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Everything Is Something

The post’s title is a three-word expression I heard from a colleague several months ago, and my goal is to turn it into something entertaining and useful for people who work with enterprising families.

Let’s set the context a bit.  I got this “everything is something” line from a colleague last October in London at the annual Family Firm Institute conference.

I’m pretty sure it took place at the reception for speakers and sponsors.  I’m not exactly sure what we were talking about but at one point my friend said “everything is something” and I gave her that look.

What look?  It’s a look that combines surprise, gratitude, and inspiration.  She had seen this look before, as she’s inspired at least one other previous blog post. (Thanks, MM!)

 

A Coaching Term (?)

After we got through the obligatory “Hmmm; I like that…  There’s a blog in there…”, she told me that this was an expression that her coach uses with her.

Now that I’m writing this, part of me wishes I’d asked her to expound on this and maybe give me an example from her coaching conversations for me to relate here.  But alas, I didn’t do that, since my mind was already beginning to think of some of the many possibilities the expression presents.

 

The Family Business Angle

As usual in this space, I now need to pivot my story into ways in which it applies to business families.  Even though the inspiration came at a conference for people who work with family firms, that doesn’t make this an obvious leap.

There was, however, a reason that this expression hit me square in the face.  It all comes down to the different perspectives that people in a family have when they think about and talk about their family situations around their business or their wealth.

Rather than starting with “everything”, to clarify what I meant, let’s look at a simpler example, like “any one thing” instead.

So, any one thing, be it a comment, a situation, an event, a payment, an email, a story, or whatever, that seems to one person to be “nothing”, or at least “nothing special or noteworthy”, has the potential to be “something”, and often “something really BIG” to another person.

 

Assumptions and Misunderstandings

Far too often in cases where family members interact with each other closely around important and sensitive subjects, the differing viewpoints of the different players are ripe for these sorts of misunderstandings.

Some of the biggest possible irritants occur when something seems so inoffensive and even irrelevant to one person, yet to another person it’s actually a huge deal.

When these things occur infrequently they can often blow over pretty quickly, but when they begin to pile up in rapid succession, look out.  There can be a cascading effect that can quickly erupt.

When I assume that something I did, said, or wrote is benign and inconsequential, yet the receiver or even another “bystander” views it much differently, often because of a simple misunderstanding, that can be sufficient to create a highly combustible pile of kindling.

 

Just Add a Spark

When there’s a lot of kindling, a simple spark can start a fire that can then turn into a raging inferno.  So if we continue with this analogy, there are two things to avoid: the kindling, and the spark.

The kindling is made up of misunderstandings or assumptions that have not been verified.

The way to avoid those things happening is to make sure that the communications channels are clear and used regularly.  You want to avoid having these things pile up.

 

Clear Things Up Regularly

Some families do this really well, getting together frequently and talking openly about important matters, even when some of them are sensitive.

Other families are less good at this, and I will usually encourage then to meet more frequently.

But then there is also the need to avoid those sparks we mentioned before.

 

High Anxiety and Possible Sparks

When things are going well, there’s a lower chance of sparks happening.  But when things are stressed, and anxiety is running high, sparks will typically occur more frequently.

My conclusion is that when things aren’t necessarily going perfectly well, then it’s even more important to communicate clearly and frequently, to clear up any misunderstandings.

Because in a family business, everything is potentially something.

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Spreading the Gospel: Let Me Count the Ways

Years ago when I was entering the family business field as an advisor, freshly armed with some great wisdom and perspective thanks to the FEA Program that I had just completed, I was already convinced that for me, having more competitors would be better for me than less.

In fact, I first wrote about this in May 2013, when I was only half way through the program: Spreading the Gospel vs. Cornering the Market

I’m pleased to report that, anecdotally at least, this attitude is beginning to gather steam.  I’ve heard a few other people mentioning this aspect of the industry. What aspect?

That a more generalized acceptance and understanding of the important work that families must do to successfully transition their wealth to the next generation will be better accomplished when more families and advisors “get it”.  

More competition not only makes us all better, it’s creating more work for all of us. Let’s look at some of the progress we’ve seen in these past few years.

