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Coaching in Family Businesses

In a family firm, you undoubtedly have to handle employees from within and from outside of your own family, all of whom are looking to you for growth, personal development, company culture, promotions and leadership. How can you balance authority and the handover of responsibility within the potential politics of running a family firm?


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Today's subject is going to be about coaching people in family firms. And that's going to include members of the family and the outside members of the team, who are there as former employees looking to develop their careers in a perfectly understandable way.


Starting with family members, and family organisations, in my experience tend to be fairly unique, whatever their background is whether the founder is still in the business where they've been around a long time, whether they're relatively new, whether they're huge concerns, or whether they're really quite small micro businesses. And each of them, therefore, has this different history, they have this different culture, which in many cases, the owners see them really only as methods of income rather than ongoing businesses, and alternative to employment, if you will.


Then again, others are very corporate in the way they approach the business, and they have a very good, long-term plan, usually around growth and longevity. So, because of this myriad of backgrounds and cultures, it's not easy to generalise about how working with members of a family and a family business will pan out. So, let's start with some specifics. Let's start with an organisation that is about 20 years old, and the founder is looking to retire and his next generation of children are in the business and looking to take over.


On a number of occasions, I've worked with organisations almost identical to what I've just described. And the challenge for the members involved in that family is for the founder for the owner, to actually genuinely commit to passing the authority the responsibility over and having confidence in the people who pass it over to the younger generation is the same thing. But in reverse, can they actually get those parents to actually give them the reins? Practically they feel a little bit of imposter syndrome as to whether or not they are really able to do this. But normally, I have to say I very rarely find situations where they're not sure if they want to do that. Because if that was the case, they probably already made the decision.


And also, from the second generation's point of view, they may have a completely different vision of the future of the business, they may want to take it off in entirely different directions, perhaps faster, perhaps new markets, who knows. Now, therefore, part of the work of the coach is to work with the owner, the person who's looking to pass it on, and with those who are going to look to pick it up and run with it thereafter.


Concentrating on the incumbent, the owner, and the founder probably and talking about how they view this situation is often key to a smooth and less challenging handover. The truth of this is, that the longer the running on this, the better in my experience. We are not connected on Monday, here's the key to the business, getting on with it is not very likely to work well. There are other stakeholders in this organisation, you need to be managed, obviously clients and customers, clearly key members of staff outside of the family, and potentially even other trading partners, key suppliers, product suppliers and so on. So, the handover needs to be like landing a jumbo jet, it needs to be done very carefully. And over a long period of planning.


That said, that does also mean that over that period of time, things can change, and the market conditions can change, the situation of businesses can change. And there could be a need to adjust the timetable accordingly. Obviously, other factors such as health and so on can unfold in that period, too. So, a degree of flexibility within that planning is inevitably important.


When dealing with the owner, the founder, or the older generation in this conversation, the sorts of things I'd like to get them to think about, first of all, is what are they going to do when they finish? And what is finished? They just finished meaning going part-time. Does it mean stopping altogether? Does it mean being non-Exec? What does it mean? And whilst it's not for the coach to tell them what the answers are questioned, you can help them work through all of the different aspects of that challenge to work out what they really do want, and indeed, that again can be over a period of time it could be they'll go part-time, then go non-exec, and then they will retire fully oversee a five-year period.


Another aspect is to make sure they get really, really good advice on the financials around all of this. Things around inheritance tax planning, corporation tax, there's a whole raft of aspects of financial planning that are needed to make sure that both the older generation and the younger generation and the business itself, are not prejudiced or put in the place that they've grown up baby. When talking to the older generation in this, it's also important to make sure they try to separate the two aspects of family and business - not easy to do. But try to see things clinically try to see things objectively, as far as the business is concerned, and allow the other family considerations to be secondary.


It's also really important if, within this mix, certain members of the family are being treated differently - there could be several children, only a minority of which are in the business and others are outside of the business. Where does that sit? How does that work out in terms of inheritance in terms of value in terms of legacy? What do you want that to be?


