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One Generational Transition at a Time, Please

Let’s Work Through One Set of Complexities First

One of the benefits of playing a variety of roles in the field of family enterprise advising is that I become involved in all sorts of situations where family wealth transitions are discussed.

It comes as no surprise that the level of knowledge and understanding around ways to make such transitions go well varies greatly.

Having exposure to seasoned experts as well as those just discovering this field has given me some wonderful perspectives, many of which I then go on to share here.

Such is the case with this week’s subject, which I’ve heard raised by newcomers, likely because they’re working from more of a theoretical base than a practical one.

Allow me to explain and hopefully dispel some myths along the way.

“While We’re at It, Let’s Work on the Next One”

I’ll spare you the details of the backstories here, but I’ll share the generalities.

I sometimes discuss situations where families are at the beginning stages of planning how they’ll transition their business or wealth from one generation to the next.

These transitions can take a long time and lots of planning, which is typically supported by a wide variety of professional advisors along the way.

Every once in a while, one well-meaning advisor will get out ahead of themselves, and wonder if, while they’re at it, they should also put plans into place for the next generational transition too.

To clarify, I’m talking about planning for a transition from grandparents to parents, (G1 to G2) which is already complex, and where someone then suggests that while we’re at it, let’s plan for the next one, G2 to G3.

Please stop. Please resist the temptation to go too far.

The Tax Tail Wagging the Dog

Of course I’m aware that many of the professionals who work with families on such transitions are very much enamored with the concept of maximizing tax savings for their clients, and I like to pay less to the government than more, wherever possible.

But, and it’s a big but, decisions made based on minimizing taxes need to be made with a full understanding of all of their side effects, not based on the assumption that all of the other things will magically just take care of themselves.

When I refer to “all of the other things”, regular readers will recognize that my focus here is on the family relationships and the human side of such wealth transitions.

If G1 owns and controls the wealth today, and G2 is expected to own and control it in another decade or two (or three), that’s already a very long term plan, which hopefully has some flexibility built into it.

When those who are in control today attempt to look farther out into the future, well past their own expiry dates, my view is that you’re asking for trouble.

Getting to Assume the Leadership Roles

Those who are expected to assume family leadership roles after the next transition may begin to think about what that will be like and make plans for how they’ll handle these roles well in advance, and that’s a good thing.

But until they get there and actually live with that reality and walk a mile in those shoes, it isn’t realistic to expect them to do a great deal of planning around how they’ll handle the transition to their succeeding generation.

And when too much tightly structured planning has already occurred before they get to assume control themselves, putting them in a box as to what they’re able to do when the time comes to transition to their offspring, the resentment they’ll feel towards their predecessors may be enormous.

One generational transition at a time, please, as I stated in my title.

Paved with the Greatest of Intentions

In almost every case, those who create highly structured plans do so with the best intentions.

They want the wealth that they created to last for generations, and so they go to great lengths to try to make sure that nothing bad can occur to get in the way of that happening.

Subsequent generations of their family will therefore inherit a great deal of wealth, but of course that wealth brings with it a number of structures and restrictions too.

Unfortunately, professionals who advise these wealthy clients can sometimes become more a part of the problem than part of the solution.

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Too Good NOT to Share

Perspectives on Sharing, Learning, and Abundance

This week’s post is a sort of confluence of ideas, some new and others I’ve shared previously, that have been swarming in my head for a while.

The best way for me to deal with situations like this is to begin to write, and share what’s on my mind.

And that’s good, because our main subject this week is sharing, and, in large part, my desire to share, constantly.

Some things, in my world, are simply too good not to share.

« Trop Beau Pour PAS Voir »

Years ago, I sold a cottage to a couple who, shortly after moving in, decided to cut down all the trees that “blocked” their view of the river about 50 yards away.

When I visited them and made a comment about the deforestation, the response from one of them was “C’est bien trop beau pour PAS voir!”, which translates to “It’s too beautiful to NOT see”.

That was about a decade ago, and it’s stayed with me ever since, and my feelings about sharing are at least as strong as their desire to insist on that view.