An illustration of people and communication

Education Programs for Advisors

When I completed my FEA designation (2014), the number of designates was somewhere in the “dozens”.  It is now in the “hundreds” (over 300 and well on the way to 400). And most of us are just in Canada.

Similarly, the GEN Program from FFI was still in its infancy then.  I completed their designations (CFBA, CFWA, ACFBA, ACFWA) from 2014-2016. (GEN stands for Global Education Network).

The first two of those are done completely online, but include a capstone webinar with a truly global group of students.  The second pair (with the added “A” at the beginning to denote “advanced”) include a full day in person session as part of FFI’s annual conference each October.

The number of people who have been through the FFI GEN program is also in the hundreds and will likely be in the thousands before long as its growth rate has been staggering.  This is a testament to the desire for increased training to work with families and their complexities.

 

Conferences for Advisors to Share and Learn

FFI is a huge and global organization that has been around for over 30 years and has helped grow the whole industry.

More recently, other groups have formed and I’ve also enjoyed attending their annual gatherings.

Regular readers will recognize their names immediately, as I write about them often, because I am a big fan and because they’re the inspiration for many of my blog posts.

Every year in July, I head to the Denver area for the Rendez Vous of the Purposeful Planning Institute.  And for the past three years, I’ve gone to NYC in January for the Institute for Family Governance’s annual conference as well.

 

More people talking about how they work with families and sharing ideas with others, every year, over and over again, has been great for all of us.

People watching a presentation in a room

Read Any Good Books Lately?

Another way that some in this profession spread the gospel is by writing books about their work.

I’ll just note two here that I really enjoyed, written by peers that I consider friends.  These are of course people that I met and continue to meet at the above mentioned conferences.

The first is In Three Generations, by Kristen Heaney.  The second is The Naked Opus, by Chris Delaney. They both happen to be written as fictional stories, and knowing both authors I recognize similarities to their own lives.

 

Interdependent Wealth

I have great respect for anyone who makes the effort to write a book, because I’ve been through it myself.  I wrote SHIFT your Family Business five years ago, and that was quite an adventure in its own right.

Currently, I’m putting the final touches on my second book, Interdependent Wealth – How Family Systems Theory Illuminates Successful Intergenerational Wealth Transitions.

For those of you who’ve been asking (Thanks!) you can now pre-order copies (click the link above) and you’ll receive them from Amazon in early July.

 

I’m running out or racetrack for this week and I still didn’t get to the area of TOOLS that people have created to help spread this great work that families require.

But that’s not a huge deal, because each week brings a new blog post, and I’ll cover some tools in a few weeks. Stay tuned!

I continue to enjoy doing my part to spread the word about this field, I hope you enjoy it too. Let’s keep spreading the gospel together.

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Kissing Your Sister: Playing for a Tie in FamBiz

As a lifelong sports fan, there’s been a phenomenon going on that I haven’t heard many people address. When I was a kid, a lot more games seemed to end in ties.

It was as a youngster that I first recall hearing the expression: “A tie is like kissing your sister”.  

As this subject came up as a potential blog post, it struck me that rule changes have been developed and implemented in some sports, notably hockey and soccer, to minimize the number of games that end with this seemingly “sub-optimal” result.

 

Is Family Business the Exception?

If ties are no longer considered something desirable in sports, maybe the world of family business could be the one place they’re still in vogue.  Let me explain.

Back in April, in Roles and Rules for Enterprising Families, I wrote about a presentation from the 2019 Institute for Family Governance Conference, which included an impressive 75-page slide deck.

In that blog, I intentionally chose to not focus on the great slide I noticed on page 50, because I was saving it for its very own post.

Here’s what the slide said:

 

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 saw that slide in January, and months later it’s still with me, and rings even truer today.

 

Setting the Proper Context

Of course we need to think about this in the proper context, otherwise this statement can be dismissed as completely nonsensical, and that would be a shame. I think that there’s real wisdom here and I’d hate for it to get lost.

Dr. Goldwater is clearly talking about what goes on “intra-family” here.

Of course every family business, as a business competing with other businesses, should be playing to win, all the time, or else the business will not survive.

