Tackling a New Breed of Generational Challenges in the Family Business

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It's no secret that generational challenges exist in any workplace. Every new wave of talent brings its own set of strengths, weaknesses, opportunities and - the most consuming and distracting of them all - threats

It's hard enough to learn to work together, moving past differences in skill sets or communication styles, to trudge toward a set of common goals. Throw in the velocity of change of today's business environment and at any given moment there can be four generations of thought weighing in on critical decisions for a company’s future. 

Add in the emotionally charged and personal dynamics of a family business (more than 5.5 million in the U.S. alone) and you have massive numbers of companies trying to navigate these challenges while tackling the personal and legacy building aspects of what could be their life’s work. 

The following are three generational challenges for family businesses, set against the threats each generation poses to each other and the business as emerging generations make the move into leadership.

1. The Crystal Ball of Planning

  • Where are we going?

  • Why are we going there? 

  • Who am I in this story? 

The newer generations moving into leadership, and ownership, have more on their minds than the day-to-day survival of the business. 

According to the 2017 PwC Next Gen Study: “Only 7% of next gens think their family business has a strategy fit for the digital age. In addition, “82% of next gens think innovation is key but only 15% think their own firm has a clear plan.”

In general, younger generations in the workforce demand transparency, clarity and direction of their career path, including the timeline when milestones will be achieved. The same is true from younger leaders of a family business, both for their own personal career path and on a larger scale for the the organization.

Whereas the first generation of a family business may have been in the "winging it" mode 24/7, and forced to be agile by nature, the following generations can represent the move to a more professionally managed organization, and with that the demand for strategic vision, purpose, mission and a succession plan. 

They need to envision the future state so they can work with purpose to achieve it. 

"The common denominator is strategic direction: the need for a compelling business strategy and practical execution plan for both the short and medium term.”

While there is no real crystal ball for this, a structured strategic plan, with the ability to adjust as the company evolves, serves as an objective voice at any table, no matter who happens to be sitting there. And once the strategic plan has been created, the leadership and succession plans can be built around the needs of the organization in the future.

Built collaboratively and finalized with the consensus of multiple generations and levels of leadership involved, all can start moving in the same direction. 

2. Digital Differences

It’s no surprise that each generation in the workplace has different technology aptitudes. While modern business environments have standardized the use of technology tools over the last 20-25 years, family businesses may still be in transition on a number of more sophisticated processes and solutions.

This goes beyond basic email and operations software and includes:

  • CRM - Customer Relationship Management

  • Digital marketing and social media

  • Managing cyber security risks

  • Artificial intelligence and emerging applications for the business or industry

This thought is highlighted in PwC’s more recent 2019 US Family Business Survey, where a primary theme is to “Ensure the next generation is deeply involved - they have a lot to offer families grappling with digitalization.” The survey states that 62 percent of family leaders plan to pass it on to the next generation.

While a portion of the Gen-Y/Millennial group, now in their mid-to-late 30s, experienced some of their life before the World Wide Web, the newest workers Gen-Z are “digital natives” having grown up in a world of smartphones, tablets and the cloud. 

This provides another opportunity to engage the younger generation’s expertise and familiarity with technology in the planning process. While comfort levels will vary among different generations, the balance that’s provided helps to weigh an aggressive pursuit of what could potentially be a ‘shiny object’ with the seasoned perspective of “do we really need this?”

3. Conflict Management

According to NxtGenNexus, conflicts that are natural in personal family life become magnified in the family business realm. 

Examples of common conflicts:

  • Family conflicts crossing over into the business

  • Lack of boundaries between family structure and the company structure

  • Performance management and holding family members accountable for results

  • Frustration from non-family business leaders over their influence in the business

Furthermore, family businesses grapple with the specific roles that family members have in the business, and how those roles are determined. Other concerns include expectations around ‘earning your place’ in the business, and conflicts that were started by prior generations that can’t be put to rest by the current generation of leadership.

While these conflicts are not new, communication styles between the generations are different, and important to address. Many family businesses seek counsel from outside resources to help open lines of communication and bridge these generational communication gaps.

The simple act of validation of an issue or conflict between family business members can speak volumes in the path toward resolutions. Knowing their issue is identified, common, and shared is the first step.

  • Recognize that these issues are the elephant(s) in the room—everyone knows they exist and so the first step is being transparent about them.

  • It‘s important to start sooner, rather than later to resolve and find a path forward on some of these long simmering family disputes. Too many families procrastinate tackling the emotional topics and it takes a tragic event such as a founder’s passing to force the issue.

  • Having a well-defined business plan, succession plan and ownership plan is key to provide structure within which systems can be created to help deal with these issues.

  • Creating a consistent process and systems for how things are done in the business is critical. The operations need to move from being managed ‘by personality’ to being managed professionally.

Bridging the Gaps

No matter the long-term vision, succession plan or targeted exit strategy, family businesses must harness the power of multiple generations today, to get results and remain viable for the future. 

According to author Sam Bruehl of Banyan Global, in his Harvard Business Review article, “How Family Business Owners Should Bring the Next Generation into the Company,” there are five key elements in which to focus: "Help the next generation find their right roles; Get the group dynamic right; Help them find their collective voice; Create a next-generation development program; Give them room to operate.”

