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The “Family HUG” We’re All Looking For

Most Enterprising Families Want the Same Things

I love it when a positive blog topic lands in my lap out of the blue, especially when it falls on the heels of recent “negative” posts, like last week’s, Avoiding Adversarial Relationships in Your Enterprising Family.

When I say “out of the blue”, I mean that I was simply jotting down some notes during a discussion, and then had an “A-Ha!” moment where something hit me, and I knew I was onto something for an upcoming weekly missive.

The context was a course given as part of the FFI GEN program (Family Firm Institute – Global Education Network) for which I serve as one of the instructors. 

I was invited to join the faculty in 2019 and readily accepted, becoming part of the GEN 502 team, for the “Family Governance” course.

We All Learn from All of Us

Some of the things I love about FFI are the fact that it truly is global, with members in dozens of countries, from 6 continents, and the fact that there are so many experienced practitioners who are members, and we all learn from each other in every course.

Since GEN 502 is one of the more advanced courses, the students all have at least some real world experience, and so whatever they share with the group (whether in the online discussion board that the instructor monitors over the quarter, or in the capstone webinar) is for the benefit of everyone.

It was during one participant’s concluding thoughts during our webinar that I heard an innocent comment, but that I captured in a novel way.

Harmony, Unity, and Growth

She stated what every family wants, i.e.  “They all want family harmony, family unity, and growth of the business”. (Thanks, LM).

I jotted down, as a list, the following:

 

Harmony

Unity

Growth

 

Ta-dah!  I could not argue with her premise, and, as she happened to put it, she gave me a “family hug” to write about.

Usually when a great blog idea comes to me during a discussion I’m involved in, I share it on the spot with the person who sparked it, thanking them for the idea, but this time the context did not lend itself to that, so I kept it to myself.

So in some ways I’ve been dying to share this even more.

OK, That’s What They Want. How Do They GET It?

Anyone who has spent time with people who lead business families will agree that just about every family has these same three wishes.

Let’s dispense with the “growth” part first, as it’s a bit different, since it typically revolves more around the business or the wealth, as opposed to harmony and unity which are more about the family.

Actually, the growth is ultimately about the family as well, because the family will also grow, even exponentially over coming generations, and deep down there’s a fear that if the business’ growth doesn’t keep pace, that will impact the family negatively at some point.

But even though growth is important, it can always be worked on by all the management and employees, while harmony and unity are a family concern.

So how do you ensure harmony and unity?

Family Governance to the Rescue

Given the fact that a course on family governance was the genesis of this post, you won’t be surprised that my answer also lies in how a family governs itself.

Family governance, in turn, is all about communicating and learning how to make decisions together. 

These things don’t always come naturally to families, and so they need to work on them, sooner rather than later, in order to work out the kinks.

The ways that families come together and meet to discuss important topics need to be co-created and developed over time, by the family.

It isn’t exactly natural though, so many families get expert help, from people who have already played similar roles for other families.

Nothing Important Happens by Itself!

Of course no two families are the same, and so you can’t just use a cookie cutter and copy another family’s governance either.

Such trusted outsiders do exist, and the good ones will play whatever role the situation requires, from project manager to quarterback, from implementer to consigliere, and from facilitator to mediator.

But it will take time and effort, from many members of the family too, because nothing important happens by itself.

Hopefully, you’ll also end up with plenty of hugs too!

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Avoiding Adversarial Relationships in your Enterprising Family

Green and Yellow Are OK; Red? Lookout!

Having recently been involved as an advisor and mediator with some families where the relationships could hardly be described as harmonious, this week I want to talk about how important it is to try to keep such situations under control, and not allow them to boil over.

I’ve written about aspects of this before, so there will be a few links to previous posts along the way.

In 2017, with Yellow Light Family – Proceed with Caution we looked at the “family dynamics axis” of a model that places families in a particular zone based on traffic lights, with which most people can readily identify.

Green light families are great to work with; when the light turns yellow, there are a few more challenges that many advisors with some experience can often help families overcome, but when the light turns red, all bets are off and many advisors prefer to head for the hills.

