Do I need to train the next generation in the family business? talks about the importance of training in family business and how we can help. For more information please call: 0121 707 0550 or e-mail: info@pathwaygroup.co.uk

1. Do I need to
train the next
generation
in the family
business?

2. How prevalent is training, whether
that’s formal off-job or on the job
training in family businesses?
According to the Institute for Family Business, Family
businesses account for two-thirds of all firms in the UK
private sector, these are predominantly Small and
Medium-sized Enterprises (SMEs).
According to the small business Survey in 2012,
60% of SME employers in the UK had arranged or
funded training in 2012. In some ways that could be
seen as a positive figure, however on the other hand,
smaller businesses were less likely to have arranged
training for their staff, and in family business we know
that many of them are at the smaller end.

3. How prevalent is training, whether
that’s formal off-job or on the job
training in family businesses?
We can therefore extrapolate that approximately half of all
family businesses are not training their staff!
Considering the special challenges of a family business, and in
particular the importance of succession planning; the idea that
half of the UK’s family business are not training their staff, the
long term prospects for these business is potentially bleak.

4. Why is training so important
in family businesses?
Recent research suggests that more than 50% of family
businesses plan to transfer ownership and management to
family members, however of these, 50% said that they had
concerns about whether their successor has the aptitude
and drive to manage the business into the future.
In addition, training and talent management in family
businesses is clearly linked to success. A report by
Ernst & Young in 2012 found that of the best
performing family businesses, 23% considered talent
management important to their future success, where
16% of the worst performing businesses didn’t.

5. Why is training so important
in family businesses?
Finally, the warning signs for family businesses are there: ‘Third
generation syndrome’ is a common phenomenon in family
businesses, this is best described as:
“The first generation builds the business, the second generation
grows the business and the third generation destroys it.”
Training and developing successors in a family business is vital...

6. Engaging with the
Next Generation
The Institute for Family Business has produced a report looking
at one of the key challenges facing Family Business - ‘Engaging
with the Next Generation’
In the report, they look at ‘Inspiring the next generation
without applying unfair pressure, allowing the next generation
to set its own path and developing a parenting/management
style that fosters autonomy for the next generation.’

7. Engaging with the Next Generation
The report lays out a five point framework
that the next generation need to be aware of:
• Joining the business should be a choice not
an obligation
• They will need experience and self-confidence
• They will need extra skills than required in
ordinary business, including skills required
to address complex family business
dynamics
• They will need credibility as well as
competence – to earn the respect of non-family
member employees
• They will need passion and commitment

8. Engaging with the Next Generation
Just reviewing this list highlights the
level of skill required across multiple
disciplines.
The report goes onto highlight two
further key areas for engagement with
the next generation in a family
business – firstly, empowering them
by providing training and career
development opportunities, and the
suggestion that a career development
plan is needed to help shape the
education and learning choices of the
next generation.

9. Defining the Training Needs
With the requirement for training so acute within family
businesses, how do you go about identifying and executing
the right training so that the person becomes competent,
credible, respected and then has the skills and desire to lead
the business in the future?
Define the key attributes required
In order to evaluate where training is needed, it is important
to define which skills and competencies the individual will
need. In succession planning this may be a complicated
picture, however in order to deal with competence and
credibility, even basic skills may be the starting point.

10. Defining the Training Needs
Overall, you will need to look at:
• Job Challenges – Specific challenges
that they will need to deal with
• Organisational Knowledge – Knowing
the key processes and operations of
the business
• Competencies – Self-awareness,
leading others, motivation etc.
• Personal Attributes - Which personality
traits are going to be important?
It’s important in this process that it is
based on what the future leader of the
business will look like, rather than on
historical experience.

11. Assess the Candidates
Strengths and Weaknesses
It’s important to have a clear view of your potential
successor’s strengths and areas for development, this will
help to define the development opportunities and training
requirements.
Techniques to assess this, include:
• Simulations or observation
• Surveys of managers, peers, stakeholders
• Behavioural interviews
• Personality inventories – assessing key traits that may
help or hinder their success in the role

12. Assess the Candidates
Strengths and Weaknesses
While some of these techniques
might seem difficult to do for
your family members; they are
key in involving them in the
business and giving them the
best chance to be successful.

13. Identify Development
Opportunities
Now that we have outlined what
the leader of the business will
need, and then assessed the
candidates strength’s and
weaknesses’ we can outline the
gaps and areas for development.

14. Identify Development
Opportunities
Again, these fit into:
• Job Challenges: You may set an internal
challenge that needs dealing with, such
as implementing a new system.
• Organisational Knowledge: Identifying
areas where they have a weakness – If
they are a qualified accountant, do they
understand marketing?
• Competencies: Can they coach and
mentor other members of staff?
• Personal Attributes: Exercises that
bridge gaps identified previously

15. Monitor and Support
This process will be an
intensive one for the potential
successor, on-going feedback
coaching and support for the
work they are doing will be
important, so they continue
their development towards
excelling in and then leading
your business.

16. For More Information
Pathway Group, work with family businesses across the
Midlands, helping them understand the training needs across
their business. We can help you plan and deliver training to give
you confidence in the ability of your family members to
continue to grow and steward the business into the future.
For more information:
Visit: www.pathwaygroup.co.uk
Call: 0121 707 0550