A Focus on the Rising Generation | Meaden & Moore

Empowering the Next Generation to Lead

Multigenerational businesses face the same challenges as any organization — maintaining growth, beating the competition, tightening operations — but they also have family dynamics to navigate. The younger generations have watched their elders build a successful business and often struggle to see where they fit in, while older generations may be unsure how to pass the baton without risking everything they’ve built.

While this dynamic may create tension, it doesn’t have to lead to conflict. We like to remind our clients that all generations want the same thing: to make an impact and to preserve the family’s legacy. They just have different ideas for how to get there.

As you prepare the next generation to take on greater responsibility, certain challenges are inevitable. Let’s address a few of these problems so that your family business can strengthen and grow as leadership moves out of your hands and into the hands of the next generation.

Problem: Next Gens feel sidelined

In a family business, it’s common for younger generations to feel like their ideas aren’t being considered.

Solution: Learn to let go

Give the younger generation the freedom to make changes before they take over the business. Let go of some of the smaller responsibilities you have so that both you and your heirs can get used to the shift in dynamics. This might look like:

• Encouraging them to attend a quarterly financial review meeting, just to observe.
• Having them build and track the budget for a smaller department.
• Tasking them with finding ways to save money on vendor costs.
• Putting them in front of prospects or vendors by inviting them to table at an industry event.
• Asking them to develop a proposal for a new product, service, or initiative.

Start small and gradually add more complex responsibilities to their plate. This gives the Next Gens time to hone their skillset, and it helps all generations build confidence in the Next Gen’s abilities.

Problem: Existing family dynamics are a bit… messy

Family conflict is almost inevitable, especially when there are multiple family groups and multiple generations at the table.

Solution: Improve governance

Establish well-defined policies and procedures to fall back on when a disagreement occurs. Here are a few to consider:

• Family charter: Draft a document that defines the family’s shared mission and values. When disagreements arise, this can serve as a reminder that you have common ground.
• Employment expectations: Define who does what for the business, and formalize promotions as roles shift. For example, if you ask a Next Gen to direct a small section of your business, promote them to a position that’s reflective of those new responsibilities.
• Employment policies: Clearly defined conditions for employment are key in family businesses. This might mean requiring Next Gens to work outside of the business before coming on board; spelling out promotion and compensation criteria; and establishing hierarchies based on company position rather than family order.
• Conflict resolution protocols: Formalize how disputes should be handled. For example, you may outline when a third-party mediator needs to come to the table, or which positions within the company have veto power.
• Continuing education: It can be smart to require continuing education for Next Gens. These educational sessions could be related to the industry, but if you plan to promote the next generation into leadership roles, you should also educate them on financial literacy, proper governance, and leadership.

Problem: Next Gens have little experience

The younger generation doesn’t have the life or work experience that you do, but you’re afraid to let them explore if their mistakes could hurt your business.

Solution: Let them explore — safely

Encourage younger employees to innovate, but only within defined parameters. For some family businesses, a Next Generation Advisory Council can be a good solution. The council should include a mix of senior leaders, experienced family members, and trusted third parties. This gives rising leaders a safe place to test ideas and ask questions.

This sort of structure doesn’t give you the power to make the decisions for them; it means you’re guiding them through the decision-making process. Your presence and support signals that you trust them to call the shots, but also that you’ll have their back if challenges arise. This balance builds confidence that future leaders need to succeed.

Problem: You worry that your legacy is at risk

Walking away from the business, or even taking a step back, may make you nervous. What will happen to everything you’ve built once it’s placed into someone else’s hands?

Solution: Reframe the narrative and enlist help when you need it

You are a steward of the business, yes, but stewardship isn’t about ownership; it’s about care. And sometimes, the best way to care for your business is to let it grow beyond you.

We know that letting go is never easy. But that’s why we challenge you to reframe the narrative. Remind yourself that the younger generation doesn’t want to undo your legacy; they want to preserve it and expand it. Their methods may look different, but the end goal is the same: to honor what you’ve built and carry it into the next iteration of the business. If you give the next generation time and patience in the years and decades prior to their transition into leadership roles, you’ll find it easier to relax into your role as supporter, mentor, and cheerleader.

And if you ever need help or support from someone outside of the business as you plan for your succession, our Meaden and Moore Family Business Advisors are here to help. Reach out to us for a free consultation today and we can help determine how best to support your family’s needs.