 

Kissing Your Proverbial Sister for Real

A couple of years later, in Kissing your Sister – Playing for a Tie in FamBiz, I shared this quote from a slide I’d seen during a presentation on Family Governance:

                         A General Family Business Precept:

 

                       In a Family, if you play to Win, you Lose;

                       In a Family, if you play to Lose, you Lose;

                       In a Family, if you play to Tie, you Win

 

                        Richard Goldwater, MD; Boston, MA

 

I found that so perfectly appropriate for most family enterprise situations that I just had to share it.

 

A few weeks ago, I wrote Getting Legal Advice for your FamBiz vs. Lawyering Up.  In that post, I shared learnings from some recent work I was in the middle of, where I saw my role and my goal as keeping the siblings from instituting any legal proceedings against each other.

 

FWIW, up until now, I’ve been successful.  But things still feel more “adversarial” than I’d like.

 

 

Letting Things Cool Down

For some reason the word “adversarial” came to mind recently as I pondered how to approach this blog.

As I sometimes do, let’s see what comes up when I Google the word:

          “involving people opposing or disagreeing with each other”

Hmmm, I was really only considering the “opposing” part, and not the simpler “disagreeing” aspect.

When people work together, disagreements often come up, it’s only natural, and we need to learn to be able to work through them.

One expression around this that I love has to do with learning to “disagree without being disagreeable”, and that’s something I’m often called on to do when working with family members.

 

When Opposing Viewpoints Create Opponents

Situations that cause more opposing viewpoints often revolve around a Zero-Sum game, where everything one person gains is at the expense of someone else.

The greenlight families noted above typically involve businesses where things are already going well and they are expected to keep going and even improve.  

When you’re making a bigger proverbial pie, the fight over who gets which slice takes a back seat.

Whenever a family limits its view to what’s already there, and there’s no plan on increasing what’s available for all to share, the chances of adversaries taking up sides increases.

Can you find ways to make it about more than what everyone can already see?  Sometimes you need to expand what you are looking to accomplish and consider some intangibles instead.

 

Many Kinds of Wealth and Capital

This brings us to some of my other favourite topics, examining what wealth and capital really are.

Too many families, and their professional advisors, seem to believe that financial wealth is by far the most important consideration for every family.

While the financial wealth is certainly not something to ignore, families who also work on their social capital and human capital actually have a better chance of success with all forms of capital.

Earlier in my career, I was managing financial wealth on a daily basis, with one eye on my computer screen and the other on CNBC. (No, I don’t miss those days.)

One market guru, whose name I’ve forgotten, used to talk about the two kinds of capital: financial and emotional. He was reminding his fans not to overspend their emotional capital, because it is a limited resource.

Families fighting over money end up wasting lots of time and energy dealing with negative situations, to the point of exhaustion or breakdowns. It’s just not healthy.

 

Were They Always Adversaries?

If family members are currently adversaries, I like to ask if they were always this way, or if there was a time in their lives when they were more cooperative and working towards common goals.

What changed?  Can they go back?  

Burying the hatchet can be good for the soul. I encourage it.

 

 

 

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Intergenerational Challenges in All 3 Circles

Getting Inside Family, Business, and Ownership

I’ve been a huge fan of the Three Circle Model (TCM) since I saw it for the first time. See: Three Circles + Seven Sectors = One A-Ha Moment. It is as useful today as ever, and continues to anchor much of the work that I do when interacting with business families.

I’ve seen many adaptations, some more useful than others, over the years.  It is quite simple, and because of that, it also lends itself to lots of possible uses.

I recently saw something that made me look at the three circles a bit differently, and that’s the basis of what I want to share this week.

The source of this idea is a local colleague and friend of mine who works mostly in French, allowing me to play language instructor or translator in this space once again

His way of looking at the challenges in the family, the business, and the ownership concentrates on the intergenerational transitions inherent in each of the circles, which in and of itself, was eye-opening to me.