On Stories and Narratives

A few weeks back, in On Stories and Narratives in Enterprising Families, we looked at the importance of sharing stories in families, in order to create and enhance a narrative and family culture.

The sharing of the stories and the development of rituals around them are what help cement memories that can then help a family instill and carry on their shared values.

The idea of sharing thus applies within a family, but as we saw in IFG: Real People, Real Stories, Real Learning, families can learn from each other when they share their experiences.

Sometimes we can learn from good ideas that worked and imitate them, and other times we can learn what didn’t work and avoid mistakes.

Preaching to an Expanding Choir

So sharing is great within a family and between families, but one of the biggest surprises for me since I began sharing my thoughts on this work, is how much my writings seem to resonate with other professionals who also work with families in one capacity or another.

I hinted a bit at this last week in Crossing All the T’s in Family Philanthropy, where I noted that discovering the idea of “Testimony” created an A-Ha moment for me, since I’ve been doing this obsessively for over ten years now.

I’ve been saying for years that there’s a huge need for the kind of work me and my colleagues do for families, but even with a strong need, it doesn’t necessarily translate into a “demand” for these services.

Well, I’m starting to see lots of little signs that this is beginning to change, and continuing to share our experiences and lessons will always be a big part of the expansion.

 Many Disciplines Coming Together for Families

I’m part of the faculty of the Family Firm Institute’s global education program, where I see first hand the growing desire for professionals who serve families to learn to work together to serve the needs of our family clients, not just with products and solutions, but also in accompanying them on their family journey towards better governance.

I also serve as a project team advisor for Family Enterprise Canada’s FEA Program, where I work with participants doing their team project with a real family, and I’ve seen advisors transform how they serve their clients there too.

We can and must continue to share our learnings, as we increase the “supply” of qualified professionals to meet the demand, as it grows, thanks to families now learning more about the fact that there are people out here who can support them in this work.

An Abundance Mentality: There’s Plenty for Everyone

If, or maybe it’s when, all families who need guidance and support in these areas all discover that there are in fact qualified, trained caring professionals to be there to walk with them on this journey, there will be more work than we can handle.

This abundance mentality also seems to be something that most of my colleagues share as well, and that bodes well as we continue to expand the field.

We need to continue educating the advisors, as well as educating the client families that we are here to serve them.

This is all too good, and too important, not to share!

And I always love to discover others out here who are spreading this gospel far and wide, giving testimony to this work.

More work remains to be done.

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Crossing All of the T’s in Family Philanthropy

Using the Side Door to Family Governance

During the past few years, I’ve been noticing an increasing focus on the subject of philanthropy, especially as it concerns families of wealth.

Naturally, families of means are solicited to support causes in their local communities and everywhere else, so there really isn’t much new there.

What is new is that having multiple generations of families get involved with how the family conducts its giving, and all of the decisions this entails, is finally being recognized as a great way to begin to address the subject of family governance.

This idea came home to me a few years ago, as I hosted an episode of the Let’s Talk Family Enterprise podcast dealing with the subject.

Since that discussion with friend and colleague Dr. Sharilyn Hale, I’ve thought about philanthropy as kind of a “side door” to initiating family governance.

Families Working on Experiential Philanthropy

I recently facilitated a family meeting with clients I’ve worked with for a couple of years in my role as a navigator with More than Money 360 (“MTM 360”).

One of the themes for this year’s family project was experiential philanthropy, and I got to see first hand how spending some time visiting with a local charity as a family can really begin to drive home lots of key messages.

The debrief after our visit, which included some light volunteer work and lots of education around the mission, touched on a number of the areas that are part of the many “T’s” of philanthropy, which is where we’ll head to now.

Having heard about the “4 T’s of philanthropy” a number of times, I was recently made aware that a fifth T was added.

It was a head scratcher at the start, which turned into a personal A-Ha moment.

Time, Treasure, Talent, and Ties

The family I accompanied on their visit to the HQ of the organisation in question spent some of their time doing some volunteer work during our visit, and of course “Time” spent is a common way that people donate to good causes.

Treasure, a.k.a. donating money, is also a highly sought after type of contribution, and I’m certain that a monetary donation will soon follow from the family to the charity who welcomed us all.

