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From Suggesting to Managing in the FamBiz

Being fluent in more than one language has many benefits, most of which are quite obvious.

Having lived in Montreal my whole life, I experience this daily. Not a day goes by where I don’t use both French and English.

Facilitation = Making Things Easier

Every language has words that come from other languages, and when you’re fluent in both, some things can seem obvious to you that others might miss.

Years ago in the Family Enterprise Advisor program that I was taking in Toronto, we were in the module on “facilitation”, and some of my unilingual colleagues were a bit unclear on the meaning of the word.

I shared my take, which is that the word “facile” in French typically translates to “easy”, so facilitation is simply “making things easier”.

Some Are Less Obvious

Examples like that one are pretty easy to spot, but others are less striking, such as the one that inspired this post.

The genesis was a documentary I watched this past summer, in French, about Felipe Alou, who hails from the Dominican Republic.

Alou had a great career in baseball, first as a player and eventually as the manager of the Montreal Expos.

Promotion to Manager

Alou started the 1992 as the “bench coach” for the Expos, essentially the “assistant” to the rookie manager, Tom Runnells.

Runnells was the boss, and Alou was there to support him.

But this manager was in over his head, and often sought input from Alou, who was older and had much more experience.

When Runnells was fired less than two months into his first season, Alou was given the top job as many fans had hoped.

Giving Suggestions

Here is where the language thing comes in. The documentary was in French, but most of the interviews were in English, so there were French subtitles.

Alou was explaining, in English, how things were at the start of the season, when he was second in command.

He mentioned that he was suggesting things to Runnells, but then suddenly he was managing the team himself.

The French verb “to suggest” is “suggérer”.

And the French verb “to manage” is “gérer”.

Wait, what?

So, is “giving suggestions” tantamount to “sub-managing”???

Sub-Titles as a Visual

If it were not for the sub-titles I was reading (for no real reason, actually, since I understood spoken English!) it would not have hit me.

But there it was for all to read, about the big step Alou had to take to go from “suggérer” to “gérer”, from suggesting to managing.

Stepping Up, One Step at a Time

Now is the time for me to bring this blog into the family business realm. I trust that some readers are already with me here.

Let me relate my recollection of some of my own story as I worked with my Dad, decades ago.

Initially, my suggestions on some subjects were welcomed. As my ideas proved to be good, they were agreed to without much debate.

From Talking to Doing

At a certain point, some of the implementations were also left to me, as I demonstrated that I could be trusted.

Sure, at the early stages, I would clear things with him first before acting, and then eventually I would act and relay the information afterwards.

Eventually, I would do what needed to be done, and sometimes not remember to even inform him.

In many ways, I took the “suggesting” to “managing” steps as Felipe Alou did, but over a longer period of time.

I was afforded this longer timeframe because my Dad and I had planned for a longer overlap.

Radical Changes: In Case of Emergency Only

The firing of a baseball team manager is not at all like a family business succession, at least in terms of the way it should be done.

Except in cases of sudden death or accident, a family business will hopefully have the timeframe required to go the slow route.

“They Aren’t Ready”

We hear a lot about the leading generation being unwilling to let go of the reins (see Sticky Baton Syndrome –ask Prince Charles)

Sometimes those who have been running things just don’t know how to get started?

Handing things off to the younger ones needn’t be done in one step.

Accepting suggestions, and even asking for them, could be a great first step. It’s never too early to begin, either!

The longer the overlap, the easier it is to make it a smooth transition.

October 6, 2018/0 Comments/by Steve Legler

Families, Family Business, Family Business Advisor, Family Business Consutlant

From Family Business to Family Office

Welcome to a new theme here at Shift your Family Business, (the website). In some ways it’s long overdue, and in others, well, it’ll be more of the same.

I’ve begun to realize that I haven’t written nearly as much about the Family Office space as I have about Family Business.

Of course there’s a huge overlap of topics that suit both areas, and these have been covered here at length.

But for some reason, I get way more questions from families about operating their businesses than from those who’ve made the transition to managing and transitioning their wealth.