His thoughts on this subject are clearly directed at how members of a business family think about and deal with their interactions as members of the same team.

 

Misdirected Efforts

In essence, what I think he’s also talking about is how important it is to present a common front to the outside world, as a united team that is competing with other businesses, playing to win.

However, when some of the team members are busy expending efforts to win at some internal game that they are in effect playing against their siblings, parents, or cousins, then things can begin to fall apart rather quickly.

 

Sad to See in Real Life

Part of me wishes I could say that my only knowledge of these situations is theoretical, because it’s really sad to see things like this go on in the real world.

I have a coaching client who is fighting this kind of battle with their two siblings right now.

It’s so clear to everyone that there’s a power struggle going on.

And when I say “everyone”, I mean everyone.  

Employees see it, customers see it, suppliers see it, outsiders like bankers, accountants and lawyers see it.

brother kissing sister

Accidental Partnerships

The situation with my coaching client is one where the siblings are partners in a business together, but if they had started from scratch, these people would never have agreed to be business partners together.

They just ended up that way, accidentally.  Or, actually, through a lack of any real planning as their parents were transitioning out of the business.

 

Not Every Problem Has a Magic Solution

Unfortunately, there isn’t always a great way out of these situations.  

Various strategies are being looked at so that these partners can each end up in situations in which they are in control of their own destiny, and that their reliance on their sibling partners is minimized.  

We’ll see how it plays out, because there’s lots of complexity to manage, and the “parts” may be worth less than the “whole”.

 

Saving the Family Over the Business?

My bias, in situations like this, is to work on ways to “save” the family, even if that means making drastic changes to the business.

Some advisors prioritize the business.  I rarely do.

 

Kiss and Make Up

Getting back to the title of this post, maybe kissing your sister isn’t so bad?

And maybe it’s all part of a “kiss and make up” strategy.

But please recall that a tie can really be a win.

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Riding a Bike: Assumptions and Promises

Readers who also get my monthly newsletter are possibly aware of a recent professional development program that I’ve signed on to in order to up my one-on-one coaching skills.

I’m now a little over month into the 6-month long professional coaching certification program with CTI, and loving every minute of it.

Included in the work, in addition to time spent coaching clients, is a regular weekly Zoom call with the other 8 coaches in my “pod”, with our course leader.

In preparation for our first call, we were asked to prepare a response to two queries about our expectations for the program.

What Are Your Assumptions?

The first thing we were to consider and expound on was our assumptions about the journey on which we were embarking.

Now my particular situation was quite a bit different from that of the average participant, because a long time had elapsed from when I took all of the prerequisite courses to when I began the certification program.

I completed those in 2014, and a five-year gap is far from standard.

So my response to the assumptions question was that it would be like riding a bike, meaning that despite the time lag, the coaching would all come back to me quite quickly.

 

What Promises Are You Making?

The next question was completely different, but I felt compelled to tie my answers together.

We were asked what promises we were making to ourselves about our participation in the program.

I thought about that one for a while, before being sparked into jotting down: “If I fall off my bike, I’ll get right back on and keep riding”.

I felt so clever in the moment, and I was pumped to share my answers the next day.

 

Change of Plans

Now imagine my disappointment when we actually began our introductory call and our leader went off script and asked two different questions instead!  Ah, crap!

I managed to answer his prompts on the spot, but my replies weren’t nearly as memorable as the ones I’d prepared.  Oh well.

But then, in my regular session with my own coach, Melissa, I relayed the story to her.

“Hmmm.  You seem excited about this subject.  Maybe there’s a blog in there for you?”

And here we are.

 

The Family Business Angle

You all know that I love to relate stories, and now the trick is to turn this into something worthwhile for families who are planning an eventual intergenerational wealth transition.

So let’s start with Assumptions and then move on to Promises.

 

Assumptions in an Enterprising Family

This part is actually pretty simple for me, because assumptions are at the heart of many of the key issues that families face.

In fact, a large part of the role that I play when working with families is to have them recognize the assumptions that they hardly even realize they are making.

