EMA Journal • Fall 2024 • Money Matters

Most parents are super proud of their adult children. That’s why it amazes me the unnecessary difficulties they put them through when trying to prepare them to successfully run the family business, carrying on the legacy.

Most parents are simply unaware that generational transition is not as easy as it looks. It can be a rocky road, full of potholes and pitfalls. Avoid some of them by using this guide.

Mistake No. 1 – Thinking your kid(s) should be just like you. Let’s face it. You run a successful business, and part of the reason for the success is your talents and hard work. Maybe you have a financial mind. Maybe you are great with schmoozing customers or growing your top line. All of that is awesome. Until … you expect your kid to be just like you. Guess what? They normally aren’t!

What to do – Assess the strengths and aptitudes they have, not the ones you wish they had. When you allow them to capitalize on their own God-given strengths, which likely are different than yours, they will be happy and productive helping the business thrive. On the other hand, expect them to be just like you, and they will be miserable and so will everyone else around them!

Mistake No. 2 – Thinking your top leaders will respect and help them. If your top leaders have been with you over decades, they may remember your child as a spoiled 5-year-old, a troublesome teenager, or whatever else and won’t see them as a peer.

We even witnessed a longtime leader tell two siblings being prepared for leadership that they would never own the company because they “just didn’t have what it takes.” (That leader is now gone, and the children are successfully running the company!)

What to do – Be direct with your leaders that their role now includes helping Junior be successful, and that is just as important as their current functional role. Provide communication paths that are respectful of the next gen. Role clarity is vitally important to success.

Mistake No. 3 – Making them do every job in order to learn the entire business. When the next gens must perform in every role, including the ones they have zero talent to do well, you put them into a position where they will fail and, more importantly, lose the respect of their fellow employees. You did not expect that of other leaders you hired, so don’t expect that superstar talent from them.

What to do – Make their first role in your company be the one they have talent to conquer. Are they numbers oriented? Start them in accounting! Love people? Start them in sales or human resources! Have a passion for trucks and equipment? Start them in your trucking division. Once they master that first area, ask them what they want to do next.

Mistake No. 4 – Not including them in a major project with impactful profit impact. Are you amid a major decision like a major software change? Any project that will impact the bottom line (positive or negative), especially years into the future, should have multiple sets of eyes, and your next gen, even if not knowledgeable, can provide prospective.

What to do – Include them in project meetings. Help them be an observer and teach them how to add quality input by asking curiosity questions. Their fresh perspective can be a huge blessing to any new undertaking; frankly, they have many more years in the business than you do to see the outcomes come to fruition!

Mistake No. 5 – Excluding them from strategic vision work until they prove their worth. Too many parents exclude their next gens from learning the critical skill of strategic vision. They expect their kids to be heads-down in daily work and do not involve them in where the company is going or even how strategic direction happens. Are you looking to grow by 5 percent, 10 percent or 20 percent? Why and how? Which parts of your business do you intend to grow? Are you considering divesting of anything? How do you decide what goes and when?

What to do – Let your next gen in on how you think, how you plan and the steps you take, even if it’s not in writing. You have a process whether you recognize it as that or not. Don’t only let them know how you think and make decisions, but hear their ideas for the future! They often have innovative ideas you have not tried yet.

Mistake No. 6 – Providing zero or only negative feedback. I’ve had next gens tell me the only time they hear from their parent is when they’ve made a mistake. Oof! That’s no fun!

What to do – Catch your next gens doing something right! When they mess up, be kind and constructive. In general, human beings need to hear 10 positives for every negative or criticism to stay productive. When you catch them doing something, well, verbalize it! “When I saw you doing ‘X’ and noticed how you ‘Y,’ I was really impressed with how you handled that,” or, “Next time you do ‘X,’ try using this other method of ‘Y,’ and you’ll likely get the results you want.”

Mistake No. 7 – Not allowing mistakes. Recovering from mistakes is a vital business skill. When parents expect perfection from their next gens, they not only set an unrealistically high bar, but they also erode rather than build self-esteem.

What to do – Encourage mistakes. When next gens realize that mistakes are a normal, natural part of growth, they will learn to take calculated risks just like you do.

In The Meridian Method of Succession, we teach the Platinum Rule. You know the Golden Rule of treating others how you would like to be treated. When it comes to next-gen leaders though, you need the Platinum Rule, which is to treat them the way they want to be treated. How do you find out what that looks like? It’s simple: You ask!

Mistake No. 8 – Skipping communication training. Tactful communication, as you know, is a vital communication skill needed to successfully run a business. Leaders can’t shy away from tough conversations, but they also can’t bulldoze to results.

What to do – Meet weekly to discuss communication observations and coach needed communication skills. Don’t have them yourself? Then engage an outside coach like Meridian!

When you follow these eight guidelines, you will avoid the most common generational transfer pitfalls and be smoothly on your way to where your next gen will have even more success in the family business, carrying on the legacy.

Meridian Associates has been partnering with family-owned petroleum marketers for more than 30 years to remove barriers, accelerate business growth and reduce stress levels. We’ve equipped more than 4,000 leaders to grow their business and help their families thrive through our combination of high-impact business coaching, petroleum-focused leadership events, advisory and precision company valuations. Meridian helps petroleum leaders build their legacy. Discover how Meridian can help your business thrive by visiting www.askmeridian.com or calling us at 817.594.0546.