What’s the Difference?

If you stop anyone on the street and ask them what a family business is, everyone will give you some kind of answer that would score at least a few points on any grading key.

I daresay that if you asked “what’s a family office”, a lot more people would ask you to repeat the question, or would have only some vague idea of what you were asking about.

I consider myself to be pretty good at explaining complex things in simple terms, and this one is a big challenge.

In the simplest explanation, a family office is a formal structure set up by a family to manage the family’s wealth and everything that goes with it.

I’m Too Sexy for my Wealth

In the last decade or so, the term “family office” has been discovered and co-opted by many professionals who work in the area of wealth management.

I come across examples regularly that make me shake my head, where I see this very broad term used as a label to describe a very narrow service offering.

The image I have in my head is of a hot dog stand with a sign that says “smorgasbord”, where you can have your hot dog with mustard, or ketchup, or both!

OK, but where’s the rest of it?

Not for the Mass Affluent

Financial institutions typically like to attract the clients with the most wealth, and they also have products and services geared to lower levels of wealth too.

There are terms that get used in their industry to segment different wealth levels, and they kind of make my skin crawl when I hear them.

There are the “mass affluent” with “only” a few million dollars, then you get to HNW (high net worth) and eventually UHNW (ultra HNW!)

Who qualifies for what level of services varies over time and from one institution to the next.

Let’s just say that family offices have historically been for families in the upper reaches of society, and so anyone who markets their services as “family office” is trying to be seen as more “big time”.

That, and the hope that families will use their services because then they can talk about “their” family office at cocktail parties, I guess.

How Do They Get There?

Historically, family offices are set up once a family has achieved a certain level of liquid wealth, and/or a certain level of complexity.

Liquid wealth is money that can be quickly transferred from one asset to another, like cash, stocks and bonds.

Family operating businesses and real estate are usually considered “illiquid”.

The most common way a family arrives in the land of a family office is after a liquidity event, i.e. the sale of a family business.

See: Liquidity Events in a FamBiz: Pros and Cons Part 1 and Part 2

Custom Made Mystery

But every family is different, and so every family has different needs.

Most families are not 100% sure of what they need, and they have an over-abundance of providers who are trying to convince them that “I am your solution”.

There’s an expression in family office circles that “If you’ve seen one family office, you’ve seen ONE family office”. There are no two the same, nor should there be.

Demystifying Family Offices

From discussions with families, acquaintances, and peers, I realize that some demystification is overdue.

So look for more frequent posts on this fascinating subject in this space going forward.

Looking to get a head start?

– See chapter nine of my book

SHIFT your Family Business, (the BOOK),

Chapter 9: Towards a Family Office Mindset

See this article by Jaffe and Grubman

“Development Stages of a Single Family Office”

September 15, 2018/0 Comments/by Steve Legler

Family Business, Family Business Advisor

Wanted: Purpose, Passion and Community

When I was in Denver a few weeks ago for the annual Rendez-Vous of the Purposeful Planning Institute, I met a bunch of interesting people, as usual.

Having been there the past five years, I’m starting to see many familiar faces each time I return, which is great, of course.

And I always meet interesting new people every year as well.

Attendees come from a whole bunch of different backgrounds and professions, and occasionally I meet folks from areas where I’ve had no contact or experience.

Such was the case with the young women I met from Koplin Consulting.

Addiction Treatment

Koplin offers in-home counselling, treatment and recovery services for those working through addictions.

I’m fortunate to not have ever been in the market for those services for my family or for client families – yet (?).

I ended up at the same table over meals with all three of their representatives at the conference and I found them very refreshing.

During one of these discussions, it was mentioned that the key to successful recovery usually involves people finding strength in three places: Purpose, Passion and Community.

The “Trifecta”

When I hear about something that works in one area of life, I’m compelled to see if it could also apply elsewhere.

So today I want to look at those three elements from the perspective of families who are hoping to transition their wealth down through the generations.

I just searched each of those words on my website to confirm that I have actually addressed them all in this space over the years, several times, but not yet in the same post.

