How the family Governs the family Business

Putting the “Own” in Ownership

I am a big fan of the three-circle model and I have been since I first learned of its existence a few years ago.

As the story goes, it was actually derived from the two-circle model that preceded it, which was already groundbreaking in its own way because it was an attempt to separate the “family” and the “business” circles, while acknowledging their overlap.

When Renato Tagiuri and John Davis added “ownership” as the third circle, they had created a model that has stood the test of time for three decades now.

Ownership remains the circle that is hardest to grasp for many people, despite the fact that it sounds pretty straightforward on the surface.

People who do not have any relationship to a family business probably have a better grasp on the meaning of the word ownership, because anything that they own is likely pretty clear to them.

This week I attended an event where a woman from the third generation of a business family related that when she became an owner of her family’s business, she was not even informed until a year after the fact.

This reminded me of an event that I lived with my father many years ago. It was back in the 1980’s when CAFÉ was going strong in Montreal, and we attended a workshop together. In preparation, the organisers sent out a questionnaire to all attendees, asking for the percentage ownership in their family business.

My Dad had left this task to me, and I noted that he owned 67% of the company, and I owned 11%. He had set things up with two holdco’s, his, with 2/3 ownership, and his 3 children’s, with 1/3.

During the event, he saw the questionnaire that I had filled out for the first time, and he asked me point blank “What’s this?” I told him essentially what I just noted in the previous paragraph. “Oh, yeah, I guess you are right” was his reply.

Clearly he still considered himself the 100% owner, and I guess my sisters and I did too!

So ownership can be a little nebulous from time to time, and I know of at least one family business advisor who says that he only works with clients on ownership governance matters and avoids working with business founders, who so often have difficulty understanding the three circles.

A couple of weeks ago at the Family Business Summit in Halifax, I participated in an interactive exercise led by Doug Bolger of Learn2, who had the entire room working together and discussing succession matters.

At one point I had another “A-Ha moment”, and I always try to share those in this blog. We were discussing “ownership”, and then someone mentioned members of a younger generation wanting to do their “own” thing.

I had never realized that the word “own”, as in “my own” was part of the word “ownership”. I raised my hand and shared this realization with the group, and based on the reaction, I was not alone.

There is a new initiative being launched by the Business Family Foundation (BFF) this fall that recognizes that members of the rising generation in families seem to be more interested in doing their “own” thing more and more frequently these days.

They have created the “Initiative Intrapreneuriale” which will begin in Montreal in September, in French. As one of their “ambassadors” on this project, I would like to share why I think the idea behind this program is one “whose time has come”.

Intrapreneurship is not a new idea, many companies have benefitted from it, often without even calling it by this name.

What the BFF’s program is designed to do is to help spark business families into intrapreneurship as a way to get younger family members to join their family’s business AND do their own thing.

Enterprising families recognize that businesses have life cycles, and know about the importance of renewal. So why not encourage younger members to come up with their own business, and have it “grow up” within the existing family firm?

Sounds like a win-win proposition to me.

 

 

My CAFÉ Symposium 2016 Top 10 List

 

Returning from Calgary after attending my third annual CAFÉ Symposium in a row, I thought I would try something a bit different in this blog, and with a hat tip to David Letterman, here is my Top 10 List of memories.

Number 10Tony Dilawri’s Dad stories

A second generation family business leader who opened the Symposium with his family story.

Favourite parts: His Dad announcing “We’re all moving to Regina”, as well as his Dad telling him he was not working hard enough because he did not work on weekends, and his reply that he had multiplied the size of the company many times over while working less hours.

Number 9Dinner conversation

At the Family Enterprise of the Year Award dinner, I was seated next to a retired criminal lawyer, Larry Hursh (accompanied by his wife Carolyn) and I had the chance to exchange views with him on the Oland trial that I had attended in November.

Number 8Another Molson please

After the FEYA dinner, author Gordon Pitts interviewed Andrew Molson, who shed light on how their family has remained strong over the generations, including 3 separate times that they have owned my favourite hockey team.

Number 7Old Friends, New Friends

Like any annual conference you attend, it just gets better every year, because you know more people and more people know you. It was great to see old friends and meet other new ones, and hopefully we will all see each other again in Halifax in 2017.

Number 6Paint by Numbers

An old friend was Sarah Tkatchuk of KPMG, and she and some colleagues lead a workshop called “Painting a clear picture of long term family success”, which was surprising to me because “painting” and “accountants” are not necessarily two words you think of together. Of course, it was essentially a “paint-by-numbers” exercise.

Number 5 You are getting sleepy

Wayne Lee’s hypnosis show was hilarious and very memorable for the performances by a couple of participants, old friend Trudy Pelletier and new friend Margaret-Jean Mannix. I will just leave it at that.

Number 4Brett Wilson’s unique ways

The former Dragon shared a few of his stories and philosophies to end the conference.