Talent is another way that people can give to worthwhile causes, and this often takes the form of using one’s professional skills on behalf of an organisation without charging them, or on a highly discounted basis.

The fourth of the 4 T’s is Ties, or using one’s social capital to help a charitable organisation make important connections to others (donors, politicians, like-minded organisations, etc.) that they would have difficulty making on their own.

And What About Testimony?

As noted above, I was recently at a presentation with some peers where someone put up a slide that showed a fifth T, which I was not aware of until then, “testimony”.

Hmmm, I thought, that’s odd, what does that even mean?

Here’s something I found later via Google, which neatly summarizes it:

“Testimony is a way of giving back that involves sharing your personal story of why and how you give back. You could write a blog post, record a video, or speak at an event to inspire others to join you in making a difference.”

“Oh, I get it”, I said to myself after it was explained.

And them came the “A-Ha” moment.

Okay, Okay, I Know, This Is NOT Charity

While working with families to support them through their generational wealth transition is not a charitable cause, it is an area that is still relatively embryonic, and thus needs support to grow into its potential.

My A-Ha upon discovering that Testimony is a way to contribute, was realising that that’s exactly what I’ve been doing for over a decade now, here and elsewhere.

I continue to write blog posts, make videos, speak at conferences, teach courses, etc., all in the name of advancing this cause.

Evangelizing and Spreading the Gospel

As I wrote 5 years ago in Spreading the Gospel, Let Me Count the Ways I’ve taken this cause on as kind of my hobby horse, after recognizing during the FEA Program in 2013 that there’s a crying need for families needing support with this difficult work.

I’m not sure I’d ever imagined becoming an evangelist for any cause, but alas, here I am, spreading the gospel everywhere I can.

It feels like my testimony is slowly helping, so I will continue….

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Nuances Between Working For and Working With

Yet Another Subtle Yet Huge Distinction

A few weeks back, in Feeling Like You Belong, Or Just Trying to Fit In, I kicked off my weekly post with something that looks like a minor difference, but that’s actually pretty significant when you break it down.

Such is the case once again with our current topic, which is interesting for a couple of reasons.

First off, this is yet another basic topic that I cannot believe I haven’t written about here before, despite writing each and every week for over a decade now.

Second, it was inspired by a question my daughter asked me recently, based on something she noted that I’d posted on LinkedIn.

You know your kids are grown up when that’s the platform you have in common.

My Joining Blackwood Family Enterprise Services

Those of you who also spend time on LinkedIn may have noticed some recent posts that noted that I have joined forces with Blackwood Family Enterprise Services (BFES).

After having worked mostly alone over the past decade, it was wonderful to discover a group of like-minded advisors who are expanding across the country and building an inter-disciplinary team to serve client families.

But when my daughter saw one of those posts, she asked, “So you work for Blackwood now?”

“Well, not exactly”, I replied. “Not working for Blackwood, more working with Blackwood”.

Being invited to join a group and being hired as an employee are not the same thing.

Offspring Working with Mom and Dad

There’s a related situation that occurs in many family businesses, of course.

When I speak to a second generation member of a family enterprise, I can sometimes be corrected by them if I happen to note that they work “for” their parents, rather than talking about the fact that they work “with” these family members.

This is also something that will likely evolve over time.

As a youngster, going to work in your parents’ business after school, on weekends, or during the summer school break, it’s pretty clear that you are working “for” them.

But if you fast forward a couple of decades, and now you have established a credible career, it’s easier to begin to think in terms of working “with” these more senior family members.

And if you’re really lucky, you can even ride this all the way through to the other side, where the parents end up feeling like they’re working “for” their offspring.

Adult to Adult Relationships Are Key

In both scenarios above, professionals working together or family members toiling in the same business, what’s key is that everyone try to maintain proper relationships with each other.

Being on a team with others, we are constantly placed in situations where the “me” and the “we” can be in conflict.

The more we can be sure that all such relationships are indeed “adult to adult”, the better things tend to go.

There may be a hierarchy that needs to be respected, but the more that lays quietly in the background, the better.

