2 people disagreeing and looking in the other direction

Choosing Sides in a Family Business

Choosing Sides in a Family Business

I sometimes write about conflict management and resolution, because family businesses are rife with opportunities for clashes of personalities and ideas.

(See: Embracing Conflict in Family Business & FamBiz: Conflict is NOT an option)

But this post will be a bit different from others I’ve written in the past.

Today I want to get into a family conflict and ask readers which side they would choose in a fictitious war between two sides in a family.

 

The Guerrero Family

Vince and Walt Guerrero are the two oldest brothers in the family that owns a specialized factory in a mid-sized northern town.

Their father, Guillermo, started the business some 40 years ago and is preparing to retire, leaving the business to his four children.

Sabrina and Teresa, the two youngest siblings, used to work in the business as well, but both left because there was just too much conflict.

 

Vince’s Side or Walt’s Side?

Vince and Walt don’t exactly see eye-to-eye on many things, and each of them wants to be the new President when Dad finally retires.

Sabrina and Teresa get along very well with each other, and they both love their brothers equally, and the boys are constantly trying to get their sisters on their side of every issue.

Which side should they choose?

 

A Common Scenario

While the scenario I just described is actually quite typical, the question that I’m asking you is not.

Of course, there isn’t enough information to give a reasonable answer to the question, and I already spent a couple hundred words describing it.

It’s actually a really stupid question because I’m asking you to “choose sides” when there really aren’t any sides to choose!

 

Study Group Example

One way that this post is different from my usual format is that I usually start out by giving some context to the genesis of the post, but this time I’ve saved that for here, in the middle.

I’m part of a peer study group through the Family Firm Institute (FFI) and we had a meeting recently where some of us got together to discuss a variety of topics, including some real case examples we are dealing with.

 

Conflictual Family Drama

One group member spoke about two siblings who were always in confrontations and how the other family members were always trying to decide which one of them to support.

We have a long-term FFI member who acts as a mentor and moderator on our calls, and she made a statement that resonated with me, so I wrote it down, intending to use it for a blog.

Nancy said, “Oh, so they’re choosing sides when there really aren’t any sides to choose!”

“Bingo!”, I thought.

 

Whose Side Are You On?

The point Nancy was making (I think!) is that while the combatants are trying to make it about “my side” versus “his side”, anyone else who looks at it that way is falling into a trap.

Taking sides is usually a false choice.

Oh, I get that this happens in family businesses, and it still happens far too often.

Family members who work together or manage assets together won’t always see things the same way and will often try ot get others to come to their side of every argument, but that doesn’t mean the other family members need to oblige!

 

Interests versus Positions

If you’ve read even a little bit about negotiation, you’ve likely heard about the difference between “positions” and “interests”.

Fisher and Ury’s “Getting to Yes” was the first place I recall reading about this, and that was in the 1980’s, so this isn’t anything new.

If each side simply holds to their position, the negotiation will likely remain a zero-sum game, where any gain by one side is a loss for the other.

 

Digging Their Heels In

Sometimes in a negotiation, both sides really dig their heels in, usually because there’s some emotional aspect to the conflict that prevents them from letting go.

And yes, sometimes in family businesses people get into conflicts that are complicated by emotional issues.

 

Get Past their Positions

In order to have a better chance at a successful resolution, you need to get past their “positions” (My way / I’m right) and get to their interests.

Then, when you can find the common interests that both sides have, there’s something to work with.

Can the other family members avoid taking sides, and look for common interests instead?

I sure hope so!

Ownership Stages In Family Business

Ownership Stages In Family Business

Ownership Stages In Family Business

Readers may have noticed that the topic of “ownership” has been featured in this space more and more lately.

That’s no accident, because last summer when I wrote Ownership: The Forgotten Circle of Family Business” I also vowed to give this subject a bit more prominence here.

 

The Simple Stage “Model”

Most people who work in the Family Business field are well versed in this “model” that looks at things in their simplest form as a family business goes from one generation to the next:

Sole Owner => Sibling Partnership => Cousin Consortium

There really isn’t anything new here, but it’s a good starting place to discuss how the ownership of a family business can get more complex as the business goes from one generation of owners to the next.

The verb I chose there, “can get” was very intentional on my part, because things do not necessarily get more complex, depending on the desires of the family and the plans that they make about how the actual ownership will be transitioned.