Family Purpose

For a family to be successful in passing down their wealth to the rising generation, it’s really helpful if they have some sort of shared purpose.

When a family undertakes the work necessary to figure this stuff out, they often start by trying to analyze everyone’s values first.

From individual values, they typically try to identify a handful of common values that everyone in the family can agree on.

Finding a common purpose becomes easier once you’ve decided on those shared values.

Individual Passions

Just like everyone has their own set of values, each individual will have their own passions.

But unlike the values, where we hope to find a few in common, to help lay out a clear family purpose, the individual passions should be looked at for each person separately.

Everyone has different things that make them tick, talents that they exhibit that set them apart, and activities that they do so well that when they’re doing them, it doesn’t ever feel like work.

Human Capital

The special talents, skills and passions that each person possesses are part of the family’s “human capital”, and ways should be found to leverage each person’s individual strengths.

Families that are able to harness the best from every member of the family will have a much easier time keeping their family wealth together for coming generations.

Part of a Community

When it comes to the “community” aspect of a family, I think the most common element is how much time

family members actually spend together.

And while that isn’t something that you’d measure with a stopwatch, there really is no substitute for “face time” in the old sense of the word.

Technology has made it much easier for people who are physically separated to be in regular contact, and that’s great, but to be successful at keeping their wealth in the family over generations, some regular contact is a prerequisite.

Wanting to Spend Time with Family

As I work with various families, it’s pretty easy to see which ones have got the community aspect figured out and which ones never will.

In many ways, it has more to do with wanting to spend time together, and looking forward to lots of interaction than it does with the amount of time they actually spend as a group.

Putting it All Together

Families wanting to benefit from the Purpose-Passion-Community idea can do so by spending time together working on their common values to drive a shared purpose.

They should allow each member to work their own passions within that, though, and not try to make everyone the same.

There’s no substitute to spending time together, with everyone bringing their best self. Good luck.

September 1, 2018/0 Comments/by Steve Legler

Family Advice, Family Business, Family Business Advisor

Accountability in the Family Business

Back in June, in Five Things FamBiz Can Learn from Fortune 500’s, I noted a few ways Family Businesses could benefit from emulating large corporations.

After it went out to subscribers, I got an email from an old friend, suggesting a 6^th thing I could’ve added: Accountability.

So I explained to “Gary” that my lists always stop at 5 (much to my wife’s consternation) and maybe I could tackle accountability in a future post.

And here we are…

Noticeable In Its Absence

Gary doesn’t come from a business family himself, but he did marry into one, so he’s familiar with some of the dynamics involved.

His email to me included this sentence:

“After placing individuals in the right “seat” for them to succeed, you must hold them accountable for both the execution of the strategy and corresponding results.”

This made me wonder if some of Gary’s in-laws were perhaps not being held sufficiently accountable for their execution and results.

Accountability is something that’s much easier to notice when it isn’t there, and often especially so by outsiders whose workplaces are much more formal than many family businesses.

General Accountability… with Exceptions (!)

Of course, there are some cases where lack of accountability causes more problems than others.

You may be inclined to think that as long as there is some accountability in a business, then that’s better than none at all.

Well, that would make perfect sense in many cases, but maybe not in some family businesses.

If you’ve ever worked for a company where everyone is held to account, except those who have the same last name as the boss, then you know what I mean.

Formality is your Friend

One of the bad raps that family businesses often get is that they are not run as professionally as they should be, and that’s often true.

I like to think that that it has more to do with the size of the company than whether it’s family-owned and operated.

A strong correlation between firm size and formality makes more sense to me than one centred on the level of family involvement.

Minimal Standards for Success

Gary mentioned strategy and results, so let’s look at those.

In the original post, I mentioned “Executing on Strategy” as my fourth point.

Now IF the business has a clearly understood strategy, AND those charged with its execution have the resources available to do their jobs effectively, then it makes perfect sense to hold the people accountable for the results.

Unfortunately, in too many family business cases, people can easily argue that they’ve been set up for failure because of a lack of clarity and/or resources.

