Upon reading of the death of Peter Drucker, I was reminded of the problems of family business, individual accountability, and succession of which he wrote years ago. In the over 30 years that I have worked with family owned businesses there have been so very many occassions wherein the business is on the brink of failure, will fail, or has substandard performance because the company has not been prepared for “up and comers” from the family within the enterprise. All to often these “up and comers” of the family are either faced with a lack of financial management or operational management training and preparation, or capital investment into equipment, plant, marketing, or key personnel (with profit and growth accountability) has for years been ignored in favor of stripping the company of cash or the complacency of “I made a profit” regardless of what that profit should have been or was needed to compete in the ever changing business environment. Often times, even if the noted problems have not taken place, so as to undermine the success of the business, some or all of these “up and comer” successors, just will never make it in the busisness. Instead, their lack of skills, absence of capacity to manage and lead, and lack of earned respect from critical non-family employees dooms the enterprise to mediocrity or failure.

One of the best investments family ownership can make is to contract with experienced and performance oriented outside resources to create an implementable program of business training in the financial management of that particular business, in operations, and sales management within an accountable (to profit and revenue growth) standards. Let them earn the operational roles and respect of the employees, while effectively getting an MBA in their own business. If they can’t or won’t perform, then pay them if you must, but let them stay home. Critical operational roles should never be an entitlement or inheritance as the stock may be. The business can’t succeed unless critical ownership and management can demonstrate their ability to perform to norms that are at a minimum required for profit, growth, and value building, and clearly outline what other critical employees can expect of that family manager…thus respect, leadership, non-family employee accountability, and the opportunity to maximize planned profit and revenue growth become practical and achievable.