Future leaders, not nepo babies: how to start family business succession
The term “Nepo Baby” may be offensive to some, but it sheds light on an important issue for family businesses: the next generation of family members may not be capable or deserve to lead the family business. In this article for Family Capital, Wingspan Partner Maryann G. Bell discusses the three areas in which families can better lay the foundations for Next Gen succession, avoiding the issue of unprepared successors whose values are not aligned with those of the firm:
- Exposure: Making sure Next Gen members are immersed in the history and culture of the family business from an early age, which can involve internships, special projects and being involved in the writing or updating of Family Mission, Vision, and Value statement or Family Constitution
- Policy: Establishing the criteria for family member employment, which should mandate spending time working outside the business and potentially educational requirements, thus blunting the “Nepo Baby” charge while allowing the Next Gen to gain valuable external experience
- Platform: Placing Next Gen members in “Board Observer” positions that allow them to view the firm through the eyes of a board member, requiring the same level of attention and scrutiny of them as any actual board member (but without voting authority)
Policies that provide pathways driven by merit allow Next Gens to earn entrance to the business and respect as they advance their careers, says Maryann. Families that do this well prepare informed future owners for service as responsible owners for all stakeholders in the business. Read the article in Family Capital to learn more about executing this strategy.