Give Me an Another Chance

Nobody’s perfect and everyone deserves a second chance, right? And family businesses are supposed to have more of a long-term orientation, so let’s not be too quick to judge, right?

The point where a lack of accountability really rears its ugly head is when it goes on and on, year after year, and nothing changes.

It’s never easy to have to come down hard on relatives, but at some point, it can become a matter of survival for the business.

Direct Reports

One of the simplest ways to minimize this issue is to try to make sure that nobody reports directly to a parent or a sibling.

In smaller companies, this can be almost impossible, but wherever it can be done, this should be a no-brainer.

Problems at the Top

One place that you might not expect there to be a problem with accountability is at the very top of family business, especially when the founder is still running the show.

But the fact that one person feels that they’re accountable only to themselves will probably catch up to just about every person at the top.

Most founders are reluctant to set up a board of directors for their business, because they prefer to run things as they see fit, by the seat of their pants, and never need to answer to anyone else.

Who can blame them?

The A-Ha Solution

At some point, when (if?) they realize that they are in fact mortal, they might wake up to the fact that once they’re gone, a board will be just what the doctor ordered for the company to succeed.

So why not set up the board now, to instill

accountability for the next generation, later?

August 25, 2018/0 Comments/by Steve Legler

Family Business, Family Business Advisor, Featured, Parents, Siblings

Family Business Without the Drama

This week I want to discuss a subject that sometimes shows up in family businesses, and that’s “drama”.

But unlike some things that come and go in one business family or another, drama seems to either be largely present or mostly absent, depending on the family.

Let me try that again for the sake of clarity.

I find that some family businesses function in “all drama, all the time” mode, while other families might wonder what I’m talking about when they read this because they don’t operate that way at all.

Let’s take a little dramatic side trip now and we’ll come back to family business after.

Eliminating the Wicked Witch

I recently attended a High School play and I witnessed some unexpected bonus drama that occurred in the audience.

It was a presentation of The Wizard of Oz in a very small theatre on a Friday evening.

There were a few young children and toddlers present, presumably to watch their older siblings and cousins perform.

Everything was going as planned until the Wicked Witch of the West arrived on stage.

The girl who played her was perfectly cast.

I know this for a fact, because she had told me personally “Hey Dad, how perfect, I get to be the Wicked Witch!”

Exit Theater Left

The Wicked Witch’s arrival on stage, with her booming voice, green face, and the stage presence that only a six-foot-tall actress could pull off was simply too much for some of the younger patrons.

Crying, squealing, mothers taking their kids out into the hall, just wow. The witch’s parents were in hysterics observing this scene.

Each time she reappeared on the stage, there was palpable anxiety in the audience. Thankfully, when Dorothy finally eliminated her, a more calm and serene mood was enjoyed by fans of all ages.

Who’s Your Witch?

There are different kinds of drama in family businesses, but one common version is a variation of the witch.

I’m talking about people in the business whose mere presence has everyone on edge.

Likewise, when they are absent, everyone knows it too, and they can actually relax and get their work done.

Who Needs an Antagonist?

While a play needs someone to act as an antagonist, a business does not.

I’ve used the word “drama” here, and also talked about the “anxiety” that is sometimes felt.

They are not exactly the same but surely related. You can have anxiety without drama, but I’m not sure that you can have drama without any anxiety.

My conclusion is therefore that minimizing drama in a workplace should be a desirable goal.

Workplace Versus Homefront

Note that I chose the word “workplace” just there.

Sometimes the drama needs to have an outlet, and my argument here is that efforts should be made to limit the drama in the workplace, for the sake of the people who are there to get their jobs done.

So am I saying that people should bottle things up at the office and then bring their drama home with them?

Well, I’m not sure that would be the best interpretation either.

Drama Kings and Queens

Those responsible for the drama are quite often the same people, and they often play their “roles” in predictable ways.

It can be very difficult to get them to change their ways. But once a drama queen, well, usually “always a drama queen”.

So now what?

Well, the only person you can actually control is the person you see in the mirror, and so that is naturally where I’m going to suggest you put your focus.

