Questions Can Ease Generational Transitions
By Craig E. Aronoff, Ph.D.
At each generational transition, business-owning families face many questions. The older generation is appropriately concerned about the younger generations= intentions, especially when several siblings or cousins will be involved. Certain issues must be discussed and resolved, and incumbent leaders provide a great service by assuring that upcoming leaders have thought through matters critical to long-term success.
We urge the older generation to challenge the next generation with a series of questions. Some questions will be specific to the particular family business. Others confront virtually all enterprises. Ask that the next generation consider the questions together and provide written answers on which they will all agree as a group.
Here are some questions presented by a third generation CEO to the fourth generation’s five cousins employed in the business and who will also have significant ownership positions. Their collective answers have eased the generational transition. They may also prove useful in your family business.
How do you plan to work together as owners?
What composition do you imagine the board of directors? Will you use outsiders? Do you all anticipate being board members? How will you decide who serves on the board?
Were I to phase out of day-to-day management over the next three years, a.)What would you expect the structure of the executive management to be at that time? b.)How would you expect to get from here to there? c.)Do you see gaps in the executive team and how would you goabout filling them?
What do you expect my role to be over the next three years (how can I help you with the transition) and what role, if any, do you expect me to play after that time?
What are the key issues currently confronting us? How would you address them?
What are your thoughts on the strategic direction of the company for the next 5-10 years? What are your attitudes toward growth? Acquisitions? Divestitures? Starting new ventures?
What major changes, if any, would you seek to make in the company over the next five years?
What are your long-term plans? Do you hope to keep the business in the family for the next generation?
What policies have you developed related to: compensation; performance evaluation (of the president, board members, other executives); future family involvement; your long-term plans for life-long financial security; your thoughts on the disposition of your stock; corporate debt; appropriate levels of return on investment; etc.
Would you make any changes in our corporate structure, by-laws, shareholders’ agreement or other governing documents?
Answering such questions as a group takes time and may reveal conflicting views. The investment of effort and the risk of uncovering differences are a small price to pay for developing a common voice and vision. If the group is unable to provide solid answers, it is not ready for the reins. When it articulates its shared and well-considered program for the future, the older generation should feel not only confidence, but pride.
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