 

Does this Tree Need Pruning?

As I wrote last year in Pruning the FamBiz Ownership Tree”, sometimes the difficulty in passing a business down through generations is complicated by something as simple as math.

I recently spoke with a second-generation member of a farm family, and their case facts make for an interesting example.

Mom and Dad had 4 children, and each one of them is now married and they each have 4 children of their own.

The family group is expanding at a geometric pace. Will the farm be able to match that growth? That’s the proverbial $64 million question.

 

Counting People and Households

The farm initially supported 6 people in one household. One generation later, that became 26 people in 5 households. So far the math is pretty simple but only in a textbook example do things remain that way.

Did I mention that the range of ages of the grandchildren (G3) varies from late 20’s to single digits?

The oldest G3 member already has children and yet their generational “equal” is still in grade school.

How are they going to work out all of that stuff?

 

Getting Good Help

I often write about the importance of getting help from outside the family to assist and guide any family through these difficult decisions.

Luckily, there are surely plenty of well-qualified lawyers and accountants out there who have crafted the types of agreements and structures that are required to work out these complex cases.

So is that my answer, to go out and talk to a lawyer or an accountant?

Not so fast, please!

 

What Exactly Are You Trying to Do?

Before you look to technical professionals to structure things and write up the agreements necessary to formalize things, don’t you think it makes sense to figure out what you’re trying to do first?

How will the four siblings in the example above work through the decisions surrounding the best way to structure things?

I’m going to assume that the four siblings won’t all necessarily agree with each other on every question right off the bat.

OK, so what if the one who is the de facto leader of the business were to simply get a lawyer to write it up his way?

Well, that might be efficient, but I’m willing to bet that some negative consequences would result, somewhere down the road.

 

Governance and Ownership

Who died and made him king? Maybe that isn’t just a rhetorical question; maybe before Dad passed away he did “anoint” his successor.

I don’t know enough about the specific case facts here, but they are not that important to the discussion.

My point is that the ownership of the business is a very important aspect to understand and work through in a thoughtful manner, but it is not sufficient by itself.

A family facing this type of situation actually needs more than just clear ownership, they also need to agree on governance.

 

How Will We Decide Things Together?

When people try to simplify governance, they usually mention communication, problem solving and decision-making.

I can’t really make it any simpler than the six-word question, “How will we decide things together?”

It’s a pretty short and simple question, but answering it is rarely short and simple.

And getting the right answer for your particular family is actually more important to work out than the more straightforward questions about ownership.

 

Please see: Family Governance, Aaaah!

Family Dog

Honouring FamBiz System Exits

Honouring FamBiz System Exits

I was born into a family business system over five decades ago, and I’ve been working in and writing about the FamBiz space for over five years now.

The fact that a family is actually a “system” is one of the important realizations that I’ve come to, yet not necessarily one that I’ve shared much about here.

There have been some blogs relating to Bowen Family Systems Theory (A Systematic Business Family?) (My Beliefs on Family Legacy Advice) and I have shared with many people the fact that I’m beginning to work on my next book, which will be all about the intersection of BFST and the world of FamBiz.

But there have been a couple of events in the last little while that made me want to address the subject of “systems exits”, i.e. situations where someone who has been a part of a system is suddenly no longer around, and some of the consequences.

 

A Matriarch’s Retirement

The first situation draws on an annual meeting with a family business client of mine, where the matriarch of the family made the sudden announcement that she would be retiring from the business, effective immediately.

I took her at her word, and after she left the meeting, I mentioned to her children and nephews that they should begin to find a way to honour her service and announce this news to all the employees.

They looked at me with curious expressions, which I eventually realized were caused by the fact that few of them believed that she was serious.

Well, that was over three months ago, and she has been true to her word, and they have yet to do anything in line with what I had suggested.

 

Leaving a Door Open

My idea for announcing the retirement decision stemmed from my view that clarity is of utmost importance in any family business.

There are so many ambiguities that are inherent in systems where family and business overlap, that it behooves everyone to work extra hard to be clear on as many things as possible.

By not announcing the retirement of the matriarch, a proverbial door was being left open for her return, and that leaves the situation more open to confusion among the ranks of the employees.

 

Losing Man’s Best Friend

The second situation regarding a systems exit was not about the exit of a human, but it was about the loss of a member of the family.