 

Parents and Their Offspring, G-X and G-X+1

While the genius of the TCM is the simplicity with which it conveys the overlaps of the circles via a Venn diagram, it doesn’t do much for how to look at the generational transitions within each circle (not that it attempts to).

My colleague Michel Handfield, works mostly with family businesses where there’s a simple structure of a parent and one or more children involved, where they are all involved in both the family and in the business, and are also the current and future owners of the business.

So whereas the TCM is really good for more complex situations, because it outlines 7 different sectors where different people might fall, Handfield gets into the dynamics between the generations, but looks at them specifically as they exist in each of the three circles.

 

Mind Your P’s and E’s

I don’t shy away from ideas in different languages, and because I’m bilingual, I have access to things in both English and French as possible resources

By happenstance, Handfield has come up with an elegant model in French, which unfortunately loses some of its elegance in English, because of the way key words happen to translate. 

Have no fear, I’ll make sure the gist of it doesn’t get lost along the way.

Here are the three “P & E” relationships he’s identified:

 

                           Family:            Parent – Enfant 

                           Business:        Patron – Employé

                           Ownership:    Propriétaire – Futur propriétaire

 

So we have a Parent-Child relationship in the family, a Boss-Employee situation in the business, and an Owner-Future Owner scenario in the ownership circle.

No, it isn’t rocket science. But man is it powerful because of its simplicity.

 

Same People, Different Issues

The first important thing to note is that the people don’t change.  Actually, the people themselves do change, over time, of course, but we are always looking at the same people, no matter which of the circles we’re talking about.

In the simplest and probably most common version, it’s father and son, although there are now many more father-daughter combos than ever before, and also mother-son and mother-daughter. 

But no matter the genders or even the numbers, the relationships between the senior generation and the rising generation all fall under the Parent-Child, Boss-Employee, and Owner-Future Owner dynamic.

 

Different Hats, Different Rooms

There are a couple of analogies that people in this field go to when discussing the importance of recognizing which “hat” one is wearing (“Boss” hat versus “Dad” hat, for example) or which room the decision being discussed belongs (owner room versus management room). 

(For more on the Four Rooms Model, check out my podcast interview with Josh Baron)

Outside advisors can sometimes be most resourceful to business families when they simply point out these distinctions and get the family to see things more clearly.

But Handfield’s P & E model focuses on the dynamic within each circle as it applies in the three situations, which is why I like it.

When an advisor works with a parent-offspring pair, recognizing what’s going on between them and offering guidance is made easier when they can separate out those dynamics for the benefit of those living them.  

Being able to grasp which relationship dynamic is at play in any situation allows one to understand the context in which the people are operating much more easily, which is quite useful when you’re trying to offer them guidance.

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Discovery, Contracting, and Designing Alliances with Families

Nice to Meet You; Let’s Start Working Together

Working with business families and their members is always interesting and rarely simple.

From the outside it looks relatively easy to get going with any family, but if you’ve ever been in a position to do this, you know how complex it all can be.

That’s what I want to look at this week, and I’ll contrast different terms that come from various professions and how they handle the beginnings of working relationships.

Bottom line, there is no simple standard way that these relationships work, although each practitioner will typically try to develop one or two ways that they prefer to construct such relationships.

 

Discovering What Makes a Family Tick

Upon being contacted by someone about working with a family, the fascinating work of finding out who’s who and how everyone relates to each other begins.

That work often continues for as long as the relationship exists, although much of it is “front loaded” and the learning curve at the outset is generally pretty steep.

I used to laugh when people who do this work would tell me that they start off by drawing a genogram or family diagram, but I don’t laugh anymore.

I find myself doing that very early on, because once you get the hang of it, you can’t go back to just taking notes ever again.

The process that many call “discovery” starts from the very first call or email, and for some it is a key step that they actually outline as part of their process, that begins after they’ve come to a formal agreement to work together.

 

The Contracting Stage

The formal agreement between the advisor and the family can be quite simple or very complex.

