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Musings on Collaborating for a Win-Win-Win

No Single Advisor Can Do It All

Thinking back to when I had my calling to this work with families, one of the first realizations I had was just how complex such work can be.

A family enterprise has lots of moving parts, especially as the family approaches an upcoming transition from one generation to the next.

Between the amount of wealth involved and the complexity of the family’s situation, there are important considerations that ultimately require the support and advice of a number of outside specialists who serve the family.

Getting these expert professionals to work together makes so much sense, at least in theory, so that the family client can get the best results.

 

The Theory Versus the Real World

Of course just because something makes perfect sense in theory, that doesn’t mean that it will work simply in the real world.

Thankfully, those who designed the FEA Program where I had that calling already knew about this “real world” challenge, and had purposefully included a team project into the curriculum.

For example, my project team included an insurance specialist, a CPA, a private banker, and me, who at the time was someone still trying to find his place in this field. 

I played the role of facilitator, and still very much enjoy that role today.

In fact, as my team came to learn, that role of coordinator and facilitator often turns out to me way more important than the other professionals ever imagined.

 

Many Challenges and Obstacles Remain

Such facilitators have a key role to play in how the actual collaboration will play out with the family. 

To many of the tactical specialists, we are often an “afterthought” because they haven’t necessarily been used to dealing with an entire family.

So many professionals have been accustomed to serving families more in theory than in practice, because they typically deal with only the head of the family or perhaps a couple.

Opening up the service offering to the entire family, which means at least two generations, means that there are many new considerations.

This poses certain challenges that can often be seen as more trouble than they are worth.

Rest assured though, that from the perspective of the family members from the rising generation, this difference is well worth the efforts in the end.

One Direction Only?

While the idea of collaboration is gaining wider acceptance and more advisors grasp the importance of working together, there is still much work to be done.

In fact, there seems to be a sort of “divide” that exists between the folks like me who specialize in the “family circle” and those whose practice involves the “business circle” and the “ownership circle”.

See: Three Circles + Seven Sectors = One A-Ha Moment (I’m referencing another blog from 2013, two weeks in a row!)

Whenever I have a client who needs something taken care of in those other circles, I always happily help them find the right resources and advisors so that they can be well served. 

Everyone else I know who works the family circle does the same.

There seems to be a general reluctance for those who specialize in the other two circles to return the favour.  Or maybe it’s just me.

 

Varying Degrees of Complexity Exist

Of course we aren’t talking rocket science here, and relatively simple family situations can obviously be handled by many advisors without the need to reach out for another person.

However, those whose entire career has been built on expertise in a particular domain aren’t expected to be adept and comfortable beyond a basic level of complexity and family conflict.

This is precisely where bringing in someone who has trained for this work make sense.

 

“Plays Well with Others”

Some professionals hesitate to bring in another advisor for fear of “losing the client”.

I can say with certainty that nobody is looking to “steal” your client. 

As children, we all got comments from our teachers that noted how we “play well with others”, and we get that the client family’s needs are what matter most.

 

What Do I Mean by “Win-Win-Win”?

And in case it isn’t clear what I mean with my “Triple Win”, the first one is the client family and the second is the advisor with the wisdom and courage to bring in another resource to deal with the family circle.

The third and final win is for that family circle expert who helps tie it all together.

Children holding a golden trophy

The Case for Friendly FamBiz Competition

This week’s blog is one of the occasional instances where I leave an open spot on my blog calendar because of an event that I’m attending, and I allow something from my participation to inspire me in real-time.

The event in question this time is the Global Family Enterprise Case Competition at the University of Vermont (UVM). I just returned from my trip there, where I was pleased and proud to serve as the lead judge on one of the four judging panels on day 1 of the competition.  

This was my fifth time as a judge, and every year I come away impressed with the caliber of the students; not only the competitors, but also the dozens of UVM volunteers who run the event, under the watchful eye of Pramodita (Dita) Sharma, who remains the heart and soul of the event, as she has since she created it.

 

Friendly Competition, Global Participants

If there was an “A-Ha Moment” that arose for me this time, it certainly was not the global nature of the competition, and, by extension, the family business world.  I’ve commented before in some of my posts relating to my membership in the Family Firm Institute (FFI) that the FamBiz community is truly global in nature.

What really struck me on this visit was the friendly nature of the competition between teams.

The dinner after day 1 of the competition involves each team (3 student participants plus 1 coach) going to the front of the room and taking the microphone and introducing themselves in a fun and creative way.  Think of it as a gigantic icebreaker exercise.

It is very friendly in nature, and it is also competitive.

In fact, the entire event truly brings together both friendliness AND competition.

 

Neither One Alone Would Suffice

What I realized was that neither one of these traits (competitiveness and friendliness) would be enough in and of themselves.  Imagine if it was all friendliness and nobody really cared who won. Or, the reverse, if it turned into a dog-eat-dog fight to the finish.

But then I also started to think about the parallels this competition has with a real family business.  Bear with me here for a minute.

