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What Are You “Well” At?

Surprising Word Choice Proves Revealing

Regular readers know about my penchant for word play and finding lessons in unexpected places thanks to vocabulary, grammar, and translation issues.

If that kind of blog is up your alley, you should enjoy this one since there’s some of each of those on tap this week…

A few months back in Social Capital in the FamBiz World we looked at the human need for connection. 

Since then I’ve realized the importance that social interaction plays in my life, and I’ve also developed a new level of gratitude for the social capital that I enjoy.

 

Joining Yet Another Group

I’m a member of a number of groups, mostly with peers, that get together over Zoom from time to time for various forms of discussion and interaction.

Most of them actually pre-date this pandemic, so I feel like I had a head start on many people in learning to get the most out of this way of meeting.

I recently joined a new group, and one of the first meetings we had was the source of inspiration for this week’s post.

Unlike all my other groups, this one conducts its business in French, which is my second language, but being a lifelong Montrealer, I’m sufficiently fluent, and I speak it both professionally and socially on a daily basis.

 

Colleagues Learning from Colleagues

Our facilitator, Jessica, was setting up a discussion and at one point I thought I knew what she was about to say but then she went in a different direction and it threw me off a bit.

We were talking about choosing the kinds of things advisors might decide to specialize their practices in, and as she was listing ways to make such choices she began to mention “Dans quoi on est…” which translates literally to “In which one is…”

My mind jumped ahead and filled in “bon”, which is French for “good”.

Of course, we want to choose to do things that we are good at, right?

But then, instead of saying “bon”, she said “bien”, which means “well”.

 

There’s a Lesson (or Two) in There

Jessica was making the point that we should concentrate on doing things that we’re “well” at, or, as a better translator might say, things that make us feel well.

Could she be on to something, suggesting that things we can feel good about doing and that make us feel well and good is even more important than concentrating on things that we are good at, i.e that we execute well?

And although we were sharing ideas amongst advisors to family enterprises, what are the implications of such a “discovery” for the members of the families we work with?

Couple relaxing on bed

Doing Versus Being

This is all about the difference between “doing” and “being”, which are two really different yet related ways of looking at oneself. 

And, interestingly, the way they interrelate evolves over time. The more you practice doing something, the more it becomes part of who you are.

Of course this also brought back memories of a piece I wrote last year, Ikigai: a Four Circle Model of Human Capital. 

That was about finding the true sweet spot of things we do well, things we like to do, things the world needs, and things we can get paid to do.

 

Examples for Legacy Families

While reflecting on these questions is important for professionals who work with families, they can take on even more significance for members of those families.

And, they give rise to another aspect of belonging to such a family, as I noted earlier this year in Where Do You FIT in your Business Family?

I think it’s interesting that I noted at the beginning of this piece the importance of social interaction in my life, as I continue to figure out where I fit in this wonderful world of working with enterprising families.

 

Feeling Well and Doing Good

Being part of this evolving field and making whatever contributions I can makes me feel good and I think that I’m doing a decent job.

Members of legacy families can often minimize the importance of finding activities for which they get paid, by virtue of the fact that they may have other assets off which they can live.

When I work with families, part of what I’m hoping I can help them achieve is that each person can do some good for the family while also feeling good about their place within the group.

That’s often way more important than money.

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A House / Home Metaphor for Family Legacy

Probably NOT What You’re Thinking Though

This week we’re looking at a metaphor that came into my head a couple of months ago, and that’s been on the back burner of my mind ever since.

I’ve been trying out different versions of it, and kept on returning it for more simmering, because it didn’t seem ready yet.

I hope it’ll finally be tasty enough for consumption now, and also nourishing.

 

The Cottage by the Water

I purchased a few acres of land on a river about 10 years ago, with the goal of eventually constructing a summer home there.

As it turned out, there’s a “pre-fab home” manufacturing plant nearby, “Kane Homes”, and so I eventually decided to check them out, took a plant tour, and was instantly sold.

“When we’re ready, I want to order our house there”, I told my wife.

So a few years later, we dropped in for a visit, assuming that we could order our house from the factory.

Nope, that isn’t how it works, we were told.

 

Metaphor Preview…

Before I lose you in this story, I want to give you the equivalent of that visit to the house factory in my parable about a family who wants to make sure that they succeed in creating and preserving their family legacy.

My normal blog topics deal with families who are concerned with transitioning their wealth from one generation to the next.

