Coaching the Next Generation of Business Leaders

Who will run the business when Mom and Dad retire? What kind of leader would work best? Which sibling is most qualified to take the reins? Should candidates outside of the family be considered?

Determining the factors that will ensure the success and continuity of a family business once control passes to the next generation should be accomplished well before the successor actually takes the job.

Here are some of the unique challenges faced by family business successors:

• The founder’s reluctance to transfer authority, control and decision-making
• Balancing expectations and demands of family shareholders not directly involved in the business
• Trying to live up to parental expectations
• Leading, motivating and evaluating the performance of both non-family and family employees

Leadership Coaching Can Play a Vital Role
Many of us have benefited from the guidance of a special athletic coach, teacher, boss, friend or colleague. However, it is only in the last few years that "leadership coaching" has emerged as a profession. Companies now realize that developing their people is the best investment they can make.

A coach enables others to achieve their goals. A coach can mentor, counsel, advocate, motivate and sponsor. Leadership coaching uses a customized, professional development program to meet the needs of the individual and align their talents with the goals of the company. Family firms contemplating leadership succession by a family member can increase the likelihood of success through the effective use of a coach(es).

Qualities of an Effective Coach

• Impeccable listening and feedback skills
• Compassion and empathy
• The belief that any changes begin with the individual being coached, and that he/she must make these changes of his/her own free will
• Being open and honest about thoughts and feelings
• A sincere desire to see the individual succeed
• A belief that the more effective the leader, the more effective the team and organization
• The ability to establish trust and maintain confidentiality
• The willingness to ask tough questions

Who Should Be Involved in the Coaching Process?
An outside professional coach is often the best choice. However, others can (and should) play a role in the coaching process, including:

• The founder/current business leader
• A member of the firm’s advisory board or board of directors
• A senior, non-family executive in the firm
• A trusted member of the successor’s professional network
• Internal senior human resource/organization development manager

Essential Elements in a Coaching Plan

Assessment. Evaluate the successor’s competencies. This involves defining the “ideal” skill set of the leader and mapping that against the successor’s demonstrated skills. If the successor is already employed in the business, a 360 degree assessment should be done, as follows:

• Select a group of people to provide feedback—e.g., the successor’s current boss, direct reports, select peers, customers, team members, advisors, shareholders and family employees
• Conduct confidential interviews/surveys to gather each person’s perspective of the successor’s strengths, limitations and areas for improvement
• Review the feedback with the successor and jointly develop an action plan for improvement in 2-4 priority areas.

Goals. Assessment results should be translated into developmental goals. Typical goal areas include:

• Leadership competencies—motivating, evaluating employee performance, strategic thinking skills, etc.
• Technical skills—finance, operations, marketing, etc.
• Relations with stakeholders—employees, customers, suppliers, trade associations, family, shareholders, etc.

Action Plan. Document the objectives, tactics and outlines of the coaching sessions. Coaching should occur in a mutually agreed upon location from 2-4 times per month. Each session should last no longer than two hours.

Timetable. Begin leadership transition coaching as early as possible—at least one year prior to the target date.

Follow-up. Plan for regular review of the action plan. Touch base with the group selected to complete the 360 degree feedback at six-month and one-year intervals. Its assessment is vital to evaluating improvement.

For additional insight into this topic, consider the following AMA seminars:

• AMA’s Course for Presidents
  
• AMA’s 5-Day MBA Program
  
• Preparing for Leadership: What It Takes to Take the Lead
  
  

Author Bio: Rachel Mickelson, MSOD, is a partner with DoudHausnerVistar, an organization devoted to helping entrepreneurial families achieve prosperity. She is a member of the Family Firm Institute and the Organization Development Network and is a founding member of the MSOD Alumni Network. Ms. Mickelson can be reached at rmickelson@dhvadvisors.com