Whether it ends up being several pages long and executed with a signature or if it is more informal and mostly verbal, it does make sense to spend some time upfront in order to properly set expectations.

The Family Enterprise Advisor program (FEA) I completed years ago, where I had my calling to this work, spends a good deal of time on making sure those who complete the program truly understand how important the contracting stage is.

The program also encourages advisors to collaborate with other professionals in service of families, and much emphasis is placed on the contracting that is required between such advisor parties.

As things change during the relationship, it will often be necessary to revisit the question and get into re-contracting too.

 

Designing the Alliance

Where FEA’s talk about contracting, coaches who trained with CTI like I did talk about “designing the alliance” instead.

I like that language because it gets at a couple of very important aspects that might otherwise go unnoticed.

The idea of “design” speaks to the fact that it isn’t always the same, and there’s a need and desire to customize the relationship between the coach and client.

The “alliance” part is all about the fact that while there are two parties, and the coach and client become true allies and work together for the good of the client.

The client is not alone, and they are also expected to be quite active during the coaching process, in fact, they will be the ones who do most of the work.

 

One Person or the Whole Family

My favourite part of all of this is that when I got into this business of serving families, I always imagined only working with families as a group.

Much of the work I do is of course still done with entire families, but thanks to some of what I learned during my Bowen Family Systems Theory studies, I realized that one can make great strides for the whole family even when working with just one family leader.

The discovery is very different when you only hear about people and never meet them, but a relatively clear picture does emerge, albeit from a subjective view of the individual client.

In all cases it is important to get these relationships off on the right foot, and that means asking a lot of open ended questions and then doing a lot of listening.

Coaching one person or facilitating for a whole family require different but related skills. It’s fascinating work and if you are naturally curious about people it can be lots of fun too.

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Skills vs. Knowledge in Family Enterprises

Knowing “What to Do” Isn’t Enough

This week’s subject deals with some issues faced by every business, but we’ll be looking at their particular effect in family enterprises.

In addition, there’s an angle to this question that applies very much to advisors who serve business families and their members.  

In fact, the inspiration for this post comes from something directed specifically at those of us who serve families in this space.

Let’s see how far we can get in connecting all these elements.

Personal Connection to Stories About This

When I began planning to write about “knowledge vs. skills”, for some reason I flashed back to my Dad, and I want to share two very different ways this was really relevant in his life.

Dad was trained as an apprentice in Austria before immigrating to Canada in the 1950’s. He had not realized what an advantage that European training in “how to do” his work for the steel fabrication industry would give him a leg up when he got here.

There was a skills shortage in those post-war years in North America. Many knew what needed to be done, but we didn’t have enough skilled hands to do the work.

Much later in Dad’s life, he’d often make sure we took the time to distinguish the “what to do” from the “how to do it”. 

“Let’s figure out ‘what to do’ first, then we can figure out ‘how to do it’”.

Onboarding the Rising Generation Family Members

In lots of family businesses, the first generation who founded the business need to have the skill to pull off the important work to get the company off the ground.

A generation later, the questions of how and where to integrate the next generation into a company typically arise.  Naturally, there’s always more than one “right” way to do things in any particular situation.

Many families struggle, though, with whether or not to start their offspring “on the ground floor”, like working in the factory, or whether they can just saunter into an office job, because they were educated, and therefore arrive armed with lots of knowledge.

Some really interesting challenges can arise when one sibling ends up with skills useful to the operation and another is better educated and has lots of knowledge and they’re expected to get along well together and complement each other for the good of the business.

It’s great when it works, but fraught with negative consequences when they don’t get along.

What About Those Who Advise FamBiz?

A couple of weeks ago in When Being Wealthy Doesn’t Equal Having Money, I mentioned the work of someone I look up to in this space, Dr. Jim Grubman, and I’m going back to his well and wealth of experience in the field of serving enterprising families again here.

In a sense this post will serve only as a tease to further writing about the recently formed Ultra High Net Worth Institute, and their work, where I know Jim was involved in the creation of their new model, The Ten Domains of Family Wealth.