One thing that I often lament is that many such families, when they decide that they need to take some action to achieve that goal, will contact an attorney and make an appointment to discuss their estate plan.

While the house factory quickly dispatched us to an appropriate avenue to order our home, most lawyers are only too happy to begin writing up the estate documents at the family’s request.

 

There’s a Lot More to a Home than the House

Back to the house purchase.  Kane Homes directed us to one of their dealers instead, “Sullivan Homes”.

OK, so just like you don’t go to GM to order your car, we had gone to the wrong place first.

The good folks at Sullivan Homes didn’t want to simply sell us a factory-made house, they were interested in helping us construct our dream home.

They were the ones who were going to take care of pouring the foundation, drilling the well, putting in the septic system, bringing in the electricity, and even making sure our long driveway was wide enough to bring in the house on two giant trailers.

 

The Work that Nobody Sees

When you arrive at our place now, the main thing that you see is still the house that was built in the factory, but without the foundation, septic system, water, and power, it certainly would not be as useful or comfortable!

In a similar way, yes, you surely will need a qualified attorney to properly write up the legal paperwork to make sure that what you want to happen is properly and legally captured.

And, if you are proactive, you will also engage with the right people to make sure that everything else works the way you want it to.

Kane sells a standard house to anyone who wants one, but thankfully they only do so while working through one of their dealers who makes sure that everything fits and works for the family who buys one.

 

Process Versus Content

My analogy is admittedly a bit of a clumsy one, especially as I now pivot to the process versus content part.

The factory-built house is the key piece of content which involved a lot of man-hours to complete, but the work that was done on site, was done by various specialists who did everything that was needed to make sure the house actually “worked” for us.

That work was much more about process, and it involves the flow of water and power into the house, as well as drainage out of the house.

 

An Estate Plan is Great, But Not Sufficient

If you’ve decided that you want to ensure that everything you’ve worked for all your life gets properly passed down to the next generation of your family, then you’ve got work to do.

If you think that a visit to an estate planning attorney will take care of it all, then you are mistaken.

Many of those other things are discussed in other blogs here, so please, help yourself!

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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.

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Commanding Respect in a Family Enterprise

Something You Just Can’t Demand 

When starting a blog post I often share the genesis of the idea for it, because I like to share the context of my thinking. 

It also helps give readers an insight into the variety of eclectic thoughts that can be used as jumping off points, almost no matter the subject.

Today’s idea could literally have come from a bunch of different places, but in fact came out of a scouting report about a hockey player who was drafted by my local team a couple of years ago.

I was impressed with some of the qualitative factors the scout highlighted in the young man, who was born in 2000. 

For reference, my children were born in 1999 and 2001, so it was interesting to think of this in terms of a demographic with which I am quite familiar.

 

Your Wish Is My Command 

It’s always interesting to see how young athletes are perceived in society, especially when your children are around the same age.

Here are the words from that report that struck me:

 

         “In other words, he commands respect, 

                     rather than demanding it.”


Who among us parents would not be proud to hear such words said about our own offspring?Wow, I thought, not bad for a young kid. Of course, everything’s relative, because he’s playing at the College level, so the others whose respect he’s commanding are around the same age, but nonetheless, this is a plus.

And then I began thinking about what makes someone worthy of our respect, and how is it that one “commands it”, rather than “demanding it”?

Let’s go there, since this topic also arises quite often in family situations, especially when it comes to how family members work together over generations.

 

The Problems with Demanding Respect

Here’s a good quote I came across from Dr. Christian Conte:

“To demand respect is to tell others, “You will respect me!” or otherwise threaten or punish those who do not act according to your wishes. To command respect is to have others observe and admire your actions of their own volition.”

It’s almost like if you try too hard to force it, it doesn’t work, and might even backfire. There’s also a push/pull aspect to it, like using a rope to push something.

Another great line I found comes from Christine W. Zust, who actually confirms what I wrote above: “The only way to command respect from others is not to demand it.”

Respect in Leading a Family Enterprise

Families who have successfully built an enterprise often begin with one dominant leader who was instrumental in the growth of the family wealth, and who thereby commands the respect of the other members of the family.

Where things typically get trickier is after that first generation, where the respect that’s required for continued success now must be earned by someone new, and where there’s not as much of a “top down” view of things.

My father built his business and naturally had the respect of his offspring. Since he died 12 years ago, I’ve never assumed that my sisters would afford me the same kind of respect they did him.

