In many families, not all the children make a choice to join the family business. It is important that we understand some of the reasons why they don’t.
There are several which I can quickly list including but not limited to the following:
- they weren’t encouraged to join,
- they were not invited in (for many reasons that warrants an article on its own),
- they don’t like the family business,
- they may not get along with their siblings and recognize even greater conflict ahead by joining them in the business,
- they may not have any applicable skill set to bring to the table, and my favorite one
- they have found their own passion outside of the family business.
I Want To Do My Own Thing
Let’s focus on those that have a chosen profession or career that does not involve the family business. Looking at transition and succession planning from their view is quite different from how Mom and Dad and siblings in the business see things. Their notion could be that they are excluded from the business and its decisions, which may have a direct impact on legacy and wealth preservation. It will make them wonder what else they are excluded from.They may feel like “they are being punished” for choosing a career outside the business. They may also think that their siblings are tied closer to the parents than they are, resulting in an unbalanced relationship, which is usually evident at social gatherings. Are they being punished (financially or otherwise)? That is determined by how you approach succession.
If the succession plans are shrouded in secrecy then they will absolutely feel like outsiders. If the parents goal is to have children outside the business feel excluded and willing choose this method of succession, then they must be prepared for a fractured relationship (at best) with their other children. If family harmony is a desired outcome then the pathway towards succession is quite different.
How Do We Maintain Family Harmony?
The answer is quite simple really. Engage an advisor to help you who wholeheartedly believes in transparency. Whoever this trusted advisor is, should believe in maintaining a solid family unit above any one member’s personal agenda.I can appreciate that this notion may be uncomfortable for many people. I am not necessarily promoted full financial disclosure and such in-depth analysis that everyone feels too vulnerable, but what I am proposing, is that outside children be included in the dialogue with regards to succession planning. They should not show up for a family function and find out that their brother or sister is now vice president and is purchasing the shares from Mom and Dad.
When the decision is made to discuss succession planning (and long-term retirement planning) the most successful families have always included every member of the family
(yes even in-laws in most cases) in the process.
In addition to sharing the plans, outside children can be a valuable asset in the process through their lifelong understanding of their family, their interactions as well as their true intentions. For many, this is a bit scary but with the right guidance parents will provide the entire family with the greatest opportunity to have a successful business transfer and most importantly, a great family unit full of love and support for one another.