Mike Falco, former CEO and director of the Topflight Corporation, looks at the benefits of peer advisory groups for the next generation of label industry leaders
Family businesses typically evolve through three stages, and the type of leadership required at each stage is different. In the start-up, entrepreneurial stage, the business is designed around the founder. It is driven partially by personal goals and dependent on the leader's intuitive direction. The second stage is ‘managerial’, where the company is more organized, but still like a family. Many of the longer tenured line workers have become managers within the company.
The third, ‘professional’ stage, can sometimes be the most challenging. More is required of the management staff in terms of their leadership capabilities, especially learning things outside their comfort zones. Decisions are driven more by what is in the best interest for the business.
During the professional stage, the time has come for the second or third generation leadership of the family to take the reigns of the business. This often becomes a challenge for the senior-generation business owners who still spend too much time making the day-to-day financial decisions and are still an influential part of company management meetings.
By age 40, the next generation leaders should be making these types of decisions and gaining leadership influence within the company.
It is also at the professional stage, where the next generation leader can benefit from joining a peer-to-peer advisory group. A study from the Small Business Administration showed that, between 2005 and 2008, business owners with a peer advisory group grew 44 percent, while those without one grew 25 percent over that three-year period.
Joining a business peer advisory group typically involves attending professionally facilitated small group meetings on a monthly basis. The meeting members are all business owners or company leaders. Each month, among other things, members discuss their current business challenges, with each person getting feedback from other members on how they might tackle a given business challenge.
In family businesses, it makes sense to honor those traditions and practices that have helped the business prosper. However, in an ever-changing world economy, you want to guard against traditions ('we have always done it that way') that conflict with the future prosperity of the business.
Peer-to-peer advisory groups can challenge this ‘traditional’ thinking among company leaders, allowing them to see situations from different angles and make better decisions.
Next generation leaders often spend too much time working in their business, rather than working on their business, and a peer-to-peer advisory group forces members to take the time to think about their business direction on a monthly basis.
Strategic progress is discussed with the group, who in turn serve as a sounding board, providing invaluable insights on the direction of the company and assisting the business to get to the next level of growth. Indeed, simply having to report current status to other members has the effect of creating accountability for a business owner that might not otherwise exist.
For example, if a business owner or executive tells his peer group that he will finally have that difficult ‘performance’ discussion with a staff member; the expectation is that they will do what they say they will do. In this way, the group members hold each other accountable for forward progress on their business challenges.
It goes without saying that improving your business is often the fastest path to improving your life. Without the headaches of a given business problem, you will likely have more time to spend with family and to attend to your own personal needs.
In almost every case, members is a peer advisory group become friends. Beyond the positive impact of making more money, peer advisory group members support each other through personal challenges, learning to lead more fulfilled lives. At the end of the day, that may be the biggest payoff of all.
This article was published in L&L issue 2, 2011
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