Recently, I had a firsthand opportunity to use a succession planning tool. My daughter expressed interest in becoming a part of Legacy by Design.
As a family-business owner, rather than in my other role as a consultant, this experience gave me a real sense of the decisions that weigh on business owners during succession planning. Though we intend to be rational and use sound reasoning, our actions don’t always reflect that model. I advocate good communication and clear objectives to plan success and enjoy life.
So when my daughter, Sara, informed me of her career interest, our family began a personal journey.
I used Conversation Starters (which can be found online at www.FarmJournalLegacyProject.com/tools) to initiate the conversation and involve both of my children. I told them we were going to have a family meeting to discuss the business and their interest in the operation. At this time, my son has no interest. My daughter is ready, willing and (she thinks) able.
The questions below come directly from the Conversation Starters tool. Here’s how our discussion progressed:
1. Are you interested in participating in the family
operation? If so, in what capacity?
Sara: I do want to participate in the business. I have two more years until college graduation, so I don’t have a clear picture of how. I’ll continue to learn and gain new insights. Right now, I can offer commitment, interest and dedication.
Comment: I’m not sure we can ask for or expect more from a college student than Sara offers. She’s put her hand up and said, "Count on me." A parent’s responsibility is to direct that willingness and help her develop the capabilities to assume a role in the operation. We will establish a family employment policy, which will include provisions for outside work experience, education and the application process.
2. Are you prepared to assume that role/responsibility? If not, what will it take to prepare for that time?
Sara: I’m in my third year of college, majoring in agricultural business. I know that I want to get some experience in the industry before working in the family business. That outside experience will allow me to develop some skills and learn about life beyond the family enterprise. More importantly, it’ll encourage me to develop my unique perspective. This will add new dimensions to the business and expand our capacity to effect positive change in others.
Comment: Though Sara is not clear about her future role and responsibilities, she does understand and appreciate the value of working in a complementary role with an outside business. There is no substitute for real-life experience, and children should work in the corporate world to better understand life outside the family operation.
3. Should family members not active in the operation attain/retain an ownership interest in the operation? If not, how should family assets be distributed?
Sara: This is a very difficult topic to think about, much less say exactly what I think, and it makes me feel vulnerable. It stirs up conflict and sibling rivalry. My brother and I have very different career goals. I have expressed an interest in the business. My brother has other career goals unrelated to the family operation. I strongly believe that he should not attain any ownership interest. If I make a significant investment in the business and he doesn’t, that would not be fair and it would open the door to the possibility of conflict.
Comment: Questions of fair versus equal, active versus inactive, are never far from the surface. Though most family operations are rife with sibling rivalry, the senior generation must acknowledge these sensitive issues and work for clear lines of responsibility and accountability.
4. If you want to be included in the operation, are you willing to personally invest in an ownership interest?