The statistics behind a family business successfully transitioning are daunting and downright scary. As a millennial entering the family business, here are a few numbers for you to think about:
- A family business has a 30% chance of surviving from the first generation to the second generation
- A family business has a 12% chance of surviving from the second generation to the third generation
As you can probably guess, the numbers don’t get any better from there.
I believe the number one factor in these dreadful numbers is nepotism.
Nepotism: the practice among those with power or influence of favoring relatives or friends, especially by giving them jobs.
The danger of nepotism is that you’re putting family before business. If you give family members job roles that they’re not suited for or qualified for, you’re putting the business at risk. Long term, high performing, non family member, employees are more likely to leave your company because they’ll be turned off by someone unqualified getting a promotion or a corner office. I also believe you’ll push away high performing family members who would like to join your family business. Why would Sarah the rock star business women join the company only to carry the weight of Jenny the slacking older sister who puts her feet up all day? No way Sarah’s coming back to lead the company. Even though she’s the most qualified and the one who will likely make the business succeed!
So what can we do as millennials in our family business? We must stress to our bosses (most likely our dads, moms, uncles) that we only want jobs we’re qualified for. Don’t give us a title and a role we’re not suited for.
Example: I want to be CFO of our company, and I’m not there yet. I have a lot of growing and skills to be developed before I can have that title. If my dad gave me that title now, one, I wouldn’t feel like I deserved it at all and two, our employees would see it for what it is, meaningless. You have to do the work and earn your titles and promotions. Stress that to your boss. Say no to anything that resembles nepotism. It’s poison to a company that’s looking to grow. So what am I doing about it? I’m working harder to develop my skills. I’m meeting monthly with a CFO coach who is pushing my capabilities and the way I think. He’s making sure I’m developing my staff underneath me in order to get to where we want to go. I’m not there yet, but I’m focused and working on it daily.
I’ll end with this. Business must come first. Family has to come much later (I used 7th in the title because it was catchy – I really don’t have a list on where family should land). When it comes down to any decision, the nepotism factor must be considered. If you don’t consider it, you’ll likely be one of the sad statistics I mentioned above.