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How and when are you best prepared to run your family’s business?
Eric Babolat is a fifth generation member of the Babolat family, which owns and runs the oldest tennis company in the world. Some 140 years ago, Babolat invented racquet strings about the same time the game of tennis itself was born.
Eric joined the company in his early twenties after his studies as a product manager and was committed to learn the tennis business from the bottom up. He thought he had plenty of time to prepare to take on a leadership role.
But when Eric was 28, his father Pierre, CEO of the family business, was killed in the Swissair Flight 111 crash in Nova Scotia as he was returning from the US Open tennis tournament.
“We all were totally caught by surprise,” Eric says. “My sister and I had to instantly take over the responsibility for the business and on top of it all, we had to manage ownership and governance issues.”
Apart from having to cope with grief and a changed life, Eric and his sister had to help steer the business through a crucial period. Babolat had just launched its first line of tennis racquets in Europe and required strategic leadership to grow in the US market.
Could Eric and his sister have been prepared for this situation? “Probably not,” he says. “We wished at the time that we had been trained in what it really means to ‘stand in’ and take over as a business leader, owner, and family successor.”
Although Eric’s case is exceptional, it highlights two important issues. One is the need for family businesses to build and train a critical mass of potential successors to secure a sustainable, competitive position into the next generation. The second is identifying the questions that the next-generation members should ask themselves before joining the family firm.
As such, we suggest these four questions that can help in preparing for a career in the family business:
1) Do I want to join my family business?
Belonging to the next generation of a family in business is often seen as a great privilege for a young adult; it represents a chance for personal development and to become financially secure. But it is also a huge responsibility, and some next-generation members prefer not to make such a radical decision early in their lives. Not everybody intuitively knows like Eric and his sister that they want to own and lead the family firm.
Parents might not openly discuss this question to avoid putting pressure on them, but children can intuitively sense their parents’ expectations. Potential next-generation successors are often compared to their predecessors to see if they can step into their shoes. Next-generation members must not only develop their executive leadership skills but also have a fine sense of “family acumen” to manage their relationships inside the family system.
2) What role should I play?
There are many ways in which the next-generation members can add value to the family business. Ambitious family members might aim to become the CEO or board chairman of the family firm, but only a few are truly ready for such a task. Others prefer to pursue professional careers and interests outside the family firm.
In between these two extremes are many possible paths, such as the family strategy committee, family to business advisory board, family assembly, next-generation committee, head of human resources, family council, social responsibility and sustainability committees, family investment committee, entrepreneurial fund and non-core projects, family office, overseer of the family mansion and archives, family foundation and philanthropy, head of an “information circle” and “study groups” to educate next-generation owners, social events chair, and leader of a “memory project” to record the history of the family firm and individual contributions to it.
3) When should I get involved?
There is really no “best time” to start contributing to the family business. It depends on and evolves with the individual’s life stages and personal development. What counts is the commitment and initiative to strengthening the family glue.
Next-generation members who enter the family firm right after school or university can receive training from the bottom up and build credibility within both the business and the family. But they need to be patient because decision-making power will not be granted to them immediately. Family businesses have become very professional and often expect family members to outperform their non-family colleagues to demonstrate their ability to step into their predecessors’ shoes.
On the other hand, gaining external experience with an unrelated corporation can also be an invaluable opportunity, as it supports personal development by building credibility, self-confidence and networks. Because career advancement in those companies can be achieved on skills alone, the next-generation members with such experience may have the edge over non-family executives should they eventually join their family business.
4) What does it take to succeed in a family business?
A strong, well-rounded education is certainly an important element to prepare for a successful career in the family business. Next-generation members would do well to learn about responsible ownership, board governance, and acquire a sound financial understanding. An international outlook, experience living and working abroad, and a mastery of foreign languages are also valuable skills.
Aside from these “hard skills,” young potential leaders in family businesses should also learn about what it takes to lead a family – the pitfalls and the tools that might help a family to structure itself and take the business to the next level.
Understanding family communication and one’s own role in a team of family members help separate the individual from team dynamics, and enables the next-generation member to become a responsible family shareholder.
Finally, it is important to realize that success in the family business also comes from commitment to stewardship and family principles. It is ultimately part of the parents’ job to impart a sustainable set of values and beliefs while providing opportunities to realize them.
It takes time and effort for a family in business to develop the next-generation talent to take leadership roles and become stewards of the enterprise. As Eric Babolat quickly discovered, one can never be over-prepared to take on the challenges. Ultimately, families should not forgo opportunities to strengthen the business, wealth, identity and unity of the family.
Written by Denise Kenyon-Rouvinez and Anne-Catrin Glemser. Professor Kenyon-Rouvinez co-directs The Next Generation program, which specifically prepares successors to take a leading role in any part of their family business governance system – ownership, business, family or wealth management.