There’s no easy fix for generational challenges in a family business, but the investments made in engaging all generations of the family will pay big dividends in the long run and are key to its success.

Jeanne Coughlin Appointed Vice Chair of The JumpStart Inc. Board of Directors

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CLEVELAND – March 4, 2019 – Jeanne Coughlin, founder and president of The Coughlin Group Inc., a consultancy specializing in strategic planning for family businesses, has been appointed to the position of Vice Chair, Board of Directors, JumpStart, Inc.

Coughlin was appointed to the JumpStart Board in August 2016 and serves as Chair of the Revenue Committee and as a business mentor. She joins new Board Chair, Gary Shamis, new Vice Chair Ellen Burts-Cooper, and current Vice Chair Patrick Pastore. JumpStart released the full leadership announcement on February 28, 2019.

Founded in 2003, JumpStart was created as a partnership between public and private entities charged with creating economic transformation in Northeast Ohio through the growth of an entrepreneurial ecosystem. The organization’s mission is to strengthen the economic vitality of Northeast Ohio and the U.S. by helping communities realize their entrepreneurial potential.

“I am excited to take this next step with the JumpStart Board and continue its mission to elevate the people and businesses the organization serves," said Coughlin.

About JumpStart, Inc.

JumpStart unlocks the full potential of diverse and ambitious entrepreneurs to economically transform entire communities. Learn more at www.JumpStartInc.org

About Jeanne Coughlin, President, Coughlin Group Inc.

Since 1993, Jeanne has worked closely with family business owners and management teams to help with strategic planning, to identify what actually needs to get done, to enhance operational efficiency, and improve culture. Her mission is to be a catalyst for the prosperity and success of privately-held and family businesses. To accomplish this mission, she created the CG one Process, a practical business planning and performance management system that gets the entire management team moving in one direction, with one vision, working from one plan.

    •    Certified Strategic Planning Facilitator, Peter Drucker Leader to Leader Institute

    •    Certified Stages of Growth Strategist & licensee of the One Page Business Plan System®

    •    Published Author: Featured Book Award from Harvard Working Knowledge Group, “The Rise of Women Entrepreneurs.”

    •    Certified Professional Certified Professional Behavior & Values Analyst

    •    Chapter Chair & Facilitator, WPO (peer advisory group for women business owners)

Coughlin serves as Vice Chair of the Board of JumpStart and chairs the Revenue Committee. She was chairman of COSE (Council of Smaller Enterprises) in 2004-2005 and was formerly a board member for GCP (Greater Cleveland Partnership), Team NEO, NSBA (National Small Business Association), and Mercy Hospital. She is a graduate of the 2003 Leadership Cleveland class, and was selected as a Women of Note by Crain’s Cleveland Business. Jeanne was also recognized with the Entrepreneurial Leadership Award presented by Cleveland State University for her “dedicated work advocating on behalf of small business.”

Learn more at www.CGroupInc.com.

This Simple Law of Physics Will Change Your Business

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“The law that entropy always increases holds, I think, the supreme position among the laws of Nature.” —Arthur Eddington

Have you ever heard of the Second Law of Thermodynamics? Unless you were an engineering major probably not, but it’s a fundamental law of the universe which dramatically impacts your business every day.

The Second Law of Thermodynamics states that the entropy of a closed system will never decrease. Entropy is the natural tendency of things to lose order. 

Here's the important thing about entropy: it always increases over time, which means that left to its own devices, life will always become less structured, everything will decay, and disorder always increases.

The article Entropy: Why Life Always Seems to Get More Complicated, by James Clear, gives a great explanation of entropy and how it impacts our personal and business lives.

As James points out, “You can fight back against the pull of entropy. You can repair equipment. You can clean a messy office. You can organize individuals into a cohesive team.  But because the universe naturally slides toward disorder, you must expend energy to create stability, structure, and simplicity. Successful relationships require care and attention. Successful houses require cleaning and maintenance. Successful teams require communication and collaboration. Without effort, things will decay.

This insight—that disorder will increase over time and that we must exert effort to create order has dramatic implications to your business.

Think of all the systems you’ve created in your business and then ask yourself what structure you’ve put in place to counteract the pull of entropy? We wouldn’t think twice about the need for continuous improvement and maintenance for the machines in our companies, and yet our systems related to people and planning often limp along without an eye toward continuous improvement or even a yearly refresh.  

I see this in the way many organizations approach their business planning. Teams get together for an off-site retreat and a plan gets created that everyone feels good about. And then entropy takes over—the plan ‘sits on a shelf,’ and isn’t reviewed on a regular basis. There’s not consistent, on-going energy expended towards keeping the plan current, relevant and responsive to the day to day disorder that affects it.

So, consider reviewing your planning system like a scientist, and ask yourself how you’re fighting the forces of entropy. How often are you checking back in with your team to solicit their input? What about adjusting the key performance indicators to respond to changing variables in the marketplace. Are you getting the team back together on a consistent basis to review and refresh the plan at least monthly or at a minimum quarterly?

If there isn’t a system in place to keep your plans fresh, then they’re already out of date and sliding into a state of being irrelevant.