Once they recognize them, they can start to deal with them.  And by deal with them, I mean that as a coach, I will challenge them to actually verify that their assumptions are in fact valid.

girl and guy riding a bike

My Kingdom for a Forum

The main reason that assumptions persist in not being “aired out” is that families don’t have a forum in which to have the important discussions necessary to clarify that everyone has a common view on important matters.

I talk a lot about the importance of family meetings, and the key is always to have a series of meetings, where the date of the next meeting is always set before the end of the current meeting.

Please See: 5 Things you Need to Know: Family Meetings

 

Promises in an Enterprising Family

The idea of promises in an enterprising family is a bit less clear to me.  Obviously when working with family, we often feel much closer to each other and there’s an inherent promise to do what is best for the group as opposed to ourselves.

But I think that my “take home message” on this should go along with what I wrote about assumptions.

While you are meeting and clarifying everyone’s assumptions about the future of your family enterprise, why not also make it a point to also enunciate the promises that you’re all making to each other?

 

Get Back On the Bike!

In closing, I recognize that some families start these meetings and then lose momentum.

To them my message is simple: Just get back on the bike and ride again!

 

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Continuity Planning: Who’s at the Table?

There are subjects I to return to regularly in this space, and “continuity planning” is certainly one of them.

I still clearly recall first coming across this term, and it was a bit of a head scratcher for me.

Lest your head also feel itchy, allow me to share what I learned when I first asked “Um, what’s ‘continuity planning’?” during the Family Enterprise Advisor (FEA) program in 2013.

 

Goodbye “Succession”, Hello “Continuity”

If the term “continuity planning” sounds new, it’s mostly just a newer, less threatening, and more accurate term for something that family businesses have been doing since, well, forever.  

Only most of them call it “succession planning”.

We were winding down the first module of the FEA program on “Family Dynamics”, looking ahead to the next six multi-day sessions that would take place over the coming months, one of which was called “Continuity Planning”.

The “outspoken” guy from Montreal asked, curiously, “What’s continuity planning?”

 

A More Appropriate Label

While the reply I got was largely that it was a “re-branding” of succession planning, I’ve since come to understand that it’s much more than that.

The biggest issue people have with the term “succession planning” is that it automatically makes one think about a future scenario when the key person or people will no longer be around.

In a non-family business or corporate environment, succession planning takes place all the time in many departments, and the idea is not nearly as “heavy”.

But in a family business, where the idea of “retirement” is somehow less common, that key person’s exit is too often presumed to only occur upon death.

 

What Will Continue, Versus What Will Change

When we substitute the word “continuity” for “succession”, there’s much more focus on what will stay the same, even when some of the people have moved to different seats on the proverbial bus.

The other idea that gets driven home is the longer term nature of the whole exercise.

We aren’t just concerned with the next transition, but also the one after that.  It’s the beginning of a long-running discussion about how to continue to prepare people for increasing responsibility for many years to come.

Setting the Table

If we want to have a good discussion about where everyone fits into the future scenario that we’re envisaging, my bias would be to include as many of these people in the conversation as possible.

What still happens too frequently is that Mom and Dad figure it out themselves and keep it secret.  Sometimes they even go see their accountants and lawyers to draw it all up officially.

And frequently those affected only eventually learn of their fates right after a funeral.  (See #5 in 5 Things you Need to Know: Family Inheritance)

Regular readers will surely recognize that I am not advocating for this strategy.

 

Start with the Family

The family business was likely built and grown for the benefit of the family, in most cases.  

If that’s true, then my belief is that it behooves the family leaders to involve the family in the first stages of continuity planning.

There are too many stories about expert advisors who lead the family down a certain path, for seemingly legitimate reasons (usually around tax minimization), on the assumption that whatever makes sense to them, will automatically also be great for the whole family.

 

Looking for Trouble, Without the Leadership to Solve It

Since this is often about a whole life’s work, there really shouldn’t be a rush to settle everything, just because some of the conversations can be difficult.

This is really important, but it shouldn’t be urgent.

What I’m suggesting is an iterative process, where a preliminary meeting is called to get the family in on the idea that plans for the future are now being worked out.

An invitation is also extended to family members to have their voices heard as to their ideas, hopes, and expectations around how they see things, especially as to what role they may have in things going forward.