Feeling like someone is flexing that over you is not conducive to sustainable relations.

Coaching and Being With

When I work with members of an enterprising family, or even the whole family as a group, I’m always on the lookout for clues around their relationships with each other.

When a family engages me, they are hiring me to work for them, but I treat it much more as though I am there to work with them.

While they hire other professionals who serve them in other ways, typically for some technical service, they may feel more like they are hiring those specialists to work for them.

Because I serve much more on the process side of things, the working with is a better way to go.

When I did my coach training a decade ago, the concept of “being with” the person we are coaching was driven home over and over.

Walking with Others, Side-by-Side 

As I write these lines, I’m flashing back to a post from 2017, Work with Me, Walk with Me.

There, I shared an expression I had picked up from a course leader during a series of facilitation courses. (Third Part Neutral)

She explained that she’d spent a few years walking with some indigenous groups, and I asked her to clarify if she’s said “walked with” or “worked with”.

She had, in fact, said “walked with”, and that analogy has stayed with me, as I walk with families, as their guide, side-by-side.

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On Stories and Narratives in Enterprising Families

How We Share Things That Happen Is Key

Over the past decade or so, I’ve spent much of my time conversing with people from the family enterprise world.

Many of them are part of existing or former family enterprises, and others are peers who now serve such families. (And lots tick both boxes!)

What never ceases to fascinate me is how many stories capture not only what occurred, but also how things played out for all family members, and how the follow on effects can land so differently with each of them.

A great exploit for one person can take on the opposite effect for different family members, for a variety of reasons.

Learning to tie the stories together into a common family narrative can be a useful undertaking.

At Least I Got a Story!

Knowing how to tell a story is an art, and for some reason I’ve been given the gift of being above average in this area.

It’s a blessing that can also be a curse, as those who are less gifted will often defer to me to share a tale because I can deliver it with more gusto than the person who initially wanted to share it with a group.

Making room for the various versions of how an event was lived by its different protagonists is also worthwhile.

But because of my penchant for relating unexpected events with fanfare, I always have my antenna up for them, and even something mundane will have me say to myself, “Well, at least I got a story out of it!”

The Jessica Holmes Version

It’s not every day that I get to introduce someone onto a stage with words like, “She has opened for Oprah and Jerry Seinfeld…”, but On May 28, 2024, I did just that.

It was as part of my role as co-Emcee of the Family Enterprise Canada annual Symposium, and the keynote was superbly delivered by Jessica Holmes, following that intro that she had scribbled on a bit of paper 10 minutes prior to my intro.

Her presentation was the highlight of the conference for many, as she left everyone with many things to reflect upon in new ways.

For me, what really landed were the parts about “the story” that peppered her speech.

This was something inspired by her parents, which she is now transferring to her children, as getting “the story” has become a large part of their family lore.

Her line, “We’re paying for the story”, was a constant reminder to persevere in the face of challenging situations that may have otherwise caused her to turn back.

Turning Stories into a Narrative

Holmes related a tale where she and her son were kayaking in the ocean and the waves made her reconsider and want to turn back rather than continue their planned route.

It was her son who reminded her about the desire to get the story they’d “paid for” when they rented the boat, and she was happy to share that this family tradition had indeed been absorbed by her child.

When family stories are shared, they can become part of the family brand, the family values, and the way the family sees itself.

You don’t have to have a family enterprise to realize this, nor a lot of family wealth, but such families have even more reason to pay attention to these things, as they can be key to family engagement and alignment, which are so useful when transitioning from one generation to the next.

The sharing and understanding of how the family got to where it is now become part of the family’s narrative; the way it thinks about itself and presents itself, both internally among themselves and even externally to other stakeholders and the world in general.

The Battle Versus the War as an Analogy

As someone who loves metaphors and other analogies, they’re never too far away in my mind.

The trick is to appreciate what they bring while tempering them and not falling in love with them too much.

Such is the case with this one that came to me overnight: stories are like various battles, while the narrative is the war.

I like the fact that you can lose some battles and yet prevail in the war.

And let’s not forget what they say about history books, they’re written by those who won the war.