The photo accompanying this post is the last one we have of Caedmon, our companion for the last nine years.

He had an interesting life during his time with us, and I’ve got enough stories about his adventures to last the rest of my life.

I wrote about one of them a few years ago (Sharing my Warmth Goes to the Dogs) and then that story was followed by another interesting turn of events that even got us on the news, first locally and then nationally. (Go Labs go! (Don’t worry) Carey Price gets his dogs back)

 

Honouring Those Who Have Left

You may think that this is a bit of a stretch (and I’d have a hard time arguing against you if you do) but I’m trying to honour this family member by writing about him here.

When we first got Caedmon, we jokingly referred to him as “Bosco’s dog”, because we got him to keep Bosco company after Rufus went to doggy heaven.

Bosco was the subject of a blog post in 2014 when he followed his “brother” Rufus to the pearly gates (R.I.P. my Old Friend)

 

Don’t Pretend They Weren’t There

I get some interesting looks from people sometimes when I refer to people who have died when we have family gatherings.

It’s so easy to not bring people’s names up because we don’t want anyone to feel bad about the absence of those who are no longer with us, but I like to buck that trend.

At funerals, we usually hear that we are there not to mourn, but to celebrate the life of the dearly departed.

That can be difficult when it is still so fresh and when the person was important to us. But after years have passed, I hate to act like the person never existed.

 

It Is Better to Have Loved and Lost…

When someone has exited the system, you can mourn them, honour them, grieve them, and celebrate them.

Just please don’t forget them, act like they were never there, or write them out of the story.

Women Meeting - Family Business

Evolving Gender Roles in Family Business

Evolving Gender Roles in Family Business

Sometimes family businesses don’t get enough credit for the societal leadership they so often exhibit.

The long-term view that they bring to the way they plan, strategize and operate, make them a special subset of businesses in general.

For example, many people instantly recognize that family business leaders are often great philanthropists, especially in their local areas.

 

Gender Balance

There’s another area that I’m starting to notice more and more where family businesses are taking an important leadership role, and that’s gender balance.

When looking at any such leadership role, you might think about the intent of any of these leaders, and imagine that there’s some concentrated effort on their part.

But family businesses don’t typically get together and decide that family businessess should do this or that.

They decide what’s best for their family, and once it turns out that many of them are doing the same thing, the leadeship trend emerges.

 

Wife, Daughter, Sister, Niece 

It seems to me that family businesses are leading the way in the area of gender balance in management and leadership roles.

My evidence is anecdotal, based on things that I read and come across on various forms of media.

But it also doesn’t surprise me either.

When it comes time to decide which person to promote to a key position, a high performing woman is less likely to be overlooked when she also happens to be the daughter, sister, cousin or niece of one of the leaders.

 

My Own Backyard 

Perhaps it’s because family businesses have always had a tendency to promote from within, that it’s more natural that any strong woman will be given more of a chance.

When I just think about my own daughter and nieces, as well as my wife and sisters, I know that they are at least as qualified as any man in their roles, and usually much more so.

 

Evolving Business Styles

It might also have something to do with the way that businesses are being run in less of an old-fashioned, authoritarian way.

The “macho male” attitude doesn’t seem to cut it like it used to, certainly not in the North American culture I’m most familiar with.

A softer touch, more inclusive leadership styles, and more democratic decision-making styles all seemingly play into the trend.

 

Family Roles

The traditional family roles of wife and mother versus husband and father have also changed a lot over the past few decades and generations.

The “stay-at-home parent” isn’t as much of a staple as it was when I was a kid and everyone went home from school for a nice lunch that Mom was busy making.

Those days are long gone.

Even in cases where one parent makes the conscious choice of taking a career break in order to take on child-raising full time, it isn’t always the mother.

And with couples having children at a later age, the eventual return to the work force can also be an easier fit for a mother who decides to go back to a family business.

 

Goodbye Primogeniture?

While it may be too early to say Goodbye to primogeniture, things are being done in family businesses today that were pretty inconceivable just a few decades ago.

It isn’t just the gender balance either; there are more and more sibling teams running things as more or less equals, with a trend to title sharing like naming a brother-sister team as “Co-Presidents”.

If any two people could pull that off properly, I’d bet on a sibling team anytime.

