How to equip your children to take on future roles and responsibilities.
Nathalia Murphy, Senior Wealth Advisor
Good decision making is one of the keys to success whatever the endeavor, and this certainly holds true for a successful wealth succession. Yet good decision making isn’t acquired overnight—it takes years of practice making decisions big and small, with blunders and success, to hone this skill.
To ensure your family’s continued success, your children will eventually have to step into decision-making roles. Getting them involved in your family’s business, family office or investments is a gradual process. As your children mature and become responsible young adults, consider how you might want to broaden your decision-making circle to include them so as to prepare them for their future responsibilities regarding family wealth. Here are some steps you can take to equip them for the future.
Teach your children to fish
As the proverb goes, “If you give a man a fish, you feed him for a day. If you teach a man to fish, you feed him for a lifetime.” By gradually involving your children in your family’s businesses or investments, you are teaching them to fish, so to speak. Take time to expose them to all aspects of the family enterprise and what you do to manage it, including:
- The kinds of decisions you make and the stakes involved;
- The thought process that goes into your decision making; and
- The types of decisions you usually delegate to others.
Also, it’s important to show your children how you manage your professional relationships, including:
- How you work with other shareholders;
- How you collaborate with employees; and
- How you access and grow your network.
By involving your children early on in the family enterprise, you are giving them opportunities to develop the skills one day to stand on their own feet. Hopefully, as they ably perform the smaller jobs and decisions they are given, the taste of success will inspire them to take on bigger tasks and weightier responsibilities.
Lead by example
No doubt you’ve been leading your children by example since the day they were born. When you involve them in the family enterprise, they get to see you in a different light: Interacting with you in a business setting offers your children the chance to learn from concrete examples of your leadership.
Be strategic in the way you mentor your children. Mentoring can be formal with specific expectations for interactions between your children and mentors. Mentoring also can be informal and function primarily as a way to initiate and nurture your children’s relationships with a grandparent, other family members and stakeholders.
Exposure to your leadership in a business setting can be invaluable both for you and your children. Besides the crucial aspect of “showing them the ropes,” you also have an opportunity to impart your values and vision of success to your children. The lessons you’ve learned over your career and behaviors that are important to you can be an enduring legacy, and can provide guiding principles for your children.
Learning is a lifelong process
What children enjoy doing, they tend to excel at. Interacting with your children in a business setting can provide insights into what roles they might fulfill in the family enterprise. Some families introduce children to a family enterprise with a summer internship that may lead to a future job. Other families may require children to have external internships or jobs for a period of time before allowing them to enter the family enterprise. Either way, when you find that first role for a child in the family enterprise, it may eventually lead to other roles offering even greater responsibilities.
As you identify your children’s strengths and consider potential roles within the family enterprise, you’ll have the chance to identify areas where they might need training or development, and together you can decide how best to invest the their time going forward. For example, what educational and practical experiences should your children pursue?
Young adult children yearn to develop an independent sense of identity and purpose. It’s important to give them room to be independent in their roles, and to own their successes and failures. If a child fails at a task, it too can be a learning opportunity, since learning from mistakes is often more effective than achieving easy wins.
Talk often
Studies have shown that the number-one reason for failed transitions of wealth within families is breakdown in communications. Involving your children in your business affairs can help develop their communication skills while developing their business relationships. At first, your children may find it daunting to dialogue with you and other stakeholders. Be patient with them, encourage them to speak their minds, and let them know that their opinions are heard and valued.
Importantly, when your children engage with each other in decision making, they begin seeing their relationships with their siblings in a new light. By working together, siblings learn how to listen to each other, disagree constructively and resolve potential conflicts. Mutual understanding and respect among siblings are so important for the long-term success of the family enterprise. Changes in a family enterprise are inevitable. Productive communication helps ensure that a family can evolve and adapt together to face any new circumstances.
There is of course no recipe for a successful wealth transition. Taking steps as above may improve the odds, and in that spirit we offer them.
