A. We have a written policy specifying the education and outside experience required for all management applicants, whether they are family or not.

B. We have a written policy specifying education requirements only.

C. We are in the process of putting together a written policy on employment criteria

D. We have an informal, unwritten policy, but many family members expect they will automatically have a job at the business when they want one.

E. We make room for any and all family members who are interested in working at the family business.

2. Is there a training program to prepare new family employees for future management?

A. We train all new entrants and rotate them through each department, then they start at the bottom and work their way up. They are included in all or most management meetings.

B. Each new family employee is trained by the head of the department he or she is assigned to, with some training in other areas.

C. We encourage and pay for new management entrants to attend local community college courses or trade association programs.

D. We are in the process of developing a training program for all new hires.

E. Training is ad hoc, on the job. Everyone is expected to pitch in as required and is responsible for acquiring skills they need.

3. Is there a mentoring program for successors?

A. We match future family managers with long-time nonfamily executives, who provide formal, professional guidance for up-and-coming leaders.

B. There is no formal program, but we do match younger generation managers with seasoned nonfamily mentors.

C. We don’t assign mentors to young family employees, but we do encourage senior managers to counsel and “watch over” future family managers.

D. There is an outside family advisor with whom family members can talk when they have a problem.

E. Our nonfamily senior managers would be too threatened to train young family members who will eventually out-rank them and out-earn them.

4. Have key non-family executives been given incentives to help develop next-generation managers?

A. We provide long-term and short-term incentives through a deferred compensation plan and current bonuses.

B. We provide short-term incentives by tying a portion of current compensation to increasing company profit or value.

C. The executives have been asked to design an incentive proposal.

D. Key nonfamily executives have employment contracts to reduce the threat from the future change of leadership.

E. There are no financial incentives. We rely on the loyalty of long-time employees.

5. Has the current owner identified the next-generation leader?

A. A future successor has been identified and is being groomed to take over at a designated time.

B. No timetable has been set for management succession. Team-building and enhanced communications are being implemented, which we hope will help identify a future leader.

C. Potential future successors are too young to know where their interests and abilities lie, but interim nonfamily managers will take over until family successors demonstrate the interest and ability to take over.

D. There are many family contenders; a mismatch in talent and/or family politics have prevented current owners from selecting among them.

E. Current owners plan to let the next generation work it out for themselves after current owners step down.

6. Do employees—family and nonfamily—receive regular performance reviews?

A. Family employees are assessed at least annually by their direct supervisors, based on quantifiable, objective criteria

B. Family employees are assessed regularly, but criteria are mostly subjective, not quantitative.

C. There is no formal performance review, but when performance problems arise, we inform underperformers and keep a record of such discussions in their personnel files.

D. Employees understand our judgment of their performance based on the size of their holiday bonus.

E. It’s just too sensitive for us to assess family members.

7. Have future successors articulated a vision and values statement?

A. Yes, and they have translated the statement into a written strategic plan, complete with revenue and expense projections.

B. They have written a vision and values statement, but not a strategic plan.

C. They are in the process of working on such statements and plans.

D. Future successors’ views and goals are so disparate that they were unable to find, let along articulate, a shared vision and values.

E. Future successors have been unable to work together in any capacity.

8. Have current owners articulated their expectations for business performance, such as return on assets or return on investment, in objective discussions?

A. Current owners have outlined business performance objectives, compared with the company’s own historical performance as well as industry standards.

B. Current owners have informal performance benchmarks, but they are not weighed against industry norms.

C. Benchmarks are based on profitability, but not adjusted for extravagant family perks.

D. Our company and/or industry is experiencing so much change and economic strife we are lucky just to be breaking even.

E. Current owners are unwilling to set performance measures, because we would have to share financial information we keep strictly secret.

9. Is there a dispute-resolution plan to help future family owners and managers amicably work out potential disagreements about management issues?

A. All family managers must take courses in constructive negotiation and mediation as well as attend an annual family meeting to bring issues to the table.

B. Our shareholders’ agreement contains incentives to work out any future conflicts concerning the business, including valuation formulas, buy-out terms, and liquidity requirements.

C. We employ outside mediators to help settle any disputes that crop up.

D. We know we get the best results when family managers compete intensely, and so far current owners resolve all disagreements.

E. We have no dispute-resolution plan.

What your answers tell you

A. You are in good shape, but make sure you revisit this area every two to three years to consider any needed updating or changing.

B. You are well on your way, but it would be wise to make sure that all details and contingencies are properly accounted for.

C. You have taken important steps, but not yet considered some crucial aspects.

D. Day-to-day priorities that have prevented progress in this area should now be put on a back burner, before unresolved issues fly out of control.

E. Your lack of attention to this area puts your business and family in a risky position. Immediate attention is recommended.