One of the biggest questions dealers are asking these days is when and how to bring their next-generation of the family in the dealership. The simple answer to this is that they should come into your business when they, and you are ready. Readiness, however, is a subjective term. These three perspectives, should be considered as you are going through the decision-making process:

  1. Yours, the owner
  2. Your next-generation family member, AKA Next-Gen
  3. Your business’

Yours, the owner

Your perspective as the business owner is foremost important. As the dealer principal, you have the freedom of control and the burden of responsibility. So, if you want your Next-Gen on board, feel free to make them an offer. However, if you are a bit reluctant to put on the fraternity or sorority rush, you are likely feeling the burden of responsibility to ensure you are not short cutting your Next-Gen or business.

If that little voice in your head is not already whispering these to you, be sure to listen, with intent to what it might be saying:

  • I need help. It’s getting late and if none of my next-generation family does not come on board soon they will not have time to learn the car business before I retire.
  • He’s not mature enough. I don’t need his personal issues complicating my business.
  • She does not have the right education.
  • He got fired from his last job why should I think he would be committed here?
  • She has a habit of quitting when things get tough.

Whatever your concern, there is a string tied to all your questions that could lead you to the “when answer.” When considering bringing the Next-Gen into the family dealership, it usually is difficult to separate the heart’s influence on the mind. Ask for objective feedback from an advisor on how to squash the anxiety and hesitancy.

I am objective, so I will offer a few pointers on the infamous “when” question.

  • Don’t fabricate a job for your Next-Gen. If you do, you may open Pandora’s Box leading to other fabrication requests.
  • Don’t be your Next-Gen’s first full time employer. Family members are not employees they are Family Member Employees (FME) and they will never be treated like a common-law employee. It will be far greater challenge for your Next-Gen to manage employees if they have never been one.
  • Don’t bring an immature Next-Gen into a mature business. The chances they will embarrass and disappoint you are pretty high. If your Next-Gen needs maturing, allow them to discover the realities of life elsewhere.
  • Don’t bring a Next-Gen into your business until they have a favorable employment record. Failing his or her way into the business is not a good plan for family business success.
  • Don’t bring a Next-Gen into the business because they cannot maintain the lifestyle you aspire for them. It’s better for you to give them money than to allow your Next-Gen to think your business is their personal ATM or to let your managers think the welfare of the business is not your number one priority.
  • Don’t be reluctant to promote the benefits of working in the family business. You may be competing against other opportunities which may appear more attractive to your Next-Gen so you better be ready to compete.
  • Pay your Next-Gen competitively until they prove their ability and their commitment. Then let them feel the benefits of a family-owned business.

Your Next-Gen Family Member’s Perspective

The perspective of your Next-Gen should also be important to your “when” challenge. Do not discount their emotions of feeling rushed into the commitment too early. They may feel it’s the right time or the ship has sailed and it’s too late. Try to understand their feelings and incorporate their thoughts with the objective perspectives of your advisers into your decision.

Don’t be reluctant to challenge your Next-Gen’s feelings which may generate dialogue, debate, or an emotional letting. It is appropriate to have this experience in a pre-employment dialogue. The nature of the dialogue generally confirms premonition. Regardless of how your Next-Gen feels, remember “when” to hire is ultimately your decision. Review the objective feedback and ensure that the reasons behind your Next-Gen wanting to enter the business, makes business sense.

The Business’ Perspective

Hiring a Next-Gen is a big deal. Their arrival creates distractions and elicits an opinion from all your employees. Most of the time, their response to “the boss’ kid is on board” is not good. If you don’t prepare your dealership(s) for the employment of your Next-Gen, gossip can spread like a wild fire with such bizarre thoughts as: “The owner’s next-gen got fired and couldn’t get another job. Now I am going to have to do my job and babysit the boss’ kid. It’s the beginning of the end; the boss is going to retire and his kid is going to run this place in the ground.” So have a plan and involve your management team.

Notably, there should be a job opening for which your Next-Gen is compatible relative to his or her skills, knowledge, and experience. Your managers should also be prepared to train and coach your Next-Gen. If your managers don’t think it is a good time to be hiring your Next-Gen, listen. Reciprocally, if they believe it is time to be proactive in the recruiting and hiring of your Next-Gen, listen.

A key component of the plan, which can be adopted years in advance, is a Family Member Employment Policy that stipulates the formal criteria and process for employment in the business. By involving your managers in the process, you will send a reassuring message that you are not going to burden them with babysitting.

Be mindful there is a difference between an FME and a Successor. Communicate with your managers and key employees well in advance that you are developing a plan for your Next-Gen. Involve them and ask for their input in helping develop a plan not only for employment, but also for successor development. Involving your managers in the creation of a Successor Development Program reassures them you are not going to turn the company over to a nincompoop. Be clear about employment plans to your Next-Gen family members as soon as they graduate from high school, so they understand the family business is serious business, not an opportunity to ride the coattails of their parents or siblings. Share the Successor Development Program after your Next-Gen distinguishes themselves in your business as a role model for commitment, effort, and enthusiasm.

Recognize, when you are hiring a Next-Gen, you are bringing in a new role model for behavior and attitude. So, be very explicit to your Next-Gen as to what you expect and it is critical, that they buy into the vision and mission of your business. Ideally, you would also adopt Family Member Employee Performance Expectations. Don’t let your Next-Gen make assumptions regarding expectation or make up his/her own rules. Most importantly, do not supervise your Next-Gen or allow another family member to do so. Find a mentor and always meet with your Next-Gen’s direct report and express to them you want them to not give your Next-Gen special treatment. Of course, they will give them special treatment, but by meeting with them they will feel more empowered to hold your Next-Gen accountable to the employee handbook and their personal standards of performance, which are critical to training and development.

Excerpt from Family Business Heartburn Relief – Section 2, Chapter 6 Relationship with Children

Author: Loyd Rawls

Loyd H. Rawls, President/Chairman of The Rawls Group, has specialized in succession planning for closely-held, family owned businesses since 1973. Well respected in his field, Mr. Rawls is a highly requested speaker and has published numerous articles and publications on this subject such as “Seeking Succession: How to Continue the Family Business Legacy” and “The Succession Bridge: Key Manager Succession Alternatives for Family Owned Businesses.”

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