Information systems can help you pass the torch

In recent years I have done many projects in manufacturing plants, and a considerable part of them are family businesses.

It surprised me that there is a continuity of the younger generations in manufacturing plants, unlike in other businesses, where owners tell me that none of the children are interested in continuing and that they end up doing their own thing.

Perhaps it is the magic of the industry, this feeling of doing real work, providing work and supporting many families over the years, that attracts the younger generation to join their parents and slowly get involved and take control.

When I arrive at a family business, my first question is how much of a family business it actually is. There are businesses where the father brings the son in for him to continue. There are businesses where several children join, there are some where the father’s brother is also there, and there are the most fascinating ones where everyone is there! The uncle and aunt, the mother, the cousin and many more.

What is the Intergenerational Transfer?

The intergenerational transfer is a term for passing the torch between the generations in an organization. In family businesses, there is the founding generation that brings the younger generation into the organization, and that at some point decides that they want to pass the torch and let the younger generation manage the organization. Sounds simple, right?

Well, it certainly isn’t!

The founding generation as a whole (in an opinion devoid of psychological expertise) has the DNA of an assertive generation, a generation that established businesses and employed dozens or hundreds of employees for many years, a generation that has life experience, extensive managerial experience, skills and professionalism with seniority. They are hardworking and reliable people (otherwise they would not have survived).

The younger generation – the children, as I call them, entered an already functioning factory, some of them studied and specialized in subjects that can contribute a lot to the factory, but it’s somewhat difficult to take the reins when in the next room, there is someone who surely knows better than them.

This difficulty in passing the torch stems from many reasons. Sometimes it is difficult for the founding generation to let go, sometimes it is difficult for the children’s generation to take control, sometimes it has to do with a variety of personal reasons, or even with the daughter-in-law or grandchildren, sometimes the matter is defective training processes precisely because it is the son of the owner, or a wide variety of other reasons for why everything gets mixed up and the passing of the torch becomes so difficult.
So what does this have to do with information systems?

These days, psychologists, organizational consultants, lawyers and other professionals help organizations deal with the intergenerational transfer, each within their own field. And here, we, the information systems people, also contribute to the matter.

Information systems make it possible to manage an organization in a computerized way. That is, all the things that were the personal knowledge of the founding generation and that existed their head can be computerized, and then it is easier for the younger generation to take the reins.

Examples?

If the founding generation simply knows who the important customers are, who receives the VIP treatment, then in an information system it is possible to make a list of customers with all their details, telephone numbers, and contacts by type (so that it is clear with whom a deal is closed and to whom in the organization an invoice is sent), and classify each of them as a regular or VIP customer.

If the founding generation knows about which raw material should be bought from which supplier, then a simple information system can manage all the suppliers, as well as all the raw materials and the purchase history from the suppliers, the prices and a list of preferred supplier for each of the raw materials.

If the founding generation knows approximately how long it takes to produce each product, then in an information system you can manage the correct time to produce a product, the work process, the work instructions, and every single figure that the founding generation simply has in their head.
So in summary, an information system brings the organization to a functioning state with minimum knowledge that is kept in the end, maximum knowledge management, and full transparency within the system. It allows control, data flooding, reduction of areas of ambiguity, and a sense that for the younger generation, it is indeed possible.

Some Tips on how to Bring in the Younger Generation

Start from the bottom – if you want your children to appreciate and know how to manage the organization at least as much as you do, let them start from the bottom, just as you started. Sure, this may not be the conventional approach, but there is certainly no shame in it, and I guarantee that it will work – get them to wear the work clothes and go down to the production floor for a few months and work alongside each employee.
Job definition – did they understand it? Did they learn? Give them a role and responsibility. One of the common difficulties I encounter is that the younger generation hangs around the factory, not knowing what their role is (and the rest of the factory workers don’t know either). It’s important and recommended to give them a role and responsibility, like any other employee.
Information systems – if this generation happens to understand and can take on the role of an information systems manager in the organization, then that is really great. Control over the computer system gives a lot of knowledge, along with strength and understanding of how the factory works, and the ability to improve and optimize it.

Is this enough and does it solve all problems?

Not really.

An information system can create a lot of order in an organization. It supports orderly work processes and manages knowledge. But in family businesses, I still recommend taking care of all the other factors at the same time.

For example, defining authorities, legal agreements, defining working methods and more.

How to start?

If you don’t have an information system? Find a consultant who will help you in the process of choosing and implementing an appropriate information system.

If you do have one? Find a consultant who will help define what the problems are and examine whether they can be solved by deepening the application of the existing information system.