 

Soft Skills in a Family Business

I’m not sure this is a 100% true statement, but it seems to me that the “softer skills”, like getting along, democratic decision making, open communication, authenticity and teamwork are even more important in family businesses.

But just because these skills may be more “necessary” there, does that mean we will find them there?

I’m not sure I could make that case strongly; but what I can say is that a family business where the people have those skills, and have things structured for those skills to shine, will be the ones that thrive.

 

Generational Transitions

A family business will only remain one as long as the family can agree enough to hold onto it.

Having the kinds of people in charge to make this happen will require diverse groups going forward.

Bet on it, sister!

 

Note:

Between when I first drafted this blog and when I was wrapping it up, my friend and FFI colleague Carrie Hall published this piece which complements it nicely:

Please see:           Why family businesses have a higher percentage of women leaders

 

A guy helping another Guy while hiking

When Is Helping Not Helpful?

When Is Helping Not Helpful?

This subject has been kicking around in my head for a little while now, and I’m finally tackling it this week.

I’ve been seeing more and more things I could add, so I’m curious to see how this turns out. Let’s go.

 

It Feels Good to Help

Let’s start with the fact that most people feel good about themselves when they can help someone else.
Sometimes it’s completely altruistic, sometimes it’s more about being “one-up” on others.

It may stoke our superiority complex, or make us flash back to the parental approval we got for helping, when we were kids.

The point is, helping is something many of us do instinctively, it makes us feel good about ourselves, and that makes it a great win-win.

 

So What’s the Problem?

If you’re a parent, you’ve surely experienced situations where “over-helping” eventually had its downside.

If I continued to tie my kids’ shoes because that’s how I can help them, they’ll never learn to do it themselves.

 

Family Business Version

In a family business, the most prevalent version of this phenomenon comes up in the area of employment.

The owner’s child “can’t find a job”, so they’re hired, out of a desire to “help” them.

If you can’t see that this may turn out to be a future lifetime under-performing employee, then you probably aren’t paying enough attention.

 

Asking for Help

I’ve also written about the fact that family businesses are often reluctant to ask for help from outsiders.

(Blog version      and       Video version)

There certainly is no shortage of potential “helpers” out there, especially regarding issues that affect the business.

In fact, getting help with “business” issues versus “family” issues is still a far more common request.

 

Different Kinds of Help

For many situations, the requested help is pretty clear.

When you need advice with investments, taxes, or legal structures, there are specialists who deal in those things every day, who’ll happily provide you with a solution.

As to whether the help you think you need is actually what’s best for you, that’s another question.

There are plenty of solution providers who’ll “help” you by giving you what you ask for. It’s often done very efficiently, even if it turns out not to be very effective.

 

What About Help for the Family?

When you move over to the family issues, that’s where things get a bit trickier.

As someone who works this space, I can tell you that the requests are often formulated in the same way.

What I mean here is that “Tell us what we should do!” is a common way of asking for help.

There’s also no shortage of “helpers” out there, that’ll gladly step up and “help” by simply answering that question.

You may be wondering why I’m implying that there’s a problem here.

 

“For the Family, “By the Family”

Here’s why the “Help me!” request, followed by “OK, here’s the answer” method usually doesn’t do the trick.

I can tell you that when I get “Tell us what to do” it can be pretty difficult to not just simply spew forth my best advice, in the guise of helping.

That’s because I know that the best results for tricky family dynamics situations are always the ones that are co-developed by the family.

 

The “Process Versus Content” Dilemma

I’ve spent the better part of the past 5 years acquiring and honing the skills necessary to become a better “process” consultant, rather than simply being a “content” expert.

Having come to the family business space by “living it” my whole life, and continuing to study the “content” of “best practices”, it can get tricky.

But I also know that any help that I offer always works best when it is subtle and indirect, especially at first.

 

Who Are the Real Experts?

When dealing with questions of family dynamics, the real experts on “how the family operates” are the family members themselves, not the outside “expert”.

In fact, if I try to offer too many “helpful solutions” before I have a good feel for this particular family, they’re bound to backfire.

 

Who Does the Work?

Those asking for help often hope for a “short cut” solution, where the expert provides an easily implementable “quick fix”.

In truth, there are few magic fixes available, and in the end, it’s always the family members who’ll need to do the work, with the helper acting as a more of a “guide”.

