Financial performance and a seamless transfer of leadership between generations are common indicators of success in family businesses. However, a crucial element to this seamless transfer is often overlooked—human capital. Human capital refers to each family member’s physical and mental well-being, as well as their ability to pursue individual happiness and fulfillment.
Investing in the members who are the company’s lifeblood is what we mean by human capital within the context of the family business. This means recognizing that each family member brings unique talents, perspectives, and aspirations. Further, when we invest in the growth and well-being of the business successors, we can create a stronger, more resilient family-owned enterprise. While there are many ways to nourish the rising generation of family leaders, let’s explore three common ones that go across multiple industries and types of family business endeavours.
Encouraging Individual Growth and Fulfillment
When individuals feel their growth is supported, they are more inclined to engage more fully, offering innovative ideas and insights. These ideas often aid the business in overcoming obstacles and challenges or capitalizing on opportunities. Valuing and cultivating each person’s distinct talents fortifies the family’s collective resilience, enabling them to navigate the nuances within the business and family dynamics.
Thus, it’s crucial to cultivate an atmosphere that bolsters personal ambitions and provides avenues for members to follow their interests while still supporting larger family values. For instance, a family enterprise might fund educational initiatives or skill-building programs tailored to individual aspirations, be it advanced studies, acquiring new competencies, or venturing into new fields.
Building Independent Identities in Family Business
In family businesses, it’s important for family members, especially the rising generation, to build their own identities, separate from the business’s wealth. If they define themselves solely by their business, they might feel pressured to pursue certain career paths, such as taking on an unwanted leadership role. This can result in a loss of confidence if the business faces difficulties.
To help them discover their own identities, it’s key to encourage activities outside the business, like hobbies or volunteering. Open talks about the pressures of being in a family business are also necessary. Together, families can find a balance between what the individual wants and what the business needs.
A stronger and more emotionally resilient family is an asset to any family business. When people know who they are and what’s important to them, they can better resolve family business issues and add real value to the business.
Recognizing the Value of Work and Self-Worth
Family businesses must understand how work affects an individual’s self-esteem. It’s important to help each person find fulfilling work, whether it’s in the family business or elsewhere. It should be clear that all kinds of work contribute equally to the family’s collective skills and knowledge.
This could mean offering chances to try different jobs within the business or backing their interests outside of it. Building a culture that celebrates everyone’s efforts, no matter their role, is also key.
By supporting family members in their career choices and valuing their efforts, family businesses can foster a respectful and appreciative environment. This cultivates a more dedicated team committed to the future success of both the business and the family.
Nurturing human capital through personal and professional growth opportunities is crucial for the success of a multi-generational family business, as it ensures their longevity and prosperity. It is through deliberate investment in fulfilling each member’s fundamental needs, which span physical, emotional, and psychological aspects—such as feeling loved, having a sense of belonging, and finding purpose—that the business propels forward.
ABOUT THE AUTHOR
As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.
Cory’s personal objective as a Wealth Advisor is simple. He is committed to supporting families to take control of the areas of their lives that truly matter to them. This commitment revolves around using specific tools and strategies that enable families to take action with confidence which will support them through life’s critical transitions.
ABOUT THE AUTHOR
As the Senior Wealth Advisor at Beacon Family Office at Assante, Cory Gagnon has supported successful family enterprises to preserve, protect and transition their wealth since 2011.
Cory’s personal objective as a Wealth Advisor is simple. He is committed to supporting families to take control of the areas of their lives that truly matter to them. This commitment revolves around using specific tools and strategies that enable families to take action with confidence which will support them through life’s critical transitions.