 

How Is Respect Related to Trust?

I’m not sure why I keep thinking about trust when I’m looking at respect, but they’re surely related.

I flashed back to a blog I wrote way back in 2013 (over 350 blogs ago!) 

“I don’t trust him. I don’t know why, I just don’t”. 

In that piece, I noted that there are three components of trust, and I think there’s a respect component in all of them.

Trust comes down to reliability, sincerity and competence.

Of course simply being reliable, sincere and competent is not sufficient to command respect, but, I’m pretty sure that if any of them are missing, respect will be a lot harder to command.

 

Democratic Decision Making

Once a family gets past the first generation wealth creator, the decision-making in the family often becomes much more democratic. There are likely going to be sibling and cousin relationships that make the whole respect question much less of a given.

When a leader in that scenario tries too hard to be like the autocrat who came before, they can get into trouble pretty quickly.

Trying to tell people that they need to respect you just doesn’t work.

Remember, you can’t push a rope!

 

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From Concentric to Non-Concentric Circles in FamBiz

A Story about Distributed Leadership

So many family businesses face similar issues, especially when they’re faced with the challenge of moving from the founding generation to “G2”.

The stories are never identical, but the idea of going from one person who loves to control everything, to a group of people working together is something that trips up many families.

And sometimes when the resulting business is very successful and it becomes a very large entity, the problems this creates can become huge too.

A Case Shared with a Peer Group

I’m privileged to belong to a number of peer groups where we talk about cases together, so we can learn from each other and sometimes get ideas when we’re stuck.

This week’s blog is about one such case, or maybe it was two (?)

Well, it was one such episode of sharing, that happened to cover two family business situations, that shared many similarities.

This was a few months ago, so the details aren’t necessarily “fresh”, but since I wouldn’t want to divulge too much, it’s better that way.

Also, the point about the “non-concentric circles” is the one I want to make, so the particular case details aren’t really that germane.

 

Replacing One Dominant Central Leader

The case(s) featured one main founder who had a family of successors, none of whom had anywhere near the potential to succeed their father in all of his success, which isn’t at all uncommon.

As noted, when the success is really rapid (within one adult lifetime) and large (thousands of employees, global presence) it’s almost impossible to expect that any one of the offspring will be able to simply step into the founder’s shoes.

It would likely be a recipe for failure in both the business, and then also the family, if they even tried.

In the case we were presented, that founder was the main leader in all three circles: Business, Family, and Ownership.

See Three Circles + Seven Sectors = One A-Ha Moment (from 7 years ago)

 

Leadership Doesn’t Show Up “Overnight”

The rising generation, who were all adults when Dad passed away suddenly, were all involved somewhere in the businesses, but none of them had the experience or the gravitas to take the helm, or helms, that their father held.

My colleague who presented the case had been involved in getting things on track so that the company would thrive and the family could remain successful in owning the business for the long term.

For the business, there were already lots of qualified non-family leaders in many places, so the business did not suffer much.

The ownership was also pretty clear, in terms of who rightfully owned what percentages of the shares, and it was relatively simple.

How about the family?

The Family Circle: A “Left-Over” Concern?

If you have any experience with family businesses, you’ll likely know that the family is often the last concern, because everybody loves each other and so let’s just concentrate on making money and they’ll all be happy.

I hope readers recognize that much of that last sentence was written in jest.

A better way to put it is that the family is never a problem, until it is.  And then it’s usually a huge problem.

Thankfully this family brought in some top advisors to work with them to make sure that the family problems remained at bay.

 

Many Opportunities for Many Leaders

Over the months and years that the consultants worked with the family, they ended up developing a number of opportunities for a handful of family members to step up into leadership roles.

They formed a family council, and a number of committees emerged from that structure, with different family members assuming key roles.

An “ownership council” was also created, resulting in the rising generation of the family learning how to work together in a variety of new ways.

Whereas their father was at the center of all of these circles during his lifetime, the next generation converted that to a series of different circles, with different people taking leadership roles.

Ultimately, this results in a much more stable structure for the family, the ownership, and the businesses that they own.

Serendipitous Timing

As I’ve noted previously, my social media posting is done by a third party, so I never know the timing of the content that I’ve produced showing up on my feeds.

Last week a post promoting my latest book appeared, reading:

 

The business system likely has strong leaders

For a family to successfully transition its wealth to following generations, the family system needs strong leadership too

 

Good timing!

