Developing Leaders in Family Business
Jim Ellis
Whether you are headquartered downtown or in one of Los Angeles’ many suburbs, if your company is a family business, it is much more difficult for one family member to emerge as a leader, as we have known that person since birth and we are well aware of all their imperfections. We therefore must work hard to develop our leaders, and we must begin at an early age.
Let us first define what leadership really is, whether in a family business or not. A good working definition of a leader is that he/she is one who takes us where we never knew we wanted to go. We are taken out of our comfort zone to another place, where we find different parameters to work with, and maybe even different comforts.
To build leaders in a family business, we must start with preparation of the next generation at an early age. Many leaders of today’s businesses remember times when they were small, sitting at Dad’s desk at the office doing homework; or sweeping out the plant at the end of the day and listening to the workers as they left; or listening to Mom and Dad have a conversation at the dinner table talking about a new piece of equipment at work. They don’t remember exactly what happened, but they remember the business being part of the family. There were early discussions about the opportunity that maybe they could take over the family business from Dad, if they wanted to do so.
The best way a parent can imprint the thoughts of a family business on the mind of a child is with a strong work ethic, sharing of accomplishment and sacrifice, and showing how much enjoyment it can provide. Additionally, by sharing in the education experience of the child, the parent shows the value of school throughout the growing years. If the child opts for college, this becomes the place where the first signs of true goals of life begin to manifest themselves.
College is where the newly-developing leader learns some significant management skills that will stay with him. Skills such as time management, curiosity to expand horizons, independent thought processes, writing, planning, and decision-making come out during these formative years. The influence of the parent is in the background as the student starts to feel the way, using the tools that were given him earlier.
Most family business experts will agree that the first three to five years out of college should be spent gathering credentials elsewhere in the business world. The young adult now gets a chance to learn and make mistakes in another environment, where mistakes are celebrated, not berated, and where learning is as an employee rather than as the anointed successor. The burgeoning leader learns leadership styles and techniques from others, such that when he brings them back to his family business they are useful, rather than hackneyed thoughts of parents.
Once the decision is made to bring this younger member of the family into the business, it must be made consciously and with purpose as to position, responsibilities, and compensation. The job must exist, and give this young adult the opportunity to succeed or fail as measured against objectives. To bring that person into the organization to a job where they cannot be measured, cannot learn, and cannot succeed is a mistake.
Learning about the company takes place from the bottom up, from the receiving room to the shipping dock, from the Accounts Payable desk to the Credit desk, and under the best of managers. Time should be allotted such that all the skills required for even the most menial tasks are understood before moving on to the next station. Regardless of where they start, the newest generation on board needs to know where they stand relative to someday running the organization. If they are not to be moved along with this goal in mind, they need to know, in order to make decisions about their own future.
When asked what makes up leadership, and how it is developed, we now can focus on a number of areas of achievement to see how our new generation fares:
1. Belief in oneself. To tap one’s unlimited potential, this is where to start. The young adult needs to know their individual strengths and weaknesses, and what it takes to support them, so that when they occupy the top rung of the ladder, they have the right structure under them.
2. Exercise the highest set of standards of ethics and morals. There must be character and a value system against which to make all decisions when ultimately running the organization. This system is first seen in how the individual is with the rest of the family members, throughout these early years.
3. Self discipline. There must be a control of attitude, both on and off the job. Balance in one’s life must be maintained, with family, health, and company being played against one another. Details must be examined, but micro managing must be avoided.
4. Ability to set goals and work towards them. Practice during the formative years enables one to be comfortable with setting them as a leader. These goals can be personal, recreational and financial, as well as vocational.
5. Belief in hard work and not a life of idleness. Role models play an important part here in formulating this strength. Fathers who suggest that not only should the individual be the first one to work in the morning, but that the hood on the car should be cold when the next person arrives, are those who determine lifetime habits for their offspring.
6. Belief in patience–without waiting. Patience is a virtue, and it is best not to hurry success. Rather it is important to build on the career, one brick at a time, always moving.
7. Curiosity–and being a good listener. Continuous learning through listening to others, and reading voraciously. A Harvard Business School professor once said that he suggested one read 10% of his/her time–2.4 hours per day!!!! Steady improving throughout the climb will make the top easier to handle.
8. Elimination of the word “Impossible” as it brings the wrong thought process. Tenacity, the ability to keep going until something stops you and then go again is tantamount to success. Leaders don’t stop when they hit a bump in the road, but rather run over or around it.
9. Smile at adversity. Failure should be looked at as a stepping stone to success. We have all heard of Truman’s mens’ store going bankrupt in Missouri, or R.H. Macy failing in the retail business seven times, or Paul Galvin buying Motorola out of bankruptcy twice. They smiled, took their lumps, and tried again.
10. Give oneself away, knowing that we are only as good as those who work for us. The magic buzzword of empowerment sneaks in here, as we learn to emphasize the contributions of those with whom we surround ourselves.
11. Act and don’t procrastinate. The concept of staying in motion, for motion’s sake is critical to success. We learn to keep moving, make decisions, and move on.
12. Know thyself. While the notion may be a little old, it still applies. Not wasting time trying to be someone else, but rather working within one’s strengths is typical of the leader. Not putting on airs to others, but being grounded and stable in the eyes of the business, will show the way for all.
13. Creativity. It is one of the cornerstones of the leader, who has the ability to go left when everyone else is going right. The ability to think in quantity, and refine it to quality, manifests itself in the leadership vein.
14. Passion. Wanting the ball in the waning seconds of a tie game is the final nail that defines the leader. This will come through in all aspects of the young life, from sports, to education, to music, and will finally tell the older generation that arising from youth comes the leader, ready to conquer the future.
Leaders come from years of preparation and training, as well as continuous scrutiny from the older generation. Defining the role is easy, but filling it is difficult. That is the task that lies before the current generation as they look to fade into the sunset to enjoy the fruits of their labor.
Jim Ellis is with the USC Business Program at the USC Marshall School of Business.