And you’ll each tie your own shoes.

 

sometimes you just need to say no written on a piece of paper

The Importance or Saying “NO” in a FamBiz

The Importance or Saying “NO” in a FamBiz

Family businesses sometimes get a bad rap because of the way they often do things less formally than a “more professional” company would.

The less formal nature of any business can be a plus in many ways, but of course it can turn into a negative too.

When they do turn negative, it’s usually because someone has agreed to something (i.e. said “Yes”) that they really should have said “No” to.

Today we’re going to look at some of those cases.

 

Summer Jobs

Quite often the children of the “boss” get their first real exposure to the business as teenagers with a summer job.

When a teen asks “Can I have a summer job?” the best answer is usually “Yes”.

The part where it can be hard to say No is if there are follow-up questions like, “Can I take Fridays off?” or “Can I take a couple of weeks off” or “Can I start a bit later than everyone else?”

If the job is to work with other regular employees who all follow certain rules, every time you make an exception for them, you’re setting a bad precedent, that not only affects your child, but also everyone else who sees the special treatment.

 

Full-Time Jobs

When you’re dealing with adult children, the idea of consistency and no special favours also often comes into play.

“Can I get a job at the company?” will often be answered with a Yes.

But, “Can I have the same pay as my sister for less work, because I have family obligations?” should probably be greeted with a No.

“Can I come in later, work from home most of the time, take Fridays off, etc.” are things that other employees see and if they become standard perks for family employees and no one else, these are huge morale killers.

 

The Other Side of the Coin

Lest you think that it’s only the next generation who ask for things to which the parents should be saying No, I’ve got a more drastic scenario for you.

This one also occurs far more often than it should, and it involves the parents taking advantage of their kids.

Picture the daughter and/or son, who have been diligently working for the family business for decades, not only following the rules that exist for all of the employees, but going above and beyond.

 

Some Day this Will All Be Yours

They work evenings and weekends, never take a vacation, and do everything that’s ever asked of them.

They ask the owners, their parents, for a raise or some time off, but they are rebuffed with something along the lines of “Some day this will all be yours”.

That can be an acceptable answer, for a while.

Five years later, when it comes up again, and the answer is still just as vague, that’s where the children need to be able to say NO.

 

When Exactly IS “Some Day”?

At some point, some clarity, especially around the “when”, is needed. But just because you want clarity, and even need clarity, that doesn’t mean that you automatically get clarity.

Sometimes you need to demand it. And that begins with a firm NO.

As I write this, I’m picturing the old sitcom plot where the mother is tired of being taken for granted and decides to go “on strike”, and finally the husband and kids realize how lucky they are to have Mom around taking care of so many things.

 

Respect the Interdependence 

As the years and decades go by and family members age and grow into new roles that fit their evolving life stages, the “power balance” shifts.

The people and the roles are very much interdependent all the way through, but the nature of that interdependence changes too.

It’s usually so gradual and incremental that you barely notice it, but it is happening. Sometimes you need to take the time to stop and notice and decide that the way things have been going doesn’t work anymore.

In this circumstance the “NO” is not necessarily the answer to a question, it’s more of a statement.

 

NO, I’m Not Settling for That Anymore

Many people get to the point where they feel this way. Not all of them have the courage to make the statement though.

I’m not saying that it’s easy, but at some point it needs to be said.

Family Heritage

What is your “True Family Legacy”?

What is your “True Family Legacy”?

The term “Family Legacy” can conjure up different images and thoughts in anyone who hears it, depending on their age, wealth, and life circumstances.

This subject comes up a lot in my work, but I haven’t necessarily written about it much, and I feel a need to share more thoughts on it.

 

Twitter Chat

I recently took part in the monthly #FamBizChat on Twitter, where a bunch of my colleagues tackle a subject for an hour on that social media platform.

The subject this time was “Legacy”, and I naturally went to my view of legacy as being much more of a “family” thing than a “business” thing.

What struck me is that I felt pretty alone in that perspective.

Maybe most of the others were advisors who worked more on the business side of things, and less with the family, I’m not sure.

But it stayed with me, so I thought a blog on the subject would be timely and useful.

 

Business Card Title

The title on my business card is “Family Legacy Advisor”, which hints at my bias.

It used to say Family Business Advisor, but because I really prefer to minimize my interactions with the business, in favour of those with the family, I made the change a couple of years ago.

