Why family-owned businesses should invest in leadership development
Your business goes as your leadership goes. Leadership can either buoy a business or sink it. Finding (and keeping) good leaders is paramount to success. That’s why large corporations and many privately-owned businesses make significant investments in the development of future leadership. Family-owned businesses, however, lag behind in this regard. That’s because many family businesses have a pre-ordained leader waiting in the wings, usually another family member. Effective leaders, however, aren’t chosen—they’re made. Leadership development programs are essential to the future success of every business, regardless of whether the leader has already been chosen. Family businesses must remember that ownership and leadership are two very different things and lay out a plan that will allow the company to thrive after the current leadership has retired.
Start with Legacy Planning
Before you can groom future leadership for your family business, you must first decide what you want your legacy to be. If you want continuity in the business after the current leadership is out of the picture, investing in the development of high-potential individuals—be they family members or non-family employees—is essential. In many family-owned businesses, the culture is tied closely to the leadership. Preserving your family business culture requires downloading that culture to the next generation over a period of time. An information download on its own is not enough, but a well-designed leadership development program can achieve this goal. And it’s not just culture—poor leadership can disrupt your business in a number of ways. Poor leadership can lead to high employee turnover, lack of employee engagement and dissatisfied customers. Furthermore, the Wall Street Journal and others have noted that developing leaders internally is far more cost-effective than brining in someone new from outside of your organization.
Read more: 5 Signs You Need a Family Business Consultant.
Creating a Leadership Development Program
Leadership development programs are not one-size-fits-all—especially for family businesses. It’s a good idea to bring in a consultant who can tailor a specific program based on your company and family needs. It is important to note as well that leadership development should cover all leadership, not just a future CEO. Consider which individuals are suited to grow with the organization as junior leaders, mid-management and the executive suite.
Once the right people have been selected for the program, start defining the competencies your company values most in leaders. Each organization will have unique styles and systems that will determine the most important leadership competencies. The following are some common leadership competencies to consider:
- Results Orientation
- Strategic Orientation
- Collaboration and Influence
- Team Leadership
- Organizational Capabilities
- Change Leadership
- Market Understanding
- Inclusiveness
The Six Elements of a High-Potential Leadership Development Program
Once you have chosen the right people to develop and identified the most important core competencies for leaders in your organization, it’s time to kick off your program. High-potential employees do not become leaders overnight, so developing and implementing your program should be done years in advance of leadership changes so that new leaders can be fully ready to take the reins. Each program will look different, but the following six elements should be included:
Self-Assessment/360 Assessment
Consistent assessments—quarterly if possible—will help you “take the temperature” of developing leaders on a consistent basis and make necessary changes in areas of need. Self-assessments give employees the chance to look at themselves in the mirror and be honest with their progress. 360-degree assessments, where employees’ managers and peers weigh in on progress, will help paint a full picture of progress and clarify areas of need going forward.
Job Rotations
Leaders—especially those in the C-Suite—must be familiar with every single operation of the company. Having future leaders spend time in every department will help them develop a sense of how the organization works from the ground up.
Stretch Assignments
Leaders must be able to make good decisions and develop winning strategies. Putting a developing leader in charge of a key company project or initiative can help serve as a proving ground, and a chance to get a feel for how they would handle a similar project as a leader.
Mentoring
Every developing leader needs a mentor. Mentorship is incredibly important in family businesses, where other emotional factors may come into play. Mentors can help developing leaders learn the knowledge, skills and most importantly, culture considerations it takes to lead the business into the future.
Individual Coaching
Think of individual coaching like a personal trainer. Whether you bring in an outside consultant to coach up your future leadership or assign the job to a current leader, coaching helps future leaders develop the necessary skills to eventually lead the company.
Executive Team Coaching
In some cases, you may be grooming an entirely new executive team who will eventually take over for the team that is in place. In family businesses, this could be a group pf relative, or a combination of family members and non-family employees. This team will need to develop its own rapport and leadership style. These can be created through team coaching sessions by a management consulting professional.
The future of every company is almost entirely dependent on the future of the company’s leadership. Companies that take the time and necessary steps to develop their future leaders will create a system that ensures the company’s viability and continuity going forward.
