Best Practices for Preparing the Next Generation
}Encourage members of the younger generation to earn their stripes outside the family business. This can help build confidence in the younger generation—and in the workers the younger generation is expected to manage.
}Use an outside advisory board or board of directors made up of nonfamily members. The best boards include successful businesspeople or financial experts who can give impartial advice.
}Don’t underestimate the value of family members who aren’t active in the business in easing transitions or integrating younger family members into the business. Social engineering can be an important part of creating a functional family and business unit.
}Consider drafting a family charter. Setting ground rules during a calm spell can provide a touchstone when things get hectic. It also can help family and nonfamily employees feel they’ve been treated fairly.
}Consider nonfamily employees—ringing in the younger generation shouldn’t be done in a way that will alienate long-term senior employees.
Sources: Alan S. Schwartz, vice chairman of the board of directors and partner at Detroit-based Honigman Miller Schwartz and Cohn; and Phil Bahr, managing principal of Troy, Michigan-based CPA firm The Rehmann Group