As we continue to move through these unprecedented times, some things are beginning to get a little bit clearer.
There are still so many unknowns, of course, but for many family enterprises, they’ve succeeded in “putting out the fire”, and now a different kind of work is needed.
During this preliminary stage of the current transition to the “next normal”, most families have begun to learn a lot more about each other.
Sometimes they’ve learned positive things, and other times they may have been disappointed.
People and Relationships
As much as they’ve discovered about other people in their family, what some families may have also started to notice is that the way they had their relationships set up before just might not be optimal anymore.
Let me give you the background and proper credit for this idea and how it came to me.
If you’re like me, you’ve never received more invitations to webinars than you have in the past few weeks. Some of them are actually worthwhile.
The idea for this blog came from one of those, sponsored by Family Enterprise Xchange (FEX), of which I am a proud member, as their FEA Program was what made me discover the world of working with business families in the way I now do.
A Friend and Mentor
In light of the new reality we’re all now living in, FEX recently hosted a webinar featuring guest thought leader Jim Grubman, who I consider a friend and definitely kind of a mentor to me, as he always has time for me, and I definitely look up to him.
Towards the end of the Zoom call, during the Q & A if I’m not mistaken, Jim noted that this current crisis is serving as a test of family governance for many families.
He kept going for a bit, but as far as I was concerned, he could have dropped the mic right there.
Bang, it was so clear to me all of a sudden.
Families who work together or manage assets together are feeling the shockwaves of the pandemic and its associated economic and societal fallout in interesting ways.
Are They Passing the Test?
At a time when everything is getting shaken up, systems and their limits get tested.
When a system is well prepared, and is able to adapt quickly, the relationships between the people in the system will likely survive relatively unscathed.
But what about systems (families) where things don’t go so well, adapting doesn’t happen as some expected, people second guess each other, and contingencies that some assumed were in place don’t operate in the way they were expected to?
Jim is correct that underneath all of these relationships lies the family’s governance, whether they know it or not, whether they see it or not, and whether their governance is formalized or not.
That family governance is being tested these days, and some families are realizing that they’ve got work to do.
Character Building Events
Any crisis can act as a character-building event, and this one is no exception. Things that were going “okay” just a couple of months ago are suddenly no longer okay.
For families who are working together, a crisis like the one the world is seeing now can be seen as a test of family character.
Any shortcomings, that may have been hidden by the “good times” we were in, are now suddenly exposed.
If you’re having trouble picturing what I’m getting at, imagine any business being run by siblings or members of different generations of a family (or both).
Now, throw in some new kinds of decisions that need to be made as a result of the new reality.
Decisions, communication, problem-solving
Family governance is all about how family members make decisions together, how they communicate, and how they solve problems together.
There’s nothing like a crisis, caused by a pandemic, to bring these into a sudden sharp focus, largely because some new kinds of decisions need to be made.
Ideally, everyone agrees not only on the right decision, but on who gets to make the call! See: Who Gets to Decide Who Gets to Decide
The answers aren’t always obvious, and situations can get complex pretty quickly.
So, how’s your family governance doing?
Is it passing the test?
If the answer is “No”, you’ve got work to do….