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Family Engagement and Family Alignment – Chicken and Egg

Which Came First?

This week we’re looking at one of those “which came first?” situations, so as you’ve probably guessed, it’s kind of a trick question. 

The good news is there’s no wrong answer!

I’ve written quite a bit about family alignment in this space, most recently in On Family Alignment and Family Alliances last fall.

But this’ll be the first time I’m dealing with family engagement, and in some ways it’s long overdue.

 

Coming Up Again and Again

Maybe it just feels overdue because the idea of alignment and engagement being two sides of the same coin came to me a couple of months ago, and ever since, it keeps on jumping up and hitting me in the face, seemingly at every turn.

I’m working with one client who’s drafting her family’s first ever “family charter”, which will essentially be the first written version of the guidelines for their “family council”, which doesn’t really exist yet.

The “writing it down” part is all about the alignment, but the work my client has been struggling with is in getting input from other family members, because she wants to make sure she’s capturing things correctly, and that’s all about engagement.

 

Getting the Rising Generation Interested and Involved

Another client with whom I’m working has taken a family business he bought from his father and grown it significantly, and he’s now working out the details of how to get his children and nieces and nephews interested and involved.

This is the type of engagement issue that lots of family businesses face at various stages in their evolution.  

But they can quickly go from low engagement to high, and then suffer from issues around their alignment, because the people who just got interested all see things in a different way.

All of this is quite normal, and possibly a good problem to have.

A Regular Governance Problem: Balance

You may have encountered the same issue in other, non-family governance situations, whether it’s the board of a non-profit or even a committee that you’re a part of.

I’ve seen it up close in each of those situations, although I really noticed it more recently, since this idea began to crystalize in my head.

But like I said, it’s a good problem to have, and there’s no wrong answer.

You can start working on one, and it’ll help you with the other, and it works both ways.

 

Leadership and Collaboration

Before I get to a couple of examples, I want to highlight that a similar idea hit me a few years ago and has stuck with me.

I’d read a book about collaborative leadership, where the point was made that people who are collaborative are exhibiting leadership, and the people who are leaders are collaborating with their followers almost by definition. 

It’s almost circular.

It was one of those things that took a bit of time to sink it, but now that I’ve internalized it, it seems to be there for good.

And so it is now, with alignment and engagement, especially in the family business context.

 

Start Where You Are

Wherever your family is, start there.  Sounds obvious, but, like common sense that isn’t really common, it isn’t.

If a family is engaged, work on continuing to develop that, and you’ll quickly get to a point where some possible “mis-alignments” pop up.

Great, now you have something to work on that’s a bit different, solving that alignment issue.

If, however, the family seems nicely aligned, start there and “push” that further. You’ll likely hit a point where some might disengage, and then you can work on engaging them again.

In so doing, you’ll almost naturally find yourself tweaking the alignment again.

Incremental, Iterative Progress

The good news, again, is that this is all part of progress.

Families who hope to transition their business or wealth to the rising generation need to have engagement, and they need to be aligned, if they want things to work out right and to have the results be durable.

As you work on developing one, alignment or engagement, you’re also making progress on the other.

It may not feel like progress because it doesn’t move quickly. It’s incremental, one tiny step at a time.

And, as I hope I’ve shown here, it is also iterative, as the family keeps rolling along forward.

One hand washes the other, and two hands are better than one.

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When You Like What You Do….

This week we’re going to look at something that came up in a non-family business context, and apply it to our usual domain of businesses that are run by multiple generations of the same family.

It goes back a couple of months to a luncheon I attended that was hosted by a successful local private wealth advisory firm. 

I’ve attended a few of their events over the past few years, and it’s always nice to stay plugged into the financial asset world, even though my work with families is now almost exclusively on the family side of things, as opposed to how they invest their liquid assets.

 

Successful Succession

The company in question is now owned by a number of their “second generation” partners, who bought into the firm over the years, and the original founders now no longer own any shares.

As I sat there and listened to them share this part of their story with the audience, which included mostly clients and potential investors, I couldn’t help thinking that some business families I know would be envious of their successful succession.

But my favourite part of the story was about one of those founders, now in his 80’s, who still comes to the office every day, and acts as “wise counsel” to the others.

 

When You Like What You Do

Apparently he likes to come in and be with his peers and friends, “without the pressure of performance”.