Admittedly, I usually answer “family business consultant” when I’m asked what I do for a living in some circumstances like going through customs.

 

Whose Legacy Is It?

But my bias is to concentrate on the family legacy versus the business legacy, although in truth, they certainly can and do co-exist together, often for decades at a time.

In a multi-generational family business though, at some point they can bifurcate.

Family involvement in the ownership and/or management of the company eventually changes, and the family eventually diversifies its focus to other endeavours.

 

Who Takes the Lead?

A business has many resources at its disposal, and they’re necessarily organized into functioning groups of people with more or less clear roles and responsibilities.

So ensuring that the business legacy is captured can actually become part of the job of a person or group. It will often fall under marketing because the business legacy is closely attached to the company’s brand.

And so of course the corresponding person whose job it is to ensure the family legacy is, um, well, of course it must be, um, well, uh, I’m not sure…(?)

“Sorry, our family doesn’t have a marketing department”.

 

Why Did You Work So Hard?

Most business founders work hard because they want to support their family, and as their wealth grows thanks to those efforts, they continue to work hard so that their wealth can serve the next generations of their family.

Many of those people, however, will fail to properly transition that wealth to their family, and that goal will never be reached.

Research shows that about 60% of the failures can be attributed to a breakdown in family communication.

 

Family Governance and Alignment

The exceptions, the ones who manage to keep their wealth in the family for multiple generations, are the ones who actually put in the work to establish some family governance.

That word, “governance”, scares some families, and I get that.

See:

It doesn’t have to be that complicated, especially when you are just starting down this road.

What it does require is some intention, which begins with a decision, normally from the top, that it’s important enough to direct some time and effort to this task.

 

True Family Legacy

Your “true” family legacy is one that’s custom tailored to your family. No other family resembles yours, so why even pretend that this work can come ready-made, off-the-shelf?

Two expressions capture this whole question rather well, and I’ve been known to use both of these:

  • Instead of concentrating on preparing the family assets for the heirs, make the effort to prepare the heirs for the assets
  • Don’t just concentrate on transferring the family’s valuables, work on preserving the family’s values

If you’re the person in your family who recognizes the need for this, you already know you can’t do this alone.

Maybe this can get you moving in the right direction:

The Exponential Magic of Family Collaboration

Also note the photo above this post: “Heritage”.

That’s much more about Family Legacy than any business the family happens to own.

 

Related posts:

My Beliefs on Family Legacy Advice

The Languages of Family Legacy

Brainstorming your Family Legacy

Informal Authority in Family Business

Informal Authority in Family Business

I like writing about aspects of family business that sometimes get overlooked “in real life”.

Some subjects that you can learn about in business school work OK in most places, but somehow, when looking at a family business, things aren’t that way at all.

 

The Standard Org Chart

Nowhere is this more apparent than with a document that you’ll find in just about any company, the good old organization chart.

There are usually lots of rectangles, connected together by lines, and often looking a bit like a pyramid.

Simple enough, “this person is in charge of this department”, “these people report to this person”, “those department heads in turn report to this VP”, you know what I’m talking about.

 

The FamBiz Org Chart

A family business, especially early on in its lifespan, may not even have an org chart.

When someone finally insists on creating one, the founder may not like it and may even ignore it.

Eventually, as the company grows, they’ll reluctantly agree that one is needed. But that doesn’t necessarily mean that they’ll respect it.

 

Respect My Authority!

The person at the top of the chart will often simply prefer to rely on the fact that they’re at the top and therefore, everyone else is below them and in turn reports to them.

While this is often factually correct, the reporting lines at the lower levels are there for a reason, and employees come to expect that those lines will be respected.

When the owner or founder walks into a department and sees something they don’t like, it’s pretty hard for them to bite their tongue and seek out the person below them on the org chart to relay a message.

In order to “save time” they’ll usually give instructions that the lowly employee feels they have no choice but to follow.

 

Giving Up Formal Authority

The good news is that while this type of scenario is rather commonplace, it is often harmless.

That is, as long as the person who’s giving the instructions is still truly the top person in the company.

When leaders step back, whether formally retiring or just cutting back to let others build their leadership, this can get a bit trickier.

The employees who are given instructions to do something will ususally feel beholden to the oldest person, and do as they say.