 

Growing Into Their Roles

As more meetings are held over the coming months, the future family leaders can grow into their roles slowly over time, as the plans are co-created and become clearer.

After the family’s big picture ideas are clarified, it will then be time to get some outside experts to the table to work on the “how’s”.

Get the family around the table first. The experts get their place after.

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Doing Better than the 4 D’s

This week I want to talk about the “4 D model” that I’ve heard David York speak about on a few occasions.

Now, lest you think that the word “model” is being used here in a positive sense, as in “a model that you should follow” or “role model”, please erase those thoughts immediately.

And furthermore, if you think that I’ll be arguing against York’s views, again, that ain’t it either.

York coined the term “4 D Model” to describe what has been going on for far too long, and we are in full agreement that there is a better way to go.

 

Background and Context

I first met David York in Denver a few years ago, at the annual Rendez Vous of the Purposeful Planning Institute (PPI).

Regular readers know that PPI is one of my absolute favourite organizations and that the Rendez Vous in July each year is the one gathering each year that I never miss.

I personally see York as one of the rising young stars in this field and love the way he conveys his important message.  This TED Talk of his is a great example.  His books are great too.

 

Traditional Estate Planning

York has long described the traditional “4 D Model” as follows:

Dump, Divide, Defer and Dissipate.

He’s also well aware that many of his estate planning attorney colleagues continue to follow this model.  Let’s look at the 4 D’s one by one.

DUMP

This is the part where the assets of the parents are transferred to their offspring upon death, usually after the second parent has died.   Little is done to transition any wealth while the parents are still alive, because that might require some real thought.

DIVIDE

This refers to the fact that upon death, those assets will be automatically divided equally between the offspring, regardless of any other circumstances, like ability, needs, etc.

DEFER

The deferring is mostly about trying to avoid paying any taxes until absolutely necessary.  So delaying any transfers of assets is part of that strategy too, because if you can’t avoid paying taxes, deferring them as far off into the future is the next best thing.

DISSIPATE

The final D is mostly about the results, as the family’s wealth dissipates after applying the first three D’s.

When the wealth has been treated in this way, with financial wealth as the sole issue of concern, and where no effort was ever made to involve those who would inherit it, it shouldn’t be surprising to learn that in many instances, that financial wealth will be handled by the inheritors in ways that could be described as sub-optimal at best.

 

More Purpose, Please

So far we’ve spent lots of time on how NOT to do the work necessary to transition wealth from one generation of a family to the next, and now it’s time to look at some positive moves a family could make to do a better job.

Notice that I said “moves a FAMILY could make” because ultimately the onus is on the family to do what is right for them.

Unfortunately, most families rely on outside experts to help them with this important work, and if a majority of advisors are stuck in the “old ways”, it can be very difficult for families to get the kind of help they really need.

Truck dumping grabbage

Involving More Parties – Inside and Outside

If the Four D model has survived this long, it’s largely because it’s very efficient.  It’s quick and relatively easy.

Making purposeful plans involves a lot more people so it naturally takes more time.

The first group of extra people are the other family members.  How can you make important plans for the next generation without involving them?

I don’t know, but most families have done it that way.

 

Multidisciplinary Advisors

The other group of extra people that need to be part of the solution are the advisors.

Every great plan will need to include input from a variety of outside specialists.  Ideally they will collaborate for the good of the family.

But most importantly, most of them should only be brought in after the family has figured out the most important questions around how they want the wealth to serve the following generations of the family, not before.

Rendez Vous 2019 will feature a breakout session featuring David York as well as one featuring Steve Legler and Joshua Nacht.  We all hope to see you there.

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Gifts of Presence from FamBiz Advisors

This week we’re going to look at a variety of subjects that are all connected to the same root word: presence.  Okay, it may be “cheating” a bit, but I’m also going to use related words, like “presenting” and simply “present”.

The other thing they have in common is that they all have to do with benefits families can get from working with a family business advisor.

 

The Presenting Problem

When a family calls in an outsider to work with them, it’s almost always because of some particular issue that they’re looking for help with.  Many people will refer to that issue as the “presenting problem”.

