Family Leadership Development
Over many years in practice, I’ve watched countless entrepreneurs work to make the transition from operating a family business to living with (and from) financial assets. It takes a different set of skills to create and run a successful business and to maintain and grow a complex web of financial assets, entities, and family members. Making the decisions to buy a new business, build a new warehouse, or start a new product line are different from picking money managers, evaluating portfolio performance, and deciding who will be trustee of a trust for your kids. It also requires a different conceptual framework to begin thinking of the parallels between “a business” and your family to create an added layer of risk management without losing the growth mindset that led to your success.
There are some common elements between business and the business of family; one of them is leadership development. Most entrepreneurs I know can talk passionately and fluently about how they build a pipeline of talent within their business. Most think that investing to build a successful team in business is money well spent.
Why, then, is the same not true in families? Why do few families invest in assessing the talents and skills of family members, teach and train them in foundational skills, and work to get them integrated into the “business of family?” Granted, it’s a little harder with family members to espouse an “up or out” philosophy or to show them the door when they don’t perform as well as expected, but differences like this can be built into the development process.
To be clear, I’m not advocating for everyone in the family to be trained deeply in financial topics – not at all. Every family is enhanced when some of its members are teachers, artists, philanthropists, or so many other things. But if those family members are to participate effectively as family leaders, it’s important that they can articulate objectives and strategies using at least some basic terminology around money. They need to know to choose advisors, evaluate their objectivity and effectiveness, and they need to be able to participate in decision-making – especially around family businesses or shared family assets.
There are many ways to build the right skills. The family can hire professionals to teach and train, take family members on purposeful trips (mission trips or learning journeys), or participate in charitable activities together. Think about it – are there activities you can share with other family members that provide great experiences, create business or financial knowledge, and give family members experience making decisions together? Being thoughtful, deliberate, and consistent about developing the next generation of family leaders takes time, but it’s well worth the investment.