But what if what they’re being told goes against what their “real boss” (according to the org chart) has told them?

 

Formalize the Authority

One of the things I like to suggest to family business clients is to formalize the authority.

What does that look like? Glad you asked.

When a business leader steps back or steps out, it is essential that the employees know who is now in charge.

There are several ways to do this, and it may be best to use more than one:

 

          – Leadership Handover Ceremony

A formal ceremony in front of the employees, during which the outgoing leader is thanked and acknowledged.

 

          – Bulletin Board or Newsletter

A written message posted on a company bulletin board and sent to employees via a regular newsletter publication.

 

          – A Simple Email to Employees

If there is no newsletter, an email explaining the changes at the top, with appropriate thanks and best wishes.

 

Culture and Leadership from the Top

The new leader needs to be able to put their cultural stamp on things, and it’s next to impossible for them to do so unless and until the former leader has officially stepped aside.

“Officially” is a big word, though, so it’s important that both parties, the one leaving and the one coming in, be part of any such announcement.

The more people who witness it, the better. This is why I have a strong preference for the ceremony.

 

Group Decision, for the Good of the Group

For all employees to be able to buy into the new reality, it needs to appear to be a joint decision, and not any sort of “coup” or forced take-over.

The outgoing leader will hopefully see this as “closure” and resist the temptation to return to a leading role.

If a support role can be identified for the outgoing leader, to still retain some presence (at a much lower official level) that can also be good.

 

Clarity is Key

Few things in any organization are more important that clarity. Clear lines of authority are a must.

Animal shadows on a white background

“Clunky Ownership Syndrome” in Family Business

“Clunky Ownership Syndrome” in Family Business

Ownership usually doesn’t get much attention in the area of family business, and there are many reasons for that, and we’ll get to some.

Maybe I’m emphasizing it too much. I did a quick search of my website (www.ShiftYourFamilyBusiness.com) and found that I’ve already written 3 blogs with “ownership” in the title.

Everything is relative, though, and even with this fourth blog on the subject, that’s less than one blog a year about this “forgotten” circle. (see: Ownership: the Forgotten Circle of Family Business)

 

Status Quo That Lasts

The people who own a business have certain privileges that come with ownership, but with those, there are also responsibilities.

Most people who work for a family business know who the owners are, and they’re usually given certain deference.

The owners, in turn, try not to act like superior overlords, and this dance can continue for decades, as long as nothing changes.

 

Fast Moving World

While ownership remains fixed over time, the two other “circles”, family and business, are constantly in flux.

The business evolves, new products are launched, new locations opened, expansions bring in new employees, and new markets are developed.

Financial results are compiled monthly and quarterly.

The family also changes, as members find partners and have children, people get educated and find their passions, some join the business, and everyone grows older every year.

Oh, and some die.

Things are constantly evolving, and changes are part of life, and these days things seem to move more quickly than ever.

Yet ownership usually stays fixed, and rarely even gets a second thought.

 

Clunky by Definition

I chose the word “clunky” to describe the situation because it felt like the right word, and I’ve used it to explain this to people in the past.

Searching shutterstock.com to find an appropriate image for this post, I almost had second thoughts, as the photo choices for “clunky” were mostly 1980’s cellphones.

(I went “outside the box” a bit with my choice of hippos; not sure it worked (?)).

Then I Googled “clunky definition” and I was immediately sold on the fact that clunky was the right word.

Here’s what came back:

clunky: awkwardly solid, heavy, and outdated.

 

So What? 

I’m not suggesting that ownership should necessarily change more frequently than it does; that would be stretching it.

What I am saying is that the definition above includes a couple of words that many family businesses should be thinking about much more than they typically do.

There are only four key words in that definition, so you can probably locate the two that are ringing alarms bells in my head.

 

Awkward!

“Awkwardly solid” almost sounds like a backhanded compliment. Solid is usually positive, but when it’s awkwardly so, well, maybe not so much.

Family business relationships are often already awkward, simply because family and business overlaps cause complex situations.

Now throw in ownership overlaps, compounded by the fact that things are stuck in the past, and things get even clumsier.

 

Outdated

“Outdated” is probably the simplest word to describe the issues that I’ve seen regarding the ownership of family businesses.

It’s not hard to understand why things change so infrequently, but that doesn’t mean that everyone should just be cool with it.