 

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Aaaargh…. Looking Stupid in Front of Others

I Hate When That Happens!

Working with client families as I do, there are sometimes occasions where communications go awry and something occurs that makes me blush and say, “Oh crap!”

Not that I’m a perfectionist, but any small slip up that makes me look like I was negligent or derelict in even a small way can result in me feeling disappointed in myself, and looking at making sure I don’t repeat that mistake again.

That relatively low threshold is something I want to maintain, even if I also want to learn to loosen my need to never look bad.

Is There Someone Else to Blame?

In the early years of my work in this field, I typically worked alone with client families, so when something went wrong, there was nowhere to hide, or, maybe said more clearly, nobody else I could blame.

Now that I work in collaboration with others more often, that has changed, a little bit.

While it can sometimes be tempting to lay 100% of the blame at someone else’s feet, that kind of attitude and behaviour can quickly turn against you.

Is Self-Blame Always Better?

Regular readers recognize that one key reason that I continue to compose these weekly missives is that this work forces me to think through subjects that my brain dances with from time to time.

Committing to this exercise of sharing my thoughts every seven days has been more helpful than most might realize, as putting thoughts into words here actually helps me advance my thinking.

 

Like now, as I consider the idea of blaming myself rather than passing that blame to someone else, what’s that about?

There are times where someone else clearly deserves the brunt of the fact that something was fouled up; should I assume a huge chunk of the fault then?  Probably not.

Learning from Mistakes: Ours and Others’

In a recent email exchange with some members of a client family, I had relied on some incomplete information from a colleague I’m working with on that file.

It angered me a bit when I found out that I’d sent them something in a way that could have been put better, had I had the full picture.

After I settled down a bit, a couple of things became more clear.

First off, it wasn’t a big deal, and nobody really noticed besides me. 

Second, I need to accept the fact I made certain assumptions that I could have (should have?) checked out first.

On a different case where I’m working as part of a team, one teammate shared some info with me about a family member, which turned out to be wrong. The result was that I said something in an email that was off base, and I ended up looking silly, which I detest.

On this occasion, I “took one for the team”, and was thankful that it wasn’t my mistake that made someone else look bad, which can feel even worse.

Intra-team Communication Issues

These sorts of intra-team communications issues need to be expected, even as we try to minimize both their occurrence and impact.

Sometimes they create a nice opportunity to normalize the difficulties in front of family member clients, because we almost never stop working with them to help them smooth out their own communication issues. See: An Abnormal Amount of Normalizing

And of course any opportunity to learn from a sub-optimal experience should be seized for all its worth.

Mistakes Are Going to Happen – Deal with It

Errors are bound to happen, and apportioning the blame is typically a futile exercise.

Owning up to our shortcomings and mistakes can be difficult, but like many other activities that require some courage, they’re actually often good for us.

Receiving feedback, even when it’s negative, can be a gift, but only if we look at it this way.

One favourite expression of mine has long been, “It’s not what happens to you that’s important, it’s what you do with it”, or some related version thereof.

Are You Learned or a Learner?

This evokes something I saw a while back but have not shared here yet.

Some people consider themselves to quite “learned” (pronounced: Lur-Ned). That’s nice, of course, if you value those who have taken the time to become educated.

Of course you can change the last letter from a “D” to an “R”, and become a “learner” (Lur-Nur).

How we choose to receive feedback makes a huge difference.

 

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Feeling Like You Belong, Or Just Trying to Fit In

Very Subtle Difference, But It’s Actually Huge

Working in a family business can be a fantastic experience, and it can also sometimes be pretty dreadful too.

For some people, it’s actually possible to live both versions at different times, and it can even toggle between the two.

One of the biggest contributors to whether the experience is positive or negative, comes down to how the person actually feels while they are there.

The lucky ones feel like they truly belong, while the others are always making an effort just trying to fit in.

This week, we’re going to look at the differences and see if we can learn something. I’ll also share a personal perspective around how my own life and career have evolved.

Belonging to the Family – Hopefully a Given!

The idea for a post on this topic came to me a few weeks ago, during a meditation session using the Calm app.

