Your Family Business Needs a Deep Bench

By Matt Dallisson, 05/06/2020

Whether business is booming or your organization is in the midst of a tough time, a crucial aspect of risk management is ensuring that your organization has bench strength — that employees have the depth of skill and experience to move easily into jobs of increasing responsibility. Is your staff prepared to step up if business grows rapidly, if new regulations or other world events make it more complex, or if a senior leader is suddenly unable to perform?

The importance of bench strength is often overlooked; we’ve all seen how day-to-day urgency can take precedence over the thoughtful development of the employees who might be needed to take a larger role with little notice. Family businesses are particularly used to making do with what — or who — they have, and they often deploy people in multiple or extended roles without considering the extra organizational vulnerability that these stretches can create. The following steps can help you strengthen your bench in both functional and organizational skills, so that you’re well-positioned to thrive in good times, and in bad:

Map all business-critical roles

Identify who holds the most critical roles now, and who would be next in line if something took the incumbent out of action. Highlight situations in which you’re thinking of a single individual as a potential fill-in for two or more roles. And keep in mind that you’re not just at risk of losing one active employee at a time — two family members may decide to move on at the same time, for example. This happened to one of my clients. A mid-level manager took a job in another state, followed immediately by his spouse, who had also worked in the family company.

Keep an eye out for who may be ready to take on more responsibility

Some aspiring leaders are easy to spot; they ask for advancement, speak frequently in public settings, and do favors for loyal subordinates. But modest, humble leaders may be working quietly in the background. Or, the work of an individual contributor might be what’s sparking a team’s success. Look for opportunities to call attention to their important contributions and give them new experiences that can strengthen them for future growth. For instance, one of my clients created a program for emerging leaders that involved significant group work on new initiatives. Senior leaders tracked performance and were sometimes surprised by which participants drove the group’s accomplishments.

Ensure that new employees understand the fundamentals of your business

I’ve worked with family businesses that hired mid- to senior-level executives from outside their specific industry specifically to shake up internal thinking and bring in some new perspectives. But when these new execs did not actually understand the models, math, or business rules before breaking them, then no matter how bright or accomplished they were, they gave inaccurate direction and disrupted working processes. It became dangerous to rely on them, and highlighted the importance of schooling new people on your business fundamentals before turning them loose to follow their own lights.

Teach general business knowledge to help develop employees’ acumen

Many family and privately held businesses are too insular, and are likely to foster insularity in junior employees. Encourage employees to be aware of the global economy and industry trends to give them context and a broader perspective for both daily and longer-term decision-making. Some family businesses require that family members work outside the company for a certain number of years or attain particular levels of leadership before joining the company; others sponsor professional education such as MBAs or certificate programs for both family and non-family employees.

 

Best practices for long-term success…..

Require the use of scenario planning

Instruct managers to assess situational risk and generate alternatives based on better-than-expected and worse-than-expected results, so they develop a discipline of being ready for varying eventualities. One of my clients uses A/B/C scenarios for such exercises as budgeting, inventory planning, and service levels so that leaders in every department get comfortable planning for a variety of eventualities.

Encourage active decision-making, rather than deferral or delay

Many family businesses operate with dotted-line relationship and may rely too much on employees who serve as coordinators or project managers to communicate decisions and report results. New managers sometimes abdicate their decision-making authority to experienced project managers, and don’t get the necessary experience taking responsibility for the choices and actions of their teams. Senior leaders should provide feedback and coaching to ensure that new leaders get the practice they need to make both small and substantive decisions and become capable and ready to lead in both normal and exigent times.

Be aware of who takes accountability — and who holds others accountable

When things go wrong, who steps forward to take responsibility? Many aspiring leaders do not do this without prompting. Perhaps even harder is the ability to hold team members to account when they have not met their goals or behaved appropriately — especially when they’re family. Employees who avoid tough conversations, including about their own failings, will need training and coaching as well as clear examples from senior leaders to be effective with their own teams, and eventually with growing into larger roles.

Screen your rising stars for compassion as a standard performance requirement

Usually, standout employees are noticed for their strong functional performance; they appear to get results. Make sure they also collaborate well with and value their cross-functional colleagues and show empathy for their team members. Up-and-coming leaders who overlook, muscle, or denigrate others now are not likely to behave better without significant intervention. At one of my clients, a bright, communicative mid-level manager impressed his superiors and was rapidly elevated to the point where he came to believe that he knew better than anyone else, and to serve his own interests, he ended up manipulating colleagues and misusing his authority.

Go back and remediate anyone you moved up too quickly

In many companies, bright, competent employees are promoted too quickly when there’s a significant organizational need and bench strength hasn’t been previously cultivated systematically. But because there are always too many things to do, these loyal, hardworking employees can become subject to the Peter Principle, a maxim that expresses the tendency for hierarchical organizations to promote people until they reach a level of incompetence. At one of my clients, a very effective sales rep was promoted to sales director when “there was no one else,” but she did not receive any training or mentoring in sales management. When she did not know how to help her team succeed, she was subsequently at risk of losing her own job, until she received external coaching to help her develop the necessary skills.

It’s worth expending both time and effort to assess and prepare your current employees to be sure they’re able to step up quickly in the event of drastic changes in your business. Using these approaches will also make them better at their current jobs, enabling them to handle more, to contribute more, and to help your entire organization grow — as well as encouraging them to stick around to grow with you.