument.

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The successor identification process is a formidable challenge. By utilizing outside resources to confront the difficult issues that create roadblocks, top family executives can clarify goals and reduce overall stress levels. Family businesses should avail themselves to the expertise of trained professionals, so that financial, social and emotional needs can be explored, and any conflicts resolved. Exploring these deeply engrained issues can be very threatening, yet with the assured guidance of a competent consultant, planner or strategist, these perceived liabilities could be converted into assets. In essence, a successful family business is built upon a solid foundation of open-communication, adherence to traditional values and beliefs, striving for common goals and respect for differences. The family and the family business are inextricably bound, and therefore, it is essential to focus on the quality of the relationships within the family. In turn, that quality will resonate throughout the family business. Whether it be estate planning, successor decisions, financial strategies, wealth management or any other demanding business issue, the need for healthy, inter-dependent family relations is essential. Conventional wisdom dictates that it is wise to be aggressive with your competitors, not your family members. Concerted, informed decisions are vital to success within the ever-changing dynamic of the family, and the family business. After all, a unified, spirited effort will yield the most valuable dividend in family relations, and a concurrent bottom-line success for the family business.

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