While contemplating what I’d write about this week, I decided it was time to take this one up, and lo and behold, this morning during my meditation, it came up again, so now I have no choice.

Writing about business families and the challenges they face, especially around their generational transitions, there’s almost always an opportunity to contrast between how things affect the family versus how they impact the business.

When I think about a family, I like to believe that all members feel like they really belong, and that hopefully every family member feels that way.

And of course I know it isn’t always the case.

Fitting in, In the Business

When it comes to a family member who joins the family business, my bias is that it’s much more likely that there will be some period where the newcomer needs to make a bit of an effort to fit in.

Eventually, the hope is, they will feel like they actually belong there.

It can take a while, and then it’s great when you gradually get there. 

But some people never do, and end up staying anyway, which I’ve seen far too often.

And what usually ends up happening then is that the longer they stay, the harder it is to even consider leaving.

I wish there were an easy solution to this frequent dilemma, but there isn’t. 

The simple answer is that they should leave and find someplace where they’ll be happier, somewhere they can feel like they belong.

But as I always say, simple and easy are not the same thing.

A Huge Case of FOMO

In some cases, one of the major factors is FOMO, a.k.a. Fear of Missing Out.

When there are a number of family members who are working for the family business, it can be difficult to be the only one who opts to do something else.

To willingly exclude yourself, you need to have the courage to take a stand and not be lulled into the morass of “one big happy family”.

But please realize that the “one big happy family at work” is not as common as it might seem. 

If you’re working with your family members and it feels like it takes a lot of effort just to fit in, that’s probably a big clue right there.

You might ask yourself what else it is that you are missing out on in your life, that you might find if you left.

Mustering Up One’s Courage

It can take a whole lot of courage to make such a bold move, but others have done it and lived to tell the tale.

Some coaching or therapy may also be a huge catalyst to make such a change, because courage often comes more easily when bolstered by an independent outsider.

This Is My Life

I hinted that I’d share something personal, so here goes.

I joined the business my Dad had started because of a sense of duty to do so, because it was a message I received constantly while growing up.

I was lucky that I did feel like I belonged, in both the family and the business.

Once we sold the operations, though, I worked mostly alone for a couple of decades, which did not suit me, but I didn’t know how to get myself out.

Now that I’m working with other families and with great colleagues, I’ve found the place where I belong once again.

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Mastering the Ceremonies Vs. Facilitating the Meeting

Comparing and Contrasting these Roles

As I write these words I’m on flight PD 386 back to Montreal from Calgary.

I just completed a busy couple of days at the Family Enterprise Canada 2024 Symposium, where I reprised my role as co-Emcee for the third year running.

So I decided it’d be fun to compare the role of Master of Ceremonies to that of Meeting Facilitator, which is more along the lines of my usual work.

I managed to jot down nine similarities on the back of my boarding pass, which I’ll share.

Managing Flow and Timing

A big part of the role of the Emcee at a conference is making sure everybody’s where they’re supposed to be, when you want them to be there.

There’s a flow designed into the schedule, and good Emcees recognize the importance of keeping things on schedule, with an orderly flow of all proceedings.

When facilitating a meeting, it’s a bit different, because the flow and schedule fluctuate more widely, and you have more flexibility in leading the discourse.

But flow and timing are part of your purview in both cases.

My Process, NOT My Content

At the Symposium I just worked, I had zero input on the content, which is nice, because I then don’t feel any responsibility for the outcome, aside from all of the transitions.

If you had input into the content, you’re in a possible conflict, where you might favour some parts of the day and give unfair sway to some presenters over others.

When running a meeting as a neutral outsider, it’s all about process, and you can do a better job if you let the participants supply all (or at least most) of the content.

More About Who I Am than What I Do

I refer to the Being Vs Doing dichotomy from time to time, and it certainly fits here.

I believe that my success as both an Emcee and as a meeting facilitator is more about who I am (or more specifically, who I’ve become) than about any specific thing that I do or say.

Knowing and accepting my role comes first.

Maximizing the Experience for All Participants

That last point creates a nice segue into this one. A major goal of mine in either scenario is to maximize the experience for all participants.