But the real money quote was this, which is what that man added, 

                  “When you like what you do, you do it 

                       long after you still need to do it”.

Hmmmm. I began to think about how this whole situation might apply nicely to some of the business families I know.

So many of the senior leaders of family businesses still really like what they do, yet they often feel like they still need to do it, even long after their successors have shown that they are more than capable of handling the work.

If only there were a way for them to keep doing some parts of what they love, while allowing others to take over other responsibilities.

 

An Opportunity to Co-Create Something

Handing over the reins of a business is almost never a simple exercise.  It takes lots of planning and the execution is rarely as easy as expected or hoped for.

However, with lots of dialogue and sharing of ideas, a great training program to ensure that the rising leaders are equipped to handle larger roles over a number of years, having new leadership ready to assume top roles can certainly be accomplished.

Sometimes, especially in family businesses, it’s having the old leader step aside that’s the biggest obstacle. But there is definitely an opportunity here, if the two generations work together to create a Win-Win.

Family Ties: Easier or More Difficult?

Some may think that this process should be easier in a family business, where the exiting leader has more confidence in the new person or people, because they are literally a “chip off the old block”.  Indeed, sometimes it does work out that way.

Anecdotally, though, it seems like family situations often make it harder to execute such a transition.

Perhaps this biased view comes mostly from founders or wealth creators who are the first generation (G1), and they notably have more difficulty bidding adieu and leaving things to G2 than occurs in subsequent generations.

 

Doing What You Like, Lots of Options

But let’s go back to the title and quote, about doing what you like, and wanting to keep doing it. As the leader for the past few decades, the number of roles that person held and the tasks for which they were responsible was likely pretty diverse.

Wouldn’t it make sense to try to discover which of those roles and tasks they particularly enjoyed, and find ways for them to continue them, yet, “without the pressure of performance”, as the example above noted?

It strikes me that there’s a huge opportunity here, for members of both generations, to co-create the conditions where they actually co-exist for a certain number of years.

It probably won’t be something that happens overnight, of course, and the longer the plan is in the works, the more likely it probably is that it will be a success.

It all starts with a discussion…

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“Professionally Emotional” – A FamBiz Oxy-Moron?

Following up on last week’s post, Three Pillars of Family Governance from a Pro, in which I invoked the wisdom of Barbara Hauser, one of the veteran contributors to the field of family enterprise, I’m going to do something similar this week.

This time I’ve been inspired by Randel Carlock, a professor at INSEAD, who has also been a major contributor to this field for decades.

And whereas last week’s post came about as the result of my reading a piece from CampdenFB, this week it comes from a post I came across  from Tharawat Magazine.

Many of my blogs have their genesis in conferences I attend and interactions with families and colleagues, but these two websites have provided many sparks as well.

(LinkedIn and Twitter are great ways to stay abreast of things in this space, by the way).

 

Professionally Emotional

What struck me was this quote, from A Family Business on the Moon – Lessons from the Author, where Carlock says, “…we encourage families to become professionally emotional, which may seem like an oxymoron, but it works.”

As someone who loves to play with words and gets excited by the potential paradoxes in any oxymoron, this one ticked a few boxes for me.

While many people might feel like “professional” and “emotional” cannot naturally coexist, I think that those who inhabit the world of enterprising families will immediately recognize the possibilities this expression gives rise to.

Let’s take a closer look at what Carlock is driving at.

 

Professional Governance and Strategy

When it comes to the running of a successful business, it’s always important to have a professional approach to the strategy and the governance of the enterprise.  Few people will argue with that.

Of course, too many family businesses continue to operate with less than professional business operations and strategy, but that is a subject for another day.

In terms of running and guiding the company, “professional” is certainly the way to go, or at least something to aspire to.

 

Emotional and Caring Leadership

But family enterprises need to be a bit different than their non-family brethren in how they exercise their leadership.  

When you have several family members involved, and you therefore have more than a simple business relationship with the others around the table, other factors come into play as well.

It is in the leadership of these enterprises that the emotions and the caring need to be present.

So, “Yes” to the professionalism of the “what”, but also “Yes” to the caring about the emotional side of things in the leadership, or the “how”.

Parallel Planning Process

Carlock is encouraging families to work on their business and their family planning in parallel.  In fact, he coined the term “Parallel Planning Process” many years ago, in a book he co-authored with John Ward from the Kellogg School of Management at Northwestern University.

That book, Strategic Planning for the Family Business, details everything quite nicely.