If you’re part of a family business and it’s all friendliness, all the time, that might be nice, but how long will it last, if you aren’t competitive enough? And I mean competitive as a business, but also internally with colleagues.

Likewise, if it’s all about competition and people aren’t even friendly with each other, what’s the point? Isn’t life too short for that?

 

The Pentland Case

The case that was used on day 1 was centered on Pentland, a UK business that was preparing the transition from the second generation of the Rubin family to the third.

It was written after Pentland had received an award for the being the best family business in Europe a few years ago, so it clearly wasn’t one of those typical business school cases where there are all kinds of obvious problems.

The setting for the case was a Friday evening family dinner where various family members had recently returned from visiting different branches of the family company, and they were about to embark on some key discussions about where the family was going to go from here.

 

Finding the Right Friendly / Competitive Balance

The key to this and many family business situations is finding the right balance between the friendly family dinner and the business meeting aspects of the important discussions that also need to happen.

Some families have difficulty with this balance, where every family dinner becomes a business meeting, much to the dismay of those around the table who aren’t involved and don’t wish to be part of any such meetings.

 

Coaches and Judges Mingle…. After Work

Personally, I also needed to work on balancing my serious role as a judge with some friendly after dinner discussions with some of the dedicated coaches.

I’m pleased to say that everyone got along very well and professionally, and my own network of family business contacts continues to expand..

I hope to return again as a judge next year.

 

And the Winners Are:

The winning schools at FECC 2020 were:

Undergraduate Division: Wilfrid Laurier University – Canada

Graduate Division: Universidad Francisco Marroquin – Panama

Congratulations to all those involved, participants and organizers.

Bird on a Cords aligned together

5 Things you Need to Know: Family Alignment

5 Things you Need to Know: Family Alignment

This week it’s time for another installment of the “5 Things you need to know”, and the subject is one that I consider to be tremendously important: Family Alignment.

I’ve written about Family Alignment a number of times in the past, but I decided to attack it again just because it needs to be better understood.

Much of the content of this post comes from a “Quick Start Guide” (“white paper”) I wrote on the subject in 2016. If you want a broader and deeper look at Family Alignment, please feel free to read and share it.

Without further ado, here are:

5 Things you Need to Know: Family Alignment

 

  1. There are 2 Parts: “Intra” and “Inter”

The first thing to look at is making sure that the family members are aligned amongst themselves. I call that the “Intra” part.

I’m talking about general agreement on the family’s values and goals, along with the important questions regarding whether or not they really want to continue to work together.

Once you’ve answered that one, then there’s the all-important element of aligning the family with its external partners.

Here is where we want to make sure that the family is working with and investing in businesses that are aligned with the values and goals that everyone agreed on in the first part.

 

  1. Do the “Intra” BEFORE the “Inter”

It’s important to work on the “intra” part and make sure the key family members are all on board with each other first.

If you haven’t worked out what you all agree on, there will be issues that could derail things going forward.

The term “collective responsibility” is one I heard recently that conveys this well.

The family members need to develop a consensus that they are responsible to each other, and only then decide on what outside businesses, causes, investments and partnerships they’ll work on.

 

  1. Starting Down the Road to Governance

Governance is kind of a loaded word that I’ve written a lot about, and it still has some negative connotations when people hear it.

To me, family alignment and family governance go hand in hand. Working on getting a family aligned necessitates getting into the questions around family governance.

Working on family governance is a good thing, and it’s actually THE key to any family being able to successfully transition its wealth to the next generation.

It’s impossible to have an aligned family without some governance, and, by the same token, it’s impossible to institute governance in a family if there’s no alignment.

 

  1. It Takes a Lot of Time and Effort

Nobody ever said this stuff was going to be easy. It isn’t, and it takes lots of time and lots of effort.

You know those stats you always see about the high failure rates around intergenerational wealth transfer? This is why.

Most families aren’t willing to do the work required to make sure that family members figure out how they’re going to make decisions together, how they’re going to communicate clearly and regularly, and how they’re going to solve problems together.

I’m actually talking about a considerable amount of time, not just in terms of hours, but in terms of months and years too.

For a family to figure out all this stuff is actually a pretty big project. Those who undertake it seriously soon learn that it really is hard work, BUT, they usually see great progress quickly once they begin.

 

  1. Process is Much More Important than Content

Unfortunately family alignment isn’t something you can just buy off the shelf. It isn’t some piece of “content” that you can pay your lawyer and accountant for.

The process of figuring out the answers to all of the important questions, together, as a group of relatively equal family members, is the most important thing.

If the Smith family has a beautiful family mission statement and a 50-page family constitution, but they haven’t had a meeting in years because one half of the family isn’t speaking to other half, that’s nice content with zero process, and a disaster waiting to happen.

If the Jones family meets regularly, has great exchanges during which they work together to define and achieve goals as a group, even if they don’t have anything in writing, then they’ve got the process down nicely.

Which family will succeed in passing the wealth down?

The family that is aligned and has taken the steps to determine its governance will have better odds.