Parenting next-generation leaders in family businesses
One of the things that can never be underestimated is the effect of good parenting on a family business’s future. Leadership development starts much earlier than in other businesses as a result of the overlap between the business and the family system.
The nature-nurture debate also embraces this issue with a school of researchers attributing variation in leadership style to genetic factors, while others to environmental influences such as the individual’s exposure to different role models and early opportunities for leadership development. A combination of the two approaches is often sustained.
Attachment theorists attribute individual differences in leadership to the early, close emotional bond between parents (or the primary caregivers) and children. They argue that next-generation leaders will, in the future, apply previously learnt patterns of interaction within the family to leadership. Consistent parent responsiveness in childhood is associated with secure adults who have relatively high self-esteem and who approach their leadership role positively and express certainty of their ability to perform well.
On the other hand, inconsistent parent responsiveness in childhood is associated with the anxious-ambivalent adults who are preoccupied with attachment and have a low self-esteem. They may express reservations about their abilities to perform well in leadership roles. Consistent parent unavailability and non-responsiveness in childhood is associated with the avoidant adult who harbours negative expectations about their ability to perform well in the leadership role. Attachment styles may be transmitted across multiple generations within families.
Parenting affects the future of family businesses as it teaches the capacity to communicate, to think outside one’s own interest, to make decisions, to seek consensus and to want fairness and justice for others.
Family business is the ultimate leadership challenge because, while the current leaders build or run the business, they also bring up their children, who are in turn, intimately involved in the future success of the business. A fundamental recommendation for current leaders in family businesses is not to neglect parenting. One may get caught up in working very hard to fulfil their own and their parents’ expectations as well as build a legacy for their children, compromising time at home and time as parents.
Work habits, attitudes towards the business, values and relationships all take root in the childhood of the next generation. Parents convey values and attitudes particularly by example. Healthy attitudes towards the business spring from the enthusiasm and joy parents display in accomplishment, hard work, responsibility and sacrifice.
Talking about the business and exposing young children to the business does not mean imposing the business onto the next generation – even if the children will never work in the business they will still become owners. What current leaders want is that their children become proud and interested owners who understand the value of their heritage. Exposing young children to the business will give them the real freedom to choose by making sure they have enough information on the business to make an informed decision on whether to embrace it or pursue a different goal.
A source of competitive advantage and a factor for success in efficiency, innovation and quality is the tacit or implicit knowledge that is transferred across generations from an early age: traditions, values and social networks. As the members of the next generation are introduced to the business from an early age, even if only volunteering in the summer holidays, they learn in practice what the business is about, as well as the context within which it operates.
During the period when the next generation is formally part of the family business tacit knowledge of a holistic nature – like strategy – is learned. Tacit knowledge is also about managerial skills, social skills and negotiation skills. The expected commitment, values and perceptions of the current generation are to be shared with the next generation which should be given challenging, real life problems to solve.
Risks to the transfer of knowledge across generations are related to dynamics in family relationships, a lack of valuation of each other’s opinions and competence. Emotional factors also come into play. The difficulty to relate with the next generation as adults and no longer as children jeopardises the whole process.
Family meetings give family members a reason to be together, to support one another and to share common interests. Apart from being very valuable in enhancing family relationships and communication, they are an excellent opportunity to articulate the meaning and mission of the family, to educate younger members and to plan for the future. The role of family members who do not work in the family business, such as in-laws, in shaping next generation leaders cannot be underrated.
Family meetings focus on the interests of the family. Such meetings should encompass as many family members as possible including in-laws and the younger generation.
Ms Fenech is a freelance occupational psychologist currently reading for a PhD at the University of London.