One of the gifts that a good advisor may be able to offer the family, after getting to know them and their situation better, is that he or she will also be able to offer new perspective on other issues.

It’s certainly not unheard of for families to think that they only really need help with something minor, and later realize that there are bigger issues beneath the surface that are more important, and need to be dealt with.

 

Dealing with What Is Present

An area that can be connected to this can be in helping the family deal with what is present.  When families are so used to being together and dealing with each other in the same old ways, an outside advisor can bring a lot of value to them by simply observing and indicating to the family members what they see, as an independent outsider.

Like the fish who doesn’t see the water or even know that they are swimmers, families can be oblivious to much of what is going on and how they are together, and that goes for the good as well as the bad.

 

Keeping you in the Present

A good advisor will also try to ensure that the family keep their focus on the present, with an eye to the future.

Families can dwell on the past way too much, to their detriment.  Rehashing old family stories and replaying past wrongs that one sibling did to another can be a huge time and energy drain.

A good advisor will work to limit the focus on bygones and keep the family in the here and now.

 

Who Should Be Present

Families in business are composed of a few interdependent systems of people: namely family, business, and ownership. See: Three Circles + Seven Sectors = One A-Ha Moment

Because many of the same people are part of the various groups, some of these families have a lot of trouble making the distinction between the groups, which can create confusion during discussions.

A good outside advisor will help keep things clear, and making sure that the family members are there for family discussions, the business people are there for the business meetings, and the owners are present for when ownership is being discussed.

 

Presenting Alternatives

Returning to the fish analogy from earlier, often family members who’ve been working together for a long time begin to suffer from “groupthink”.  They’ve been over the same subjects many times and they all begin to see things in exactly the same way.

An advisor who comes in from the outside can offer new perspectives to the family that they probably haven’t thought of, even though they’re often right under their proverbial noses.

The perspectives will almost always come with new alternatives for the family to consider.

 

Their Mere Presence

Sometimes the mere presence of that outsider, “someone with a different last name” as I often describe them, can do wonders for a family meeting.

When you were kids and there was a guest over for dinner, didn’t everyone behave just a little better?  It can be remarkably similar for business families when an outsider comes in to facilitate their meeting for them.

If this person is also trained in mediation, they will be able to work with all family members in getting the concerns and interests of everyone onto the table so that they can be dealt with.

 

Bearing Gifts?

When I arrive to work with a family I don’t come bearing gifts, at least not anything that is wrapped and with a bow on it.

I come armed with my skills and wisdom, and a deck of cards to randomize the speaking order.  Does your family deserve the gift that such an outsider can bring?

 

 

 

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5 Ways to Invest in your Enterprising FAMILY

Each week in this space I write about business families and families of wealth, and I usually prefer to emphasize the family and its members, over the business and its assets.

This is in sharp contrast to much of the focus, not only by the professional advisors to such families, but often too many of the family members themselves.

Today I’m going back to a format used pretty frequently in the past, the old “Five things you should know…”, by looking at 5 Ways to Invest in your Enterprising Family.

 

  1. Formal Education

Post-secondary education is certainly one simple way for families to invest in their rising generation members.  As my grandfather liked to say, anything that you can put between your two ears, nobody can ever take away from you.

Some families have an urge to get their kids into key roles in the business ASAP, with the attitude that they don’t “need” to go to school any longer, because they’ll learn everything they need to know at work.

My bias is to look at everything with the longest time lens possible, so while encouraging young family members to go to college may delay their entry into the business, they will bring much more to the table, including more self-confidence, with a university degree a few years later.

 

  1. Family Retreat

When looking for ways to invest in the family as a whole, organizing a family retreat can be an interesting option.  Getting the whole family together at a different location (not at the office, and not at home or the cottage) can be done in many ways.

The important things to remember are to make sure that the activities and subjects covered will vary, and will certainly not be “all business”, and to make sure that many voices will be heard over the course of the retreat.

If the plan is just to have the parents download information and their wishes onto the next generation, you may as well not do it.

Please see Geography 101: “Where” Matters for more on this.

 

  1. A Series of Family Meetings

Even better than a single retreat would be to begin to hold family meetings on a regular basis.  This could be done annually, more frequently or even less often, depending on the size of the family and other matters around complexity.

