Lessons in family business leadership

In September this year, KPMG launched the Family Business Leadership Academy, with the first residential hosted at Nexus in the University of Leeds. 

I’ve spent the past seven years helping clients solve problems for which there is no playbook. And there have been no shortage of those. From Brexit to Covid to hybrid and, this year, geopolitical and macroeconomic turmoil. As Course Director for KPMG’s Family Business Leadership Academy, I’ve spent the past two years looking at those issues through a new lens. Family businesses think about these things differently. Here are the top five lessons family business leaders wish they’d learned earlier:

Create a network of trusted peers

It’s lonely at the top. And particularly lonely for Family Business leaders. Especially for emotive subjects such as succession. You can’t always talk about Mum or Dad with colleagues who work for them. And while I might look to my family for support after a bad day at work, that doesn’t always work, particularly if they are the subject of a tough shift! So, who do family business leaders turn to? KPMG’s research shows that the next most popular sources of support are other family business leaders and external advisors. It’s important to cultivate networks of people you can turn to outside those who may be conflicted.

Leadership is a mix of the old and the new

In the new working environment we are operating in post-pandemic, individuals and businesses have gone through a “shock”. It’s caused us to question the purpose of everything and all leaders need a guide to take them on a transformational journey. As future leaders develop their leadership style, some of what previous generations can pass on is timeless; but not all. People are still people and lots of things remain constant; judgment, attitude to risk, commitment to the long term, knowing who to trust. Other things have changed unrecognisably; technology, the ESG agenda, labour market dynamics. Being an effective transformation leader means knowing which advice is timeless and what needs a fresh take to be relevant. It’s an important judgment call for next generation leaders.

Successful succession is not passive

Succession strictly means one following another. That’s not the same as transmission – the passing of the mantle of leadership. The latter is a conscious action and preparing for that can take time. It can take ten years to plan an effective succession, preparing the next-generation leader and, as importantly, the organisation they will lead, its customers and suppliers. I have heard stories of successful transitions but the ones that stick with me vividly are the ones that didn’t work. In which both family and business feel the aftershocks for years, or longer. 

I am working on several large change programmes and I reflect on the effort that goes into de-risking the change. It’s enormous! Ramp down periods, grey-out times, data migration, rehearsals. Why should we expect the generational leadership change to deserve less effort?

Backing next generation leaders is a measured risk, not speculation

At a recent event we were asked: “Which is investment and which is speculation? Giving your granddaughter a significant sum to invest in her personal project or giving it to an investment bank to generate returns?”

Their logic was that, win or lose, your granddaughter will learn a lot and, if she will run the business one day, that may well turn out to make multiples of the initial outlay in decades to come. The current generation of leaders readily admit to making mistakes, especially if they learned from them, preventing more serious setbacks later. Isn’t it important to expose the next generation to the valuable opportunity of mistakes? Or lessons as I prefer to call them.

Find out what others are reading

This was a real surprise. At one of my favourite events this year I joined an eclectic group of eight people from at least three continents found at the same table. No question posed, no content set. “Talk amongst yourselves” if you will. But rather than comment on travel plans or lunch one participant asked what books were on our bedside table. The discussion that followed on everything from Eastern philosophy, meditation, and cognitive psychology. And a bit of Jack Reacher (everyone needs to relax sometimes). It was rich, enlightening and surprisingly practical. I sent a copy of one of those books to our learners, and another featured in our Family Business Leadership Academy Book Club.

Putting it all together – KPMG’s Family Business Leadership Academy

As course director for KPMG’s Family Business Leadership Academy, I have seen these lessons brought to life for our first cohort. They have attended their first residential, book clubs, peer learning sessions and gave us their take on the podcasts and webinars which touch on all these subjects. It’s a course designed for next-generation leaders to learn with peers about what works. 

Designed to fit around busy lives, it offers the next generation exposure to the latest thinking, an experienced KPMG partner mentor and an opportunity to be supported through a significant project. And, thinking about loneliness - we hope that the relationships our next generation leaders form on the programme will last a lifetime, providing a lasting network of peers to turn to for support. 

And as our leaders work on their transformation projects, I am struck by how they plan to use that support. Some have decided to bank the benefit and de-risk succession. Others have decided to “spend” the risk reduction or, as they put it, “perhaps with all that support we can afford to be bolder and scope out a more ambitious project for our next generation leader”.

We have just opened applications for the second cohort, beginning in September 2024. If you are a sponsor or a Next Gen leader who’d be interested in finding out more about the Academy, email mark.essex@kpmg.co.uk. Click here for more information.