— sincerity, reliability, competence, and care. Sincerity is the consistency between one’s words and actions. Reliability is keeping the commitments you make to others. Competence is the assessment that you have the skills, resources, and capacity to do what you say you can do. Care is produced when you have the other person’s best interests in mind. You may trust someone in three domains, but not necessarily the fourth.
In a family we observed, the patriarch believed that his son was sincere, reliable, and caring. However, he did not believe he was sufficiently competent to run the family’s east coast real estate business from the west coast. They agreed on criteria to increase his competence that included getting a real estate degree and expanding business networks and the family business brand on both coasts.
We have seen in our interactions with many families that definitions of preparedness can vary greatly. For one founder, preparedness meant first working for three years at a competitor’s business. For another, readiness meant starting at the bottom and cleaning construction sites for a year. Completion of an MBA indicated being ready to head a business division for yet another family business leader.
Over the years, we have noticed a tendency for founders to tighten controls of the family business as they look toward succession. To balance control with flexibility, families must bolster the participation of the next generation by giving them more autonomy, embedding high-trust behaviors, and adhering to clear standards of readiness. When done effectively, succession plans provide a pathway for future stability and ease the transition of next generation leaders.