Not only is it important to do planning for the business AND to do planning for the family and its members, a major point is that they are equally important.

And because they are both important, they need to be done in a coordinated and aligned fashion.  They are interdependent, so you need to make sure that they’re both progressing side-by-side.

 

Match the Speed of Evolution

What often occurs is that many plans are made, professionally, concerning the future of the business.  The focus continues to be on making the business strong, and having it continue to grow. The family can be an afterthought.

That’s when things can get out of sync with the family.  When there is business planning without regard to the family members and the human capital that they can offer, many possible contributors can get lost in the shuffle.

The other version can occur too.  How many of us have heard of family businesses that get sold to outsiders, because no family members want to take over?  Typically, the next generation have all become professionals and have great careers going, so coming back to the family business can seem like a step backwards.

All the more reason to try to keep the plans for the family and for the business properly aligned. None of this is necessarily easy to do, it takes effort and diligence.

That doesn’t mean it isn’t worth it though!

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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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“Nose In, Fingers Out” for Family Business

“Nose In, Fingers Out” for Family Business

Today’s topic is one that I’ve been thinking about for a while, ever since I first saw it mentioned back in 2017.

If you Google “nose in, fingers out”, you’ll see that it has been used by a number of people, attesting to its usefulness in creating a mental image that most people can quickly grasp.

I need to give a hat tip to Larry Putterman for putting it on my radar screen first.

 

 

It’s All About Boundaries

A topic that arises often in business families is that of “boundaries”, and there are many reasons for that, and anyone who has ever worked with, or in, a family business knows what I’m talking about.

But while the “nose in, fingers out” idea is about boundaries, it is also a subtle way to discuss how boundary lines are not all necessarily a solid concrete wall, but perhaps just some steel slats.

Boundaries are important, but we need to think about, and talk about, what the boundaries are supposed to accomplish, if we are going to establish the optimal boundaries for our situation.

 

Boundaries

From CEO to Chairman

The area that Putterman specializes in is Boards of Directors, and in the family business context what he is most often referring to relates to a person who has decided to scale back their involvement as part of a transition.

The former leader of the operations of the business, likely the CEO, has decided to pass on the reins of the operations, but to stay involved in a lesser capacity, and not disappear altogether, at least not yet.

There are different ways to take these kinds of steps gradually, of course.  My father brought in a non-family President and stepped into the Chairman role, but kept the CEO title for himself for a while.

Quite often the biggest step is the one where the CEO mantle is relinquished, and only the Chairmanship is retained.

 

 

How Much Is Out, How Much Is In?

In a family business, an outgoing leader will (hopefully) get to the point where, for many reasons, it makes more sense to scale back their involvement, moving from day-to-day operations to more of an oversight role.

These kinds of transitions happen all the time.

But sometimes they work out well, and other times, well, they just create problems.

This is where the “nose in, fingers out” idea comes in.

 

 

What Is Permissable?

The devil, as they say, is always in the details.

The nose and the eyes go together, so you are allowed to look around and sniff around as much as you like.

As you would expect in an oversight role, continuing to observe whatever is going on in the company is allowed and even required.

Below the nose is the mouth, of course, and this is usually the first place that problems begin to arise.

 

 

The Mouth Can Be a Finger (?)

If the nose and eyes go together, does that mean the mouth does too?

Probably not.

Once you step back from the day-to-day to oversight, what you say to people, at least those who are involved in the daily operations, needs to be weighed very carefully.

Problems and confusion arise quite quickly when the old boss walks around and tells “his people” what to do.

In fact, it is at this point where the mouth has become tantamount to a finger.

 

 

Encouragement Yes, Direction No

When the ex-leader talks to the employees, care must be taken to limit their words to encouragement and not direction.

When they are in a board setting or discussing things with others involved in oversight only, then the mouth is once again an agent of the eyes.

 

Road directions in a desert

 

What About Other Family Members?

 

There is another area where the nose in, fingers out situation comes up in family business that I’d also like to touch on here.

It’s the one where family members who do not work in the business interact with others, often siblings, who do.

There are boundary issues here as well, as those who don’t work there have an information disadvantage that they usually need to overcome.

Sometimes their questions seem a little too much like fingers in, rather than just noses.

For those being questioned, the best defence for this is to try to be as transparent as possible, and to get out in front of any questions.

If you satisfy their noses, they will be less tempted to poke their fingers in.

 

 

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