Examples of Each Type Abound

Anyone who has spent any time in the family enterprise world has surely encountered a variety of different versions of sibling partnerships.

Sometimes sibling groups come together and end up working so well together that people are rightfully impressed by the way they can combine into what appears to be a “1 + 1 + 1 = 10” arrangement. That’s good, and maybe even great.

Other times, things might start off on the right foot, but after some time, and typically after the previous generation has fully exited, they may be lucky to find themselves staying even, i.e., where 1 + 1 + 1 = 3.  If you were expecting at least a 5, then 3 feels pretty bad.

And of course when you read about disaster family business stories on the front page of the newspaper (remember those things?) well then it’s often more of a case of (1 + 1 + 1) X 0 = 0, or maybe even a negative number, or downright ugly.


Avoid Ugly, Strive for Good

I don’t want to spend too much time on the ugly version, except maybe to say that before things get ugly, they usually go through some “bad” on the way.

I’d rather share some ideas on what you want to look for when things begin to turn bad, and encourage folks to cut their losses well before they get to ugly.

Let’s talk about some examples of good, and look at what families are doing right, and concentrate on the positive.

I was recently privileged to serve on a committee charged with determining the winners of a competition that some family businesses have entered to choose an annual award winner to be announced this fall.

The three finalists all shared certain characteristics that made me think of this topic, and I think there are definitely some lessons worth sharing.

 

From Autocratic to Democratic Leadership

Family business literature typically talks about G1 being a one-person show, that hopefully moves on to a sibling partnership in G2, on the way to becoming a G3 “cousin consortium”.

The three FamBiz we judged were all past G2 and yet they were each currently involved in transitioning to a group of their offspring for the first time, since each of the past generational transitions were of the “father-to-one-son” variety.

Perhaps one of the secrets to FamBiz longevity is to avoid passing the company down to more than one child or branch (?)

The biggest change that occurs when going from one leader to a few is that autocratic decisions no longer typically work as well, and are usually not deemed acceptable by the other sibling partners.

Learning how to “make decisions together” is something I talk about a lot when discussing the importance of family governance.

 

Family Governance? Not Again!

“Oh boy, here he goes again”, I can almost hear some of you thinking. 

But once again discussing the three finalist business families we looked at, they had all been working on their family governance for at least a few years now, and each of them had done so with the help of at least one outside expert brought in specifically for that task.

If you are hoping for a “good” sibling partnership, one key is to begin working on your family governance, so that it has a chance to evolve while both generations are still involved.

While each generation learns how to deal with the transitions involved in moving from one to the next, the siblings in the rising generation also learn how to work together effectively, or at least that’s what’s hoped for.

 

Avoiding Bad Before It Gets Ugly

The key to avoiding ugly is to be able to recognize a situation that has a likelihood of turning bad. 

Sometimes families recognize that certain siblings will not likely mix well in a business context, and so they transition to one of their offspring and find other ways to treat the others. That’s one way to avoid “bad”.

But once a sibling partnership exists, as soon as things start to get sticky, there’s still a chance to avoid “ugly”, but it almost always involves getting some outside help to allow the important conversations to happen in a productive way.

See Getting Legal Advice for your FamBiz vs. Lawyering Up for more on ways to react before things get too far out of hand.

Most Enterprising Families Want the Same Things

I love it when a positive blog topic lands in my lap out of the blue, especially when it falls on the heels of recent “negative” posts, like last week’s, Avoiding Adversarial Relationships in Your Enterprising Family.

When I say “out of the blue”, I mean that I was simply jotting down some notes during a discussion, and then had an “A-Ha!” moment where something hit me, and I knew I was onto something for an upcoming weekly missive.

The context was a course given as part of the FFI GEN program (Family Firm Institute – Global Education Network) for which I serve as one of the instructors. 

I was invited to join the faculty in 2019 and readily accepted, becoming part of the GEN 502 team, for the “Family Governance” course.


We All Learn from All of Us

Some of the things I love about FFI are the fact that it truly is global, with members in dozens of countries, from 6 continents, and the fact that there are so many experienced practitioners who are members, and we all learn from each other in every course.

Since GEN 502 is one of the more advanced courses, the students all have at least some real world experience, and so whatever they share with the group (whether in the online discussion board that the instructor monitors over the quarter, or in the capstone webinar) is for the benefit of everyone.

It was during one participant’s concluding thoughts during our webinar that I heard an innocent comment, but that I captured in a novel way.

Harmony, Unity, and Growth

She stated what every family wants, i.e.  “They all want family harmony, family unity, and growth of the business”. (Thanks, LM).

I jotted down, as a list, the following:

 

Harmony

Unity

Growth

 

Ta-dah!  I could not argue with her premise, and, as she happened to put it, she gave me a “family hug” to write about.

Usually when a great blog idea comes to me during a