Whether I’m up on the stage or at the head of the table, I adopt a service mentality, whereby the others in the room are the focus.

I know I’ve done well when everyone got the most out of our time together, even those who may have been sceptical going in.

Thinking Fast on Your Feet

The ability to think on one’s feet is a key success factor in both roles. Admittedly, when leading a meeting, especially with an enterprising family, this can be even more of a differentiating factor, because one never knows what might arise, and as a facilitator, it is our job to get things back on the rails.

But even in an Emcee role, there are always hiccups, changes in plans, new info to share, and unexpected delays that you have to be prepared for.

Passing On Key Messages

The need to pass on key messages also occurs in both roles, but is quite different.

From the stage, the messages come from the event organizers, and are to be relayed to the people in the audience, and everyone gets that.

In many family meetings, a prepared moderator will know about some subjects that need to be raised, and can help them come out onto the table, but the way that’s done needs to be much subtler.

Works Better as a Pair

Working as a pair on a stage has many benefits, assuming you and your partner understand your roles and get along well.

In a meeting scenario, having a second pair of eyes and ears is always useful, and 1 + 1 = 5 in terms of the results.

It’s Harder than It Looks

Doing a good job in front of a crowd is not as easy as it looks, and making it look effortless is part of the challenge.

Leading a family meeting is also not easy, and when it is done well, it should look easy, even if it is anything but.

It’s Not About Me

Many of the eight points above boil down to the fact that both these roles are examples of servant leadership, and if you think it’s about you, you’re doing it wrong.

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Transition Timing Gradual Versus Sudden

Can You Guess My Preference?

This week we’re looking at a topic that comes up often in my work, but isn’t necessarily spoken about front and center.

It’s usually right below the surface, though, and it speaks to one of my mantras, or at least one that I’m beginning to flex more often.

I recently spent a day with several members of a business family I’ve been working with for a while now, and because a significant part of our meeting was educational in nature, I ended up repeating it a few times.

In fact, because I heard myself saying it over and over in different (but related) contexts, it also rose to top of mind potential blog status.

Family Business Governance 101

The morning began with some basics around family business and the governance systems they need, and the way that governance typically evolves as they mature and grow, especially as the families prepare to transition things to the next generation.

I went over the Three Circle Model (Tagiuri and Davis) and the Four Room Model (Lachenaeur and Baron), and shared my definition of what governance boils down to. See: Succession Without Governance Equals Chaos

And as I talked about the changes and transitions that occur in each of the three circles, as well as in other areas, I kept coming back to the speed of the transitions, and how long they can be expected to take.

“Gradual changes are almost always better than sudden changes”, I stated, probably 4 or 5 times during the day.

At one point I actually added, “I just figured out my blog topic for this weekend”.

Family Changes Are Typically Gradual

If we think about changes and how they happen in the family circle, they are usually pretty gradual in nature.

When there’s an addition to the family, it usually comes after 9 months of pregnancy or some period of engagement before a wedding.

Exits from the family can be more sudden, as some people die unexpectedly or get separated without much warning.

But this just goes to emphasize my point that the gradual transitions are easier to take, because people have a chance to accept and prepare for what’s coming.

The suddenness of an accidental death or of a marriage breakdown are part of what makes them so jarring.

Business Circle Changes Vary

When we think about the business circle and how changes happen there, it’s kind of a mixed bag.

Building an extension to your plant takes months or years of planning, but firing someone can happen more quickly.

Again, though, when things happen in a sudden fashion, the waves that are made are more troublesome than when people have had a chance to adjust and prepare for the new reality.

Entering a new market takes months of planning and can be exciting for employees to get behind, but making a decision to close something down is usually quicker and can be quite demoralizing.

The good things proceed slowly, the bad ones quickly.

Ownership Changes at Glacial Speed

We’ve now arrived at the last circle, which gets the least attention. See Ownership: The Forgotten Circle in Family Business. There are good reasons why this circle moves the slowest.

Whereas the governance of the family is usually very informal, and the governance of the business is likely “semi-formal”, the ownership is usually governed by s shareholders’ agreement, which is typically very formal.