I first became aware of the UHNW Institute last year, and when I saw that they had created this new model to help understand all the important areas that wealthy families need to consider, I was hooked.

Great Knowledge, Yes.  Skills Also Required.

One of the points Grubman makes is that while knowledge is great, it is not sufficient, for those who wish to truly serve families well.

Many people know that families need to work on their governance and have family meetings, but knowing that doesn’t automatically make one the best person for a family to hire to help them with such matters.

And when merely knowledgeable people act as if they are also skilled, bad things can occur. Skills matter.

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23: Let’s Talk Family Enterprise Podcast Episode 23: Family Business Ownership: Four Rooms and Five Rights

Read more
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The Art of Gathering your Family

It’s More Art than Science

This blog idea has been simmering in my “future posts” folder for a while now, and it finally stuck its hand up and said “now!”

It’s based on  a great book that I read during the winter, called The Art of Gathering, How We Meet and Why It Matters, by Priya Parker.

The book is a great resource for anyone who is occasionally charge with organizing any kind of get-together involving people, for whatever reason they might have to be in one place together.

Of course most get-togethers do involve people, unless you spend a lot of time at the local dog park. The issue is that many gatherings seem to forget the importance of the people attending.

Now that such gatherings are once again becoming possible, with much of the pandemic hopefully behind us, this is topical again.

Family Gatherings Are a Particular Subset

While the ideas in the book can be applied to all sorts of gatherings, I read it with a particular interest in family gatherings, because I sometimes work with families who are just getting used to having regular family meetings, and some of the details can be pretty important.

The organizing of such events typically falls onto the shoulders of one or two people, and most families can readily point to the “usual suspects” who play that role in their clan.

Such “family champions” or “CEO’s” (Chief Emotional Officers) would do well to pick up the book to get some ideas and tips that they’ll find useful.

Even experienced gatherers will get something out of it, if only for a better understanding of why they’ve already been successful.

Parallels to Other Areas of My “Family” Work

Aside from wanting to plug Parker’s book, there’s a bigger reason why I wanted to write this particular post.  Regular readers know my penchant for metaphors and analogies so that’s naturally at play here.

It has to do with the experts whose advice is typically sought when one begins to make important plans, and what those experts focus on.

The best way to set this up is with a direct quote from the book:

          “Because so much gathering advice comes from 

            experts in food and decor rather than from facilitators, 

           that advice almost invariably focuses on preparing 

           things instead of preparing people.”

Preparing things instead of people….

Focusing on What, When, and Where

There are plenty of people who can help you find a great place for a gathering, and they all have a calendar on which they can see if your date will work, and they’ve likely held similar events to yours too, so you can count on their advice to make yours great, right?

Likewise, when planning for the future of your business and wealth, and how they will affect your family, there are also plenty of experts who have done similar work for other families, and can tell you exactly how you should set things up legally and financially.  

And guess what; if you follow their plan, you’ll save your family lots of money in taxes!  Because that’s what’s really most important.

Not!

Let’s Think About the WHO (Or Is It Whom?)

You may see me coming from a mile away, but just in case, let me suggest that the people, those members of the rising generation of your family, may be an important factor to consider here.

And, it probably makes sense to actually speak with them, and perhaps even involve them, before, during, and after you make such important decisions and plans.

Here’s another quote from The Art of Gathering:

       “This advice makes the pregame window about physical 

         setup rather than human initiation, about the 

         gathering space and not what it holds: people.”

What the gathering place holds: People.  Hmmm.

Preparing the Heirs for the Assets, Not the Other Way Around

One way to make sure that you’re preparing the people for their future roles in managing and stewarding the family’s wealth is to gather often and discuss these exact subjects, in regular family meetings.

These meetings don’t just happen by themselves, they need to be planned and coordinated, and you need to make sure that you make some progress towards the goal.

That goal is to make sure that everyone understands what will be expected of them, while also figuring out how they’re going to make decisions together when their turn comes.

Yes, the work the experts do to prepare the assets for the heirs is important, but it’s definitely not sufficient.

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