The other aspect is to think about how they hand over the business in such a way that the rest of the business, the other stakeholders, as I mentioned, already feel confident in what is happening. They don't feel that you're deserting a sinking ship, they don't feel that you're hiding the truth or in some way, or that the whole thing is going to go to hell in a handcart in many ways, it can be an opportunity to celebrate the success of the period, that the company has been running the business, it can often be a great chance to energise the marketing, and recommit to the way in which the business is looking to go forward.


Another aspect of passing over from the elder generation's perspective is what happens if something goes wrong. What happens if, along the way, the business gets into trouble, what happens if, along the way, the younger generation has changed their mind? What happens if you are seriously at loggerheads with the way in which they plan to take the business and you fundamentally disagree? If it represents your major source of wealth, and indeed, your retirement, then you're much more likely to want to intervene. If you have severed the links if you have passed the business over, then to some extent, it isn't really possible, you can give advice, but I don't have to take it. so, you can see from a family business point of view as the older generation passes to the younger generation, there are a number of important and conflicting issues.


Flipping it on his head and looking at the younger generation, what are the important things that they might want to be thinking about? Well, clearly timetable clearly the way that things are going to be managed externally. What's going to happen with the other senior management around the business, clearly what's happening financially, are they going to own the business? How's it going to work, from a tax point of view, and so on, and so on, and so on those things exactly the same way that is important to the older generation that is important to the younger generation. But they also need a plan, they need to know what they're going to do when the older generation has gone. How are they going to run this business?


If there's more than one of them, more than one sibling, say, or more than one relative; How are they going to carve up authority and responsibility? How are they going to re-energise and give confidence to the senior team and the rest of the workforce? Are they going to create a whole new business plan a whole new direction and sense of purpose? That could be really, really exciting or it could be really, really disturbing. From their point of view, are they happy with the timetable? Was it to extract it does it effectively prolong the agony? Do they want it to go less quickly because they are frightened of being thrown in at the deep end?

Another aspect if I was younger generation taking on the business from my parents or older relatives, I'd be very concerned about how the external part of the family would feel about not just my immediate family, but others. How's it going to represent to them? Am I worthy, is this just some form of ridiculous entitlement? Am I the right person to be doing the job?


Also, from the younger generation's point of view, they want to feel that they are truly in command, want to feel that they can make the decisions, that's not to say they don't have access to the old generation for advice and support, bouncing off ideas and so on. But they do want to feel that they are in charge, they're in charge, and there's nothing worse than having responsibility and authority. It's very demotivating. It's confusing. And it leads to an awful lot of ineffectiveness. That leads to a culture that leads to sense of purpose.


Usually, the family business is a fairly clear, well-established culture. This is how things get done around here. This is how the family behave, or at least his other boss behaves. This is what he or she likes, this is what they tolerate, this is what I won't tolerate. And these are their expectations. And clearly, with a new generation that's very likely to change. Whether it's deliberately consciously with a whole sense of new energy, or it's just, that I'm a different person to them. That happens by osmosis. And so, it's very important that the rest of the organisation is kept well aware of what is happening. And they're kept appraised of the transition and the objectives of the transition and how it will be different in the future. Not necessarily a salary, a criticism of the past, but a process of renewal. And if the younger generation doesn't think about these sorts of things, then they'll find there will be problems with people after the transition.


So, there you have it, coaching a family business where the older generation is passing to the new generation, it's more complicated than you think it might be, takes longer than you would like it to work best with lots and lots of planning. But above all else, it's a moment of great change which needs managing, and as a coach, all you can do is help people think through the things they need to be thinking about, rather than offering them solutions because there are as I said, right at the beginning of this conversation, every one of these situations is unique.


That was the latest edition of The Coaching Conversation. I hope you found it interesting. I hope you found it useful. You can find out more about our coaching programmes at theexecutivemindset.co.uk


If you want to reach out you can send us an email at theexecutivemindset@sagegreen.com you can book a free 15-minute coaching session at theexecutivemindset.co.uk which will give you a really good feel for how coaching can help you.

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