Favourite parts: He admits attending the University of Saskatchewan because he did not realize that (in theory at least) he had other choices of schools. Also, the methods he is using to get his children to be financially responsible, which sound like they are working, even if they are clearly not for everyone.

Number 3 Prepare those heirs!

The mother-daughter team of Kathy Reich and Nicky Scott shared lots of great ideas during their workshop. It is nice to see that more people are getting into what they called “Preparing Heirs for Assets (not the other way around)”.

Having read “Preparing Heirs” myself, and also having the pleasure of speaking with author Roy Wilson on a recent conference call, I am glad to help spread this message to more people.

Number 2A new take on Core Values

Keynote speaker John DeHart spoke passionately about how he co-founded Nurse Next Door and how defining their corporate values was (and still is) their key to success.

It only hit me after he was finished that his real innovation was getting away from the staid old “one word” values like integrity and replaced them with sayings, taglines or catchphrases like “sunny side up”, which was both a personal value of his and a value of his company.

Number 1The Bermingham Story

Patrick Bermingham recounted the tale of his 119-year old family business, and what a tale it was.

Favourite parts: How he purchased the company from his father, they shook hands, and Dad never said another word, he was now fully in charge. How he went about raising cash at a time where he had no other choice, and how he offered shares to key employees to ensure the company’s growth would be sustainable.

Many inspirational stories were heard and enjoyed by the hundreds of attendees, and I was glad to be one of them again.

I hope to see you all in Halifax next year!

 

 

Steve Legler “gets” business families.

He understands the issues that families face, as well as how each family member sees things from their own viewpoint.

He specializes in helping business families navigate the difficult areas where the family and the business overlap, by listening to each person’s concerns and ideas. He then helps the family work together to bridge gaps by building common goals, based on their shared values and vision.

His background in family business, his experience running his own family office, along with his education and training in coaching, facilitation, and mediation, make him uniquely suited to the role of advising business families and families of wealth.

He is the author of Shift your Family Business (2014), he received his MBA from the Richard Ivey School of Business (UWO, 1991), is a CFA Charterholder (CFA Institute, 2002), a Family Enterprise Advisor (IFEA 2014), and has received the ACFBA and CFWA accreditations (Family Firm Institute 2014-2015).

He prides himself on his ability to help families create the harmony they need to support the legacy they want. To learn how, start by signing up for his monthly newsletter and weekly blogs here.

 

Teach your Kids to Make Lemonade

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Our ability to navigate the tricky subjects around family business is often correlated with the parenting skills that were either present or absent while the kids were growing up.

Most people that I speak to about these subjects have agreed with me when I mention that almost all problems we see as advisors to business families stem from things that the parents either did or did not do while raising their little ones.

Ever since I began the work necessary to becoming an advisor to family businesses (taking coaching courses, attending mediation workshops, and even completing two years in a Bowen Family Systems Theory (BFST) training program) the most wonderful side effect has been the positive impact on my own parenting.

Back in February, I wrote a couple of blogs called Tell it to the Judge (Part 1 and Part 2) in which I suggested that the only people who could truly judge anyone’s parenting skills are those who were on the receiving end of them, i.e. their children.

So I guess I would have to actually ask my kids if they agree that my parenting skills have improved over the past few years, but I think so, and even my wife agrees!

During a discussion with my fellow BFST trainees, one member of the group described a situation wherein one of their teenage children had been involved in an unfortunate situation, and someone brought up the old saying “When life gives you lemons, make lemonade”.

So today I want to revisit the lemonade question and how parents might think about handling it. When something unfortunate happens to someone you love, it is tempting to jump in, and react quickly to try to save the day.

Unfortunately, nobody has yet invented the “rewind” button in life, where you could actually just go back and “undo” something bad that befells you or someone you care about. All we can really do is start today and try to make things better going forward.

So what are some of your options when your child receives a proverbial lemon?

Well, you could hit them over the head with it and blame them and make them feel even worse about themselves. This obviously doesn’t sound like a great idea, but that doesn’t mean that it doesn’t happen, and far too often.

We could feel sorry for our child, tell them that none of this was their fault at all, and Mommy and Daddy are going to make it better. “Here you go dear, I made you some lemonade!”

I suppose that is better than the first reaction, but this too can be taken to an unhealthy extreme, and is a missed teaching opportunity.

Somewhere in between these lies a more useful and balanced approach. I will try to break it down into some possible steps to draw out the ways I have thought this through:

  1. Make sure that the child is OK and that there is no more immediate danger or problem.
  1. Empathize with them, explain that sometimes bad stuff happens to good people.
  1. Explain the lemonade proverb to them, along with the old “it’s not what happens to you that’s important, it’s how you DEAL with what happens to you”.
  1. Don’t fall for the temptation to make the lemonade for them. Feel free to share your lemonade recipes (i.e. things that happened to you but which you overcame)
  1. Inquire about how their lemonade making is going, ask for a taste, and compliment them on the fine beverage they have produced.
  1. Encourage them to learn life’s lessons so that they can hopefully avoid being dealt those same particular lemons again.
  1. In due time, point out how proud you are of the way they made that batch of lemonade, and that you are sure that whenever they get some other kind of lemons, you are confident that they will be able to handle them with aplomb.

