By Prof. Enrique Soriano
As we explored in Part 1, the distinction between merely naming a successor and developing a true leader is fundamental to the survival and success of family businesses. Identifying who will take the reins is crucial, but it’s only the first step. The more critical phase involves cultivating the skills, mindset, and emotional intelligence necessary for true leadership. This is not a one-time event but a continuous journey requiring effort, guidance, and consistent nurturing.
Despite an extremely tiring first two weeks of October, I managed to drop by Vietnam the day after returning from Germany to continue this mission. My 3-night visit to Ho Chi Minh City was focused on auditing a strategic plan as well as providing leadership and next-generation mentoring to a family business operating in Ho Chi Minh City. This engagement also included values formation for the 3rd generation, ensuring that leadership was rooted in the family’s core principles.
The task of guiding family business successors to become true leaders goes beyond simply passing down control—it is about fostering qualities that ensure the continuity and success of the family enterprise for generations to come.
In this article, we delve deeper into the essential components that turn potential successors into capable, resilient leaders: mentorship, emotional intelligence, values-driven leadership, and resilience. These elements form the backbone of leadership development, ensuring that the next generation is not just prepared to manage the business but to lead it into the future.
Keys to Leadership Development in Family Businesses
- Education and Exposure: Developing future leaders in family businesses requires a mix of formal education and real-world exposure. Many successful family businesses invest in the next generation’s business education, sending them to top universities or industry-specific training. However, classroom learning is just the beginning. Equally important is exposing future leaders to the daily challenges of the business. They need to understand the business not only from the top but also from the ground up, learning the importance of every role and department.
- Mentorship
Mentorship is a cornerstone of leadership development in family businesses. Current leaders should serve as mentors to the next generation, providing guidance, sharing experiences, and passing down lessons learned over years of leadership. Effective mentorship goes beyond technical skills and management practices—it encompasses wisdom, integrity, and an understanding of the family’s legacy.
However, it’s important to recognize that mentorship can and should extend beyond family members. Family business successors can greatly benefit from external mentors who provide objective advice and bring a fresh perspective. These outside voices help develop critical thinking, encourage self-awareness, and expand the successor’s worldview. By broadening their horizons, they can adopt a more holistic leadership approach that goes beyond internal family concerns.
External mentorship also introduces next-generation leaders to diverse perspectives, challenges their assumptions, and encourages innovation. This balance between internal legacy and external insights creates well-rounded leaders capable of navigating both the family and business aspects with maturity and foresight.
- Emotional Intelligence
Emotional intelligence (EQ) is an often-underestimated trait that plays a significant role in leadership within family businesses. Due to the emotional ties that exist in a family-run firm, future leaders must learn to navigate both business operations and complex family dynamics. Leaders with high emotional intelligence can handle conflicts more effectively, build trust, and maintain harmony between the family and the business.
Leaders with strong EQ are better equipped to handle emotionally charged situations and interpersonal issues, whether it’s sibling rivalry, disagreements between generations, or business conflicts. They are able to mediate, empathize, and communicate effectively, preserving family unity while making sound business decisions.
To be Continued
***
Register now for my final virtual event of 2024: Future Proofing 2025: Bold Strategies for Navigating Uncertainty and Driving Growth. This Zoom event is open to the public, where I’ll share actionable growth strategies tailored for CEOs and business owners to implement in 2025. To secure your spot, contact Thomas +639565128299 and register via Future-Proofing 2025: Bold Strategies for Navigating Uncertainty and Pursuing Growth.