Respond, Don’t React

A couple of weeks back in Your Response is Your Responsibility, I suggested that you make every effort necessary to avoid reacting, and instead take a deep breath, pause, and offer a response instead.

Drama kings, at home or at work, enjoy the reactions their tactics elicit.

When denied the satisfaction of those reactions, they may slowly, eventually, begin to subside, if only just a little bit.

Don’t Fight Fire with Fire

While it’s sometimes very tempting to fight dramatic fire with dramatic fire, I think that these fires should be fought with water instead.

Let’s end with a quote from George Bernard Shaw that makes this point nicely:

“I learned long ago, never to wrestle with a pig.

You get dirty, and besides, the pig likes it.”

June 9, 2018/0 Comments/by Steve Legler

Family Business, Family Business Advisor, Family Business Consutlant, Featured

Lonely at the Top of the FamBiz

This week we’re going to look at something that many family business leaders face, and that often makes them feel powerless.

While they appear so powerful to others, deep down inside, well, maybe, not so much.

Life Imitates Art

I was a big fan of the TV Show The Sopranos when it first aired on HBO, and it became appointment TV viewing in our house.

Tony Soprano was a mafia boss, and he had a family, but he wasn’t the prototypical family business leader.

We have a promotional poster for the series in our basement, that shows Tony in the center, with his wife, mother and kids on one side, and his “work family” on the other.

It reads:

“Meet Tony Soprano:

If one family doesn’t kill him,

The other family will”

I still get a kick out of it every time I see it.

Not Just for Business Leaders

The Soprano quote below that inspired this blog post came from a story I read a couple of months back about David Chase, which ran in GQ Magazine.

The story was about Soprano’s head writer David Chase, and it examined some similarities between Chase and the Tony Soprano character.

The end of the story included this quote:

(Some of the letters have been replaced by ***, but I think you can still get the gist of it):

“All due respect, you got no f***ing idea

what it’s like to be number one.

Every decision you make affects every

facet of every other f***ing thing.

It’s too much to deal with, almost.

And in the end you’re completely alone with it all.”

Does It Have To Be So Lonely?

Let’s look at some options that the person at the top has as possible outlets or resources.

Spouse

Tony, of course, had Carmela and they spoke quite often about many important issues. But deep down, Tony knew that there were many things that he couldn’t and shouldn’t burden his wife with.

An understanding spouse who is a good listener can be very helpful but is rarely sufficient to relieve the loneliness burden.

Top Management

Some of the most memorable scenes from the show were ones that included Tony and his top management. Paulie and Sylvio were the mainstays, and Christopher was a rising star in the group.

But much like the spouse, these people are so tied in with the decisions, that it becomes difficult to broach subjects that affect the group.

Peer Group

The closest thing Tony had to a peer group was the other top mafia bosses from other territories.

We occasionally got glimpses of this, and they sometimes offered an opportunity to exchange with others who faced similar challenges and decisions.

The nature of their business on the show, however, added a dangerous element that discouraged too much sharing.

Real family business leaders usually have lots of opportunities to join peer groups, through organizations like FEX, TEC, Vistage, etc.

Rising Generation of the Family

Tony’s kids were too young, and AJ, his only son, did not seem to have the “right stuff” for the line of work his father was in.

For real leaders of family businesses, there are plenty of opportunities to share what one is going through with their offspring, especially those who work in the business with them.

This is an area that I think is underexplored by most people.

Maybe it’s because they don’t want to appear to be playing favourites by sharing with one child more than others, or maybe it’s an effort to avoid putting a burden on them.

My belief is that some sharing, in appropriate amounts, at the right age and stage, and in the proper way, can be a win/win, because it also helps prepare the future leader(s).

Trusted Outside Advisor

Tony’s frequent visits with Dr.Melfi, his shrink, were a recurring theme throughout the show’s run.

Mental health practitioners are a potential outlet, but so are other trusted professionals, like your accountant and lawyer.

There are also plenty of executive coaches and family business advisors that could certainly play a role too.