If you can do all of those things, chances are pretty good that your child will judge your parenting skills to be more than adequate.

I’ll drink to that.

 

Steve Legler “gets” business families.

He understands the issues that families face, as well as how each family member sees things from their own viewpoint.

He specializes in helping business families navigate the difficult areas where the family and the business overlap, by listening to each person’s concerns and ideas. He then helps the family work together to bridge gaps by building common goals, based on their shared values and vision.

His background in family business, his experience running his own family office, along with his education and training in coaching, facilitation, and mediation, make him uniquely suited to the role of advising business families and families of wealth.

He is the author of Shift your Family Business (2014), he received his MBA from the Richard Ivey School of Business (UWO, 1991), is a CFA Charterholder (CFA Institute, 2002), a Family Enterprise Advisor (IFEA 2014), and has received the ACFBA and CFWA accreditations (Family Firm Institute 2014-2015).

He prides himself on his ability to help families create the harmony they need to support the legacy they want. To learn how, start by signing up for his monthly newsletter and weekly blogs here.

Humble and Kind

It has been over three years since I wrote a blog with a title borrowed from a country song, so I hope that nobody will accuse me of going back to the well too soon.

As with Blame it on Cinderella back in March 2013, I was driving when I heard the song, there was a conference involved, and I was on the East Coast. Last time it was a CFA meeting in Boston, and the song that inspired me came on during my drive home.

This time I first heard the song on the way to the Family Business Summit in Halifax, put together by the great folks at the Dalhousie Centre for Family Business and Regional Prosperity.

This time the song was by country star Tim McGraw, and because my radio was still set to HotCountry103.5, I actually heard it again as I was heading back to my cottage in New Brunswick when the summit ended.

I was driving away with a smile on my face, because I met so many great people over the two days, and I was actually trying to figure out what it was about these people that made them so easy to be around and get along with.

Part of me was thinking that it must be the geographic location, because Maritimers are known as some of the friendliest people you will find anywhere in the world.

Whenever someone asks why we have a cottage in New Brunswick (not exactly close to home in Montreal) I never fail to mention that one of the main attractions is the people and their relaxed, easygoing nature.

So the people were nice because they are from Atlantic Canada, right? Yes, but that is only part of it.

These people were also Family Business people, and over the past few years since I got back into the family business game, I had not really thought of this, but there is something about FamBiz types that makes so many of them great people to be around.

And just as I was thinking about all this stuff, still with that smile on my face, Tim McGraw’s latest hit, Humble and Kind, came on my car radio again.

Humble and Kind. Every single person that I had met during the previous 36 hours, from the hotel staff to the speakers, from the summit organizers to the family business people themselves, each one seemed to be truly humble and kind.

When I got back home I listened to the song again, and wouldn’t you know it, I had another A-Ha moment.

When I heard the song in the car, I was focussed on the “humble” and the “kind”, and if you had pressed me on it, I would have sworn that the song was about being humble and kind.

But that would have missed part of the whole lesson. The actuall lyrics that the father is singing to his children are “Always stay humble and kind”. So what’s the big deal about that?

In order to stay, or remain, a certain way, you have to be that way to begin with. Now we know that not everyone scores well on the humility and kindness scales, but is that because they did not stay that way, or because they never were?

And if you do start out humble and kind when you are young, how did you get that way? My guess is that most of it comes from your parents and the example they set.

When family businesses fall apart, it is usually in large part because of family conflict, so what happened to the humility and the kindness?

My theory is that there is a large “self-selection bias” in family business conference attendance. Families who attend are doing well and want to do better, so they come together, as families, and meet other families, and learn from each other.

The ones who do not attend are probably the ones who really should be there, because what they learn from others could really help.

The upcoming CAFÉ Symposium in Calgary will give me another great chance to put this theory to the test.

 

Steve Legler “gets” business families.

He understands the issues that families face, as well as how each family member sees things from their own viewpoint.

He specializes in helping business families navigate the difficult areas where the family and the business overlap, by listening to each person’s concerns and ideas. He then helps the family work together to bridge gaps by building common goals, based on their shared values and vision.

His background in family business, his experience running his own family office, along with his education and training in coaching, facilitation, and mediation, make him uniquely suited to the role of advising business families and families of wealth.

He is the author of Shift your Family Business (2014), he received his MBA from the Richard Ivey School of Business (UWO, 1991), is a CFA Charterholder (CFA Institute, 2002), a Family Enterprise Advisor (IFEA 2014), and has received the ACFBA and CFWA accreditations (Family Firm Institute 2014-2015).

He prides himself on his ability to help families create the harmony they need to support the legacy they want. To learn how, start by signing up for his monthly newsletter and weekly blogs here.