Rising generation family members crave some clarity about their futures, but they often continue to put up with vague replies when they broach the subject.

“Don’t worry, some day this will all be yours”

 

When Exactly is “Some Day”?

Once again I feel the need to explain my views on this, lest readers get the impression that I think ownership changes absolutely need to happen more regularly and quickly.

I’m advocating for some thoughtful discussion and planning, and hopefully some transparency.

 

Transition Planning

As the business evolves and family members age, transition plans are contemplated to make sure that people will be prepared to assume their future business management roles.

Don’t forget that there needs to be an ownership transition too.

 

Two-for-One

Do you really think it makes sense to think about those things as completely separate discussions? I don’t.

And if you ask those being groomed for future management roles, I bet they’d agree too.

Look 15 years into the future. People will be that much older, and the business will have grown.

If nothing changes, your current ownership structure will be pretty clunky.

Start planning those changes now too.

Family of adults and kids sitting together

Realistic Family Governance Goals

Realistic Family Governance Goals

I recently spent a day in New York City at the second annual conference of the Institute for Family Governance.

It wasn’t only interesting, but in some ways inspiring. But upon further reflection over the following days, I almost felt like it might’ve been a bit too inspiring.

I’ll get back to that part later.

 

Generative Families

The opening speaker was Dennis Jaffe, who didn’t disappoint, as usual. His presentation was titled “Do you need a different mindset to create a fortune than to hold onto one?”

I love that title because it’s a question that answers itself, with an “of course” as soon as you read it.

Jaffe went on to talk about what he terms “generative families”, which others call “legacy families” and still others dub “enterprising families”.

Generative families, according to Jaffe, see themselves as a “collective entity”, who’ve decided to develop into a “great family”.

 

Great “Family” vs. Great “Business”

This reminded me of a line that some people like to use with successful business people, to convince them to shift their focus.

“You’ve already created a great business;

now, why don’t you create a great family?”

It also fits nicely with the question that served as the title of his presentation.

Jaffe has studied dozens of such generative families who’ve been successful at transitioning their wealth over several generations.

 

Examples and Role Models

The rest of the day continued with examples of families who’ve figured out that family governance is the key to having a great family.

Simply put, without any governance, a family’s legacy has virtually no chance to survive over generations.

In the past few decades, people like Jaffe have done the work of learning what these families do, and have written about it so that other people can follow these role models.

 

Too Inspiring

So here’s why I think that in some ways the examples we heard about might actually be “too good”.

I’m willing to bet that none of those families made the decision to create a governance model on one day, and then had created and implemented it successfully within a year.

I bet most of them still had lots of work to do even after a decade. This work takes lots of time and effort, over many years.

 

Family Culture

Mitzi Perdue was our closing keynote speaker and she talked about family culture, which includes the answers to questions like “who we are” and “how we do things”.

She also correctly noted that these things don’t just happen by chance.

This stuff takes lots of work, and it takes lots of time.

And it takes a different mindset.

 

Family Alignment and Vision

I know that in order for a family to be receptive to putting any sort of governance into place, they need to be aligned, and have a similar vision of what’s possible.

Regular readers of mine also know this to be true (assuming they’re drinking the KoolAid).

But I feel like many of the attendees at this conference might have had the impression that some of the examples we heard about possibly seemed “too perfect”.

Advisors to families, and families themselves, who’ve never heard of family governance often need time to grasp everything that’s involved in this work.

Likewise, the entire family will rarely buy in all at once; there usually needs to be an “early adopter” or “family champion” who “gets it” first, and then leads the way.

 

Ironman Inspiration to Get Off the Couch

I love analogies, and I think of these great generative, legacy families that are the role models, as if they were champion Ironman Triathletes.

They’re awesome and inspirational, and that’s why they’re on TV.

Most people will never get to that level, and if they choose to stay on the couch because they know they’ll never be an Ironman, then that’s a missed opportunity.

Lots of families could benefit from getting off the couch and just going for a walk or a jog.

 

One Step, One Person, One Family at a Time

Family Governance starts with a mindset, and a group of people who are aligned.

It takes lots of time and effort to get there.

The good news is that it’s very incremental in nature.

Start small, get another person on board, and grow slowly.

Don’t compare yourselves to the best and get discouraged.

It can be done, and it is so worth it.