How Parents Can Promote Resilience in Family Businesses

Parents of family businesses often wonder how to prepare their children for the issues they will inevitably face as they transition into corporate leadership positions. The focus is on continuing the family legacy through the business, and the success of the next generation of members as individuals. The most important thing a parent can do to improve the ability and resilience of the next generation is to provide children with the opportunity to develop internal points of control – the belief that they can control what happens in their lives; not that their lives are controlled by external forces of. In order for members of the next generation to understand that they can control their own outcomes, parents need to 1) promote positive experimentation, 2) embrace failure, 3) require children to identify multiple solutions to problems, and 4) avoid micromanaging. Focusing less on telling and more on delivering a learning experience can make all the difference.

As a professor of family business, I have been teaching the “next generation” for nearly 20 years. As expected, my character has many conversations with the parents of these next-generation leaders. In almost every conversation, questions about parental influence come up. The details of the problem may vary from family to family, but the intent is the same: How can I get my son or daughter to…? A common theme of this question is resilience. Parents are desperate to learn how to prepare their children for the problems they will inevitably face. The focus is on continuing the family legacy through the business, and the success of the next generation of members as individuals.

After listening to questions for so many years without being able to provide a clear answer, I decided to look for one. Over the next few years, I interviewed the next generation of students, trying to understand which factors had the greatest impact on who they were, what they believed, and how they behaved. While researchers shouldn’t begin these efforts with an idea of ​​what they expect to find, I fully hope that my findings will alleviate the concerns of the parents I asked. I hope that the people with whom they have a close relationship – especially their parents – will be a major source of influence in my student life. Additionally, I hope to discover how parents can better engage and educate the next generation to develop capable and resilient leaders.

I was dead wrong. In interview after interview, my students rarely mention their parents, grandparents, or even friends as determining factors in their lives.On the contrary, almost every student, not much changed, talked about how to determine experience shape who they are.

These “defining” experiences, while unique to each student, do share some commonalities. They transform the way students understand themselves and their ability to affect the world around them. A student talks about how they got the freedom (as teenagers) to create marketing materials for a family business without supervision, and how it changed their perception of their abilities. Another talked about going away from home to school and how compared to their peers, the experience helped them recognize the unique perspective that growing up in the family business gave them. In one extreme example, a student spoke of a fire in a home factory. Members of the leadership generation were traveling when the fire broke out, and the student, as a teenage student, had to deal with the tragedy immediately. The student recounted how the experience helped them see their potential as leaders and solidified their desire to join the family business.

So, where are the parents in these narratives? Are parents not influential? Absolutely not. In most cases, parents are the coordinators of these defining experiences. But it wasn’t the direct talk, the teaching, or even the example that the parents set that had the most impact. Rather, it’s the parent’s role in providing the experience as a learning opportunity.

Not all experiences lead to this transformative learning, and some do more harm than good. So, how can parents approach this process of providing the next generation with learning experiences that increase competence and resilience? In 1989, developmental psychologist Emmy Werner completed a research project in which she studied 698 children from birth to age 40. The purpose of the study was to examine the impact of various risk factors such as poverty, conflict, low education, etc. over time. Two-thirds of children are considered high-risk, with risk factors contributing to serious behavioural problems. However, in one-third of cases, children continued to lead productive lives despite significant risk factors. Essentially, they are resilient in the face of adversity.One of the key factors that differentiated the prolific children in this study was their ability to develop internal control point. As a component of personality psychology, the point of control refers to the degree to which an individual believes they can control an outcome. Internal points of control represent the belief that a person is in control of what happens in their own life, while external points of control represent the belief that external factors are in control.

Combining the importance of experiences I learned from student interviews with these findings about points of control, parents looking to instill resilience in the next generation should focus on providing learning experiences that develop internal points of control. This will require helping the next generation of members understand that they can influence their own outcomes. That’s it:

Promote active experimentation:

The world we live in is unpredictable and becoming more unpredictable. The next generation of members should have the opportunity and ability to learn through active experimentation – testing a hypothesis and trying something to see if it works, building the “I can figure it out” belief. Of course, more experienced parents might be able to predict the outcome, but saving the next generation of members from the “trouble” they find themselves only promotes external points of control.

Embrace failure:

I once asked a group of family business leaders how they could use their wealth to “help” the next generation. One parent responded that wealth was used to increase the likelihood of success. With that said, effort sounds positive, but what if I instead said wealth was used to reduce or eliminate the possibility of failure? If resilience is the ability to recover from difficulty, how can it be practiced without failure? If all barriers are removed, how will the next generation trust them to be resilient and capable?

Identify multiple solutions:

The impact of failures on control points depends on how the next generation responds when failures occur. Helping next-generation members consistently identify multiple possible solutions to any problem can support the development of internal control points. There is only one solution, and failure represents the end and a feeling of inevitability. With multiple solutions, failure becomes an idea that doesn’t work. Simple question: What are you going to try next? or What’s your next thought? The next generation of members can be helped to focus on their reactions to the results, not the results themselves.

Avoid micromanaging:

Establishing internal control points in the next generation requires parents to give up some of their own control. Still, a properly functioning home and family business requires a certain level of structure. When supervision emphasizes tight control over all aspects of the process (process control), parents working with the next generation may promote external points of control. Instead, parents should focus on expected outcomes by providing the next generation with clear direction about what to expect, but allowing them to use their own ingenuity to figure out how to achieve goals (outcome control). This approach establishes internal control points without compromising high standards or expectations.

As parents, we often feel that what we say or do has the greatest impact on how our children believe and behave. Instead, my research shows that it is the experiences parents provide to the next generation that really shape who they are. Knowing this, business families looking to build resilience in the next generation should focus on delivering experiences that support internal points of control, or trust them, rather than external factors, to control outcomes in their lives. When it comes to raising the next generation, placing less emphasis on telling and more on delivering learning experiences can make a big difference.

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