Changing a shareholders’ agreement normally requires all of the current shareholders to agree on the new one.

And because looking at updating an agreement only usually occurs after many years, the new circumstances will usually be quite different, meaning that the likelihood of everyone agreeing again has decreased.

Build in Some Flexibility

My view, which only came to me in the days following that meeting, is that the key is to revise the shareholders’ agreement very infrequently, BUT to make sure that there’s plenty of flexibility built into it.

You can determine share classes and their various attributes in a durable way, all the while allowing various people’s percentage of ownership to change as needed. See The Two Most Essential Components of FamBiz Ownership.

Gradual ownership transition, from one generation to the next, makes a lot of sense.

If you create an agreement that allows for that to happen in a relatively simple fashion, without requiring the reworking of the whole agreement, you’ll be way ahead.

Never forget: sudden changes don’t work as well as gradual ones.

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IFG: Real People, Real Stories, Real Learning

Family Governance Is a Contact Sport

Transitioning a family’s wealth from one generation to another is my beat, and every week I take a stab at adding some useful perspectives to this work.

Doing this work is rarely easy, and I like to think that all of those who work this space like I do, in support of families trying to succeed, can and must learn from one another.

Recently in Building Processing Time into your Process, I noted how one peer group I’m part of likens family work with skiing only the double black diamond runs.

In my weekly posts I often share things I learn in peer groups, but I just realized that one of my regular conferences offers something I don’t get anywhere else.

A Conference Like No Other

I just returned from the annual conference of the Institute for Family Governance in NYC and once again, it did not disappoint.

But I’m only now coming to grips with what makes it so different from the other annual family enterprise events on my calendar.

I get a lot out of Family Enterprise Canada’s Symposium, the RendezVous of the Purposeful Planning Institute and the Family Firm Institute’s annual conference.

But IFG is different and it’s because it’s just so damn real.

The organizers manage to bring together real people from real multi-generational family businesses, who share real stories.

Because family governance is very much a contact sport, some of these stories are not necessarily all butterflies and roses, as you might guess.

But somehow at IFG, they tell the real stories and really share, warts and all.

Strictly Obeying the Chatham House Rules

The IFG Conference runs on the basis of Chatham House Rules, which means that I’m allowed to share much of what I heard there, so long as I don’t share who said what.

I can easily share some snippets of words shared during talk at my table between presentations, though.

A man beside me noted that he did not recall hearing the word “A-hole” so many times in one day at a conference before, and I had to agree.

I shared a comment with a young woman on the other side of me at the end of the day, where I told her not to expect to hear the sharing of such frank stories at other conferences.

A Spirit and Culture of Blunt Sharing

The stories we heard typically involve families whose wealth has already successfully transitioned a few times from one generation to the next, and yet still there are some elements involving conflicts that got resolved, seemingly against long odds.

We can learn from the successes of other families, but we may even be able to learn more from their failures.

The stories shared involve a lot of successes that were required to build the wealth of the families, and then the hiccups along the way as that wealth was being shared by the family.

The blunt sharing of the less beautiful aspects of those transitions is what makes the IFG conference special, as the culture has been created where that’s a safe space for family members to share.

Families and Their Wealth Grow at Different Rates

One of the issues that can arise is that the wealth can continue to grow at some reasonable rate, but when you go down a couple of generations, the growth in the number of family members can expand exponentially.

As a generous amount of wealth is expected to be available to more and more people, that can become problematic.

Who gets to decide how the wealth is managed and shared?  See Who Gets to Decide Who Gets to Decide from 2017.

Pruning the Family Tree

Building wealth is difficult enough, but learning how to keep it and share it as a family is probably even harder.

It shouldn’t be surprising to learn that many of the stories we heard about from families where the wealth was first created over a century ago, were able to transition it a few times by limiting the number of family members who shared in it.

This sort of “pruning” of the family wealth tree is simple to explain, but not necessarily easy to implement, assuming that you value harmonious family relationships.

The IFG conference did a nice job of normalizing the fact that families can face a bumpy road on this journey, but when we learn to share the good, bad and ugly, we can help others to be forewarned.

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