Board of Advisors

The ultimate solution, just shy of having a full-fledged “Board of Directors” would be to set up a less formal “Board of Advisors”.

This takes time and effort to set up, but those who have done it swear by it.

Tony Soprano probably should have had one too!

April 22, 2018/0 Comments/by Steve Legler

Family Advice, Family Business, Featured

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.

March 31, 2018/0 Comments/by Steve Legler

Featured, Parents

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.

March 10, 2018/by Steve Legler

Families, Featured

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.

February 24, 2018/by Steve Legler

Featured, Rising generation, Siblings

5 Things that Can De-Rail a Family Business

It’s been a few months since my last “5 Things” blog, so this might be overdue.

While I usually deal in positives because it’s my nature, this week we’re going to look at some potential pitfalls that many family businesses face.

Let’s get started.

Assumptions

The word “assumptions” that I chose here might surprise some, but I wanted a word that stood on its own, without requiring a negating adjective.

So while I could have said “Poor Communications”, I chose instead to look at what IS there, as opposed to what is NOT.

The reason many families don’t think that they need to talk is because they actually assume that everyone else in the family knows what they are thinking, AND that everyone is in agreement.

That often turns out to be wishful thinking at best, and hides serious misunderstandings at its worst.

Bad Timing

Another issue that can de-rail things is that family members from different generations will often have different views regarding timing.

I call it “bad timing” but it’s really about poor alignment of timing, different priorities around timing, and just plain waiting too long to get started on things that are important.

The rising generation needs to step into roles with a long runway so that they can learn while the elders are still there.

More often than not, the elders hang on way too long, telling themselves that the “kids aren’t ready yet”.

That usually has much more to do with their own sense of importance than anything else.

“Us-against-the–World” Attitude

Business families are notorious for keeping things very close to the vest and having great difficulty trusting any outsiders.

They often think that they’re the only ones in the world who have family issues to contend with as they run their businesses.

They wrongly believe that everyone else is “out to get them” and have trouble trusting anyone who happens to have a different last name.

This can be harmful in terms of attracting good employees, qualified advisors, and of course eventually outside independent directors for their board.

Jealousy and Superiority Complexes

You had to know that I’d eventually get to something in the area of sibling relationships, and here I’ve chosen to label it as jealousy.

When there’s a lack of harmony in sibling relationships, quite often it can be traced to some jealousy issues.

And even when one sibling isn’t really jealous, sparks can come from what I like to call someone’s “superiority complex”.

I’m not sure if that’s even a real term, but I like to use it as the opposite of the more familiar “inferiority complex”.

When a sibling occupies a leadership position in the business vis-à-vis their siblings, it brings about some potential difficulties, like jealousy, for example.

A humble sibling leader will face less issues with this, than one who boasts about his relative place with his generational peers.

Stagnation

Family businesses can become stodgy and complacent with time and not quick enough to innovate. Lack of foresight and getting out in front of industry changes can become a problem.

This often accompanies the bad timing noted above, where the younger family members know that things need to change, but aren’t able to convince the current leaders that changes are needed to be profitable in the future.

Wait, Where’s “Conflict”?

Just guessing here, but I assume that some readers may be surprised that “Conflict” did not make my list.

It certainly isn’t because conflict doesn’t exist in business families, nor because I don’t think conflict needs to be addressed.

Of course conflict is an issue, and it exists in almost every family business. But, in and of itself, conflict won’t de-rail a family business.

Unresolvable conflict, due to an unwillingness to work on resolving it, can certainly be a huge risk.

Likewise, unexpressed conflict that lays beneath the surface for years or decades has certainly sunk more than one family business.

Manage the Conflicts, Look Out for the Other Five

Conflict can be healthy (see: Embracing Conflict in Family Business), so I suggest concentrating on the other five areas.

No. 3, only trusting insiders, can be the biggest one.

Regular, honest, open communication is the best antidote to all of these.

Recognizing everyone’s interdependence is probably the “magic bullet”, if there is one.

What keeps you up at night?

February 3, 2018/by Steve Legler