September 12, 2022
Article
Harvard Business Review (website)

Merit or Inherit: How to Approach Succession in a Family Business

Format:Electronic

Abstract

One of the most critical questions facing family businesses is how to treat the next generation. They are clearly different from other employees, as current or potential owners of the company, whose wealth and reputation are on the line. On the flip side, most parents rightfully worry that providing too many unearned advantages undermines not only the next generation’s work ethic, but the soul of the company. In answering this question, families often default to one extreme or another: giving the next generation special treatment that doesn’t hold them accountable to the same standards as other employees (the “inherit model”) or requiring them to earn everything they get (the “merit model”). This article describes a path that blends elements of both, and which is far more likely to set family members up to succeed.