These meetings can take place at a home or office, but ideally would be done in “neutral” locations most of the time.

The central reason for holding these meetings is to “force” the family to come together to talk about important matters that would otherwise not get discussed.

Presumably not everyone works in the family’s operations and these meetings are a great opportunity to share what’s going on, even with those who you may not think really care. (Hint: they actually DO).

 

  1. Family Business Conference

Families ready to take the “next step” can look for family business conferences where they can learn from other families facing similar circumstances.

I can almost guarantee that many family members who attend one of these types of conferences for the first time will have the following reaction: “Wow, I never realized that so many other people are experiencing the same issues as we are.  It’s nice to know we aren’t alone”.

 

  1. Hire a Family Facilitator

Now you may see me coming when I suggest that a family may want to hire an outsider to guide them down the road to figuring out all the issues relating to their alignment and governance development, but I already know that very few families will ever go this far.

As mentioned in My Notes from a Great Keynote a small percentage of business families do actually hire an outside consultant, and it is analogous to hiring someone to give you private lessons.

This blog is about investing in your family, and hiring this person will cost you some money of course, but the real investment will need to be each family member’s time in the meetings and other activities that you all undertake together.

The facilitator you hire can become the architect or project manager of the family’s journey to creating and implementing their family governance plans.

 

Logical Progression?

As it turns out, the five ways I’ve outlined above actually flow in a more or less logical progression. You don’t need to follow them in order though, just get started anywhere!

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Roles and Rules for Enterprising Families

Back in January after the Institute for Family Governance’s third annual conference, I noted in Family Governance: One Step at a Time that that one day would end up being the source for a number of future blog posts.

I’ve officially lost count already, and here’s another one.

Its inspiration was the second presentation of the day, by John Ambrecht and Michael Whitty, entitled “Governance Structures that Actually Fit a Psychological Model of Human Behavior”.

Looking over their 75-page slide deck some 10 weeks later, there was a LOT of information in their talk.

 

From Roles to Rules ©

The psychological model they referred to is detailed in a 2004 paper that was published in the California Trusts and Estates Quarterly titled “FROM ROLES TO RULES©:† A NEW MODEL FOR MANAGING FAMILY DYNAMICS IN THE ESTATE PLANNING PROCESS”

I’ll leave it to the most curious readers to examine this in more depth, and I’ll simply talk about family business roles and the importance of eventually making rules that everyone needs to learn to abide by.

 

In the Beginning…

When family businesses start, things are usually rather informal, with few real rules and with poorly defined rules, if any.

As the business grows, the division of work necessitates that roles become clarified, and many family companies have some difficulty even with this roles component.

When that man tells me what to do, is he my boss, or is he my Dad?  (Of course the answer to that question is “Yes”)

Role Clarity and Making Rules

You may be thinking that in order to properly define each person’s role, making some rules around things would make a lot of sense. And I think you’d be correct.

While Ambrecht and Whitty suggest that there’s an evolution “from roles to rules”, they certainly don’t mean that you finish with roles completely and then arrive at the rules stage.

It’s more of a change in emphasis as the family business matures.

 

Formality is your Friend

Regular readers will recognize the expression “formality is your friend” as one I return to from time to time, and this is another such occasion.

Both roles, when they are well defined, and rules, when they are clear and are actually enforced, certainly help out with formality.

I hope that you noticed that I just added some conditions to both roles and rules there.

If the roles are poorly defined, they won’t do much good, and if the rules aren’t clear, or worse, if they aren’t enforced, it may be worse than not having any rules at all.

 

Rules Lead to Governance

Sticking with the formality, that feels like it fits really well with the rules idea.  And as a family makes more formal rules, they can (hopefully) eventually end up in the wonderful world of family governance.

Recall that this post began with a mention of a conference devoted to the subject of family governance.

As I wrote a couple of years ago in Family Governance, Aaaah!, my personal views and feelings around the “G-Word” have evolved.

Families will often have a negative view of governance because it sounds way more formal that what they are ready for and for what they think they need.  And they are often right about that.

 

How Are We Going To…..

When someone explains to them that family governance doesn’t have to be that complicated, and that it really involves answering three simple questions, people can get on board more easily.

Those questions are:

  • How are we going to make decisions together?
  • How are we going to communicate?
  • How are we going to solve problems together?

Three questions that can have some pretty long answers, agreed, but still only three categories to worry about.  And the third one is really mostly a repeat of the first one, but with an added emphasis on trickier situations.

 

Back to the Roles and the Rules

While governance feels like it’s more about rules, it is also very much about roles too.

All those decisions that need to be made will be made by people, and the bigger and more complex the family’s wealth becomes, the more important it is that they find ways to make those decisions in ways that satisfy the family group.

Business decisions can often appear much simpler than those that affect the family.  Please see The Unsung Role of Family Champions for more on key roles in enterprising families.

As families approach key generational transitions, it becomes especially important to pay close attention to these ideas.

 

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Business Families: Looking for Glue and Grease

This week we’ll look at some characteristics of successful business families, with some analogies to hopefully make my case more compelling.

Longtime readers with great memories may recall that I’ve noted this “glue and grease” idea before.

In late 2017, in My Notes from a Great Keynote, I touched on this idea for the first time.

The keynote speech in question had mentioned that one of the benefits of clarifying a family’s values is that they provide some “glue” that is important in keeping a family united.

I added that in addition to keeping things together, it’s also important that things continue to run smoothly, so that “grease” is also a key element, in addition to glue.

 

My Kingdom for Some Greasy Glue?

At the end of that post, I asked if any readers could provide me with examples of substances that had qualities of both glue and grease, in the hopes that there would be some product that I could point to when talking about this subject.

Alas nobody come forward with any ideas, which was a bit disappointing, but certainly not surprising.

The idea has continued to simmer in the back of my head ever since.  I was determined to revisit this and so here we are.  I wish that I could claim that I had a “eureka” moment, but alas, I haven’t.

But I may be getting closer.  We’ll wrap up this post with that, but in the meantime, let’s talk about those important qualities for enterprising families.

 

“Family-Ness”: Finding Goldilocks

For any family hoping to succeed at keeping their wealth together over generations, they really need to have enough “family-ness” to keep everything and everyone together to a certain degree.

In the first generation or two of the building of the family wealth, this is usually much easier, since most of the family members will have grown up in the same household, or at least in close proximity to one another.

When you get to the third and fourth generations, it’s quite common for people and family branches to have spread out to different geographical locations, and even other countries.

When family members don’t see each other as regularly, it can get more difficult for everyone to feel like they’re still a part of the same family.

That’s why it’s necessary to ensure at least some recognition of this, along with the intention to make enough of a sustained effort to be sure that some family events are always on the calendar.

But can there be too much family-ness?

 

Krazy Glue is NOT Ideal

While many family members love spending time together, there’s always the possibility of having too much of a good thing.  There are limits.  I enjoy spending time with my family members, and I hope that they enjoy spending time with me. But I’m not sure that I’d invite them to stay with me for an extended period of time either.

Even siblings who get along famously can run into issues after they each get married and you throw the in-laws into the mix.

Trying to force the issue of family time can be worse than not having enough.

 

Grease: Communication and Flow

When people feel too stuck together, because the glue has hardened and now they can’t escape, new problems can arise.

As important as it is for everyone to feel comfortable to enter the family space, they need to also feel just as comfortable to exit.

While my grease analogy is certainly about lots of clear communication, including making sure all family members understand what the glue is that is keeping them together, it’s also about the flow of people into and out of the system, each according to their own comfort level.

Salad Dressing: My Little Eureka?

Salad Dressing: My Little Eureka?

The best analogy that I’ve managed to come up with for my glue and grease is salad dressing. I’m a huge Costco fan, and they always have a variety of salad kits, of which I’ve tried a handful.

When you open them up, some of the leafy greens typically find their way onto the counter.  Until you add the dressing and mix it in.

Then things hold together better. And when you add in the other ingredients, they all hang together nicely, while still sliding around freely.

Salad without any dressing is clearly missing something.

Likewise families need glue AND grease.

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