When next-gen leaders are asked to assume more responsibility and act like owners, they’re typically expected to have “skin in the game”—in other words, buy into their firms. The obvious challenge is that they often lack the financial resources to fund a buyout. In that stage of their lives, they are usually paying for family, children, college funding, etc. It’s even harder for them when the firm’s got a high valuation.
A firm that’s changing hands will have to strike a delicate balance coordinating the share purchases of new partners with the payouts to departing owners of differing ages who have various retirement goals and demands on their own liquidity. Enterprises solve these significant capitalization challenges by creating a clear structure for ownership investment and divestiture. They also provide clear communication about career paths and an understanding of the investment required to become an owner. They manage relationships with banks or other organizations willing to provide capital to the less wealthy next-generation employees, recognizing that sweat equity is also critical to the ongoing financial success of a firm.
4. The Company’s Vision And Culture Must Transcend The Organization And Its People
While firms operating as businesses often have company mission statements or statements of values, these can be uninspiring or narrowly focused on boosting the shorter-term bottom line. Business-success metrics and employee-performance goals may also be overly centered on bottom-line results.
An enterprise, however, must focus not only on profit but also emphasize a powerful vision and culture with broader aims.
A vision that articulates key, long-term goals will more effectively align employees’ daily activities with the firm’s true mission and values. More importantly, such a vision helps everyone understand their interdependence and creates a common sense of meaningful accomplishment beyond the bottom line.
When the employees understand a firm’s culture, they understand what behavior is expected of them, including whether they are on a path to ownership. A strong culture also contributes to stronger brand recognition, especially when it’s communicated to clients and the community.
An enterprise can only come into its own when there is successful collaboration among the main stakeholders, who must recognize their interdependence and display a willingness to make decisions and take actions for the greater good of the entire firm over time. All employees of a firm must be willing to think less about success for themselves and more about a future where they depend on others.
A Final Thought About The Future
Evolution is an interesting thing. In nature, it never really ends, and while we can guess where it might lead, we do not know for certain until it actually happens.