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When the second and third generation joins the Business. 

by: Tami Lancut Leibovitz

In family businesses, the first generation builds a well-known business success or even an empire, developing it at the same time with persistence, worldly wisdom and experience over many years. But what happens to some of these businesses when the second and third generation joins them? The facts  that only a very few of these family businesses survive and a great many more fail to continue the dynasty.

Many companies and production plants started out as a closed family business, managed according to a strict hierarchy. Most of them, with the entry of the second and third generations and other family relatives, started to unravel and cracks appeared in the tightly knit family façade, which, on the one hand, protected the business, but on the other perhaps damaged its chances of evolving. It is difficult to avoid the problems of a generation gap and it is difficult to arrest change. It is almost impossible to avoid conflicts deriving from ambition, different approaches and education by the younger generation, clashing with the founding generation’s tendency to preserve what has been established and to continue its conservative management of the business. Nor is it certain that this should be so.

 The family business relationship is a triangle comprising three sides: Parents, second-generation managing sons and daughters and employees. In every human relationship, and even more so in the workplace, the only method that can ensure industrial peace and efficiency is an observance of the rules of politeness and honesty, consideration and mutual respect (the same deserved approach to “IBL Code”). Every relationship of this kind can become hell.

The Parents

The parental position at the top of the pyramid is unquestioning – until the second generation, sons and daughters enter the family business arena.

However, in most family businesses a clear separation is made between the home and the workplace; but from the moment they enter, the psychological boundaries between the parent, managers and subordinate sons or daughters blurs, and with it their relationship to the employees in the middle. On the one hand, the parent-commanders aspire to preserve their hegemony, demonstrate their management qualifications and capabilities. On the other hand, they clearly want to bring the inheritors into the picture, incorporate them in the best possible way, and to take pride in them. Consequently, they must preserve a formal and professional set of relations with their children and between their children and their employees. Complicated?

Here are some suggestions for parents:

• At the outset, clearly define the position of a son or daughter. This is a basic condition for including family members in their business. They should not only know their position, but for the employees it is important to understand where the inheritor’s position begins and ends.
• You should quickly move from parent-son relations to director-employee relations. This means during work hours relate to your son or daughter as you would to an employee, especially in all things related to professional matters. Do not defend the children and do not refer to them by their pet names at home. You have given them responsibility. Also give them respect.
• Restrain yourself and do not hurry to place them in senior positions, not only because of their inexperience; this would also be unfair toward your team of workers. For your son’s good and the future of the business build him a sensible course of advancement and promote him according to his achievements.
• Treat your children as you would your regular staff. If your employees feel secure, they will cooperate in integrating new employees and criticize him fairly whenever needed, and without fear.

Let’s turn to the sons and daughters

The desire to prove yourselves and your cleverness can bring you, the parachuted sons and daughters, to one of two situations: either you take out the silver spoon with which you were born and put in a genuine effort to learn the ropes and to honestly advance from stage to stage, or that you hurry to demonstrate a hereditary potential buried in you for management and rush for shortcuts through the minefield of the family business with the aim of “winning” at all costs. This is dangerous.

Suggestions for sons and daughters:

• Respect those who established and managed the business before you and those who have worked in it for many years, even if your formal education is higher, do not forget that their experience is ten times higher.
• Strictly adhere to accepted work procedures - be punctual about starting hours for work. Do a full day’s work. Graciously accept the conventional policy on dress code, lunch  break       entertaining guests, private telephone calls, hygiene and order, use of company cars, etc
• Try to solve problems in the framework of a team. Turn to your immediate superior and not directly to your father.
• You do not have to conceal your family relationship from the bosses, but do not wave it around arrogantly.
• Do not be conceited toward employees. Their professionalism and credibility are your only measure of a genuine assessment of your own. On the other hand, do not let employees exploit your relationship to the upper echelons of management (“Perhaps daddy can agree to a long weekend on Friday after the holiday…”).
• Even if you were parachuted into the business straight from the Faculty of Business Management, it is better that you do not hand out advice immediately about efficiency and improvements. Here you are “the son of,” but elsewhere you would not dare make changes on the first day of work.
• Be courteous and polite especially toward employees. You are being watched.

The last but not least - The employees

It is easy to understand awakening fears when suddenly one of the “princes” or “princesses” has been dropped in. Experts and long-term employees obviously feel threatened by the parachutists and their blood relationship to the owners that can sabotage their own chances of promotion, create problems in working relations, and put to a test your credibility, loyalty, and commitment to the workplace. This is frustrating, no?

Advice to employees:

• If the managers have not done it, you must ask them to accurately define the position of sons and daughters or relatives so they stay within their boundaries.
• Assist the parent-managers to integrate the new staff member and give them professional training without flattery, envy, or arrogance. They are starting their career at an advantage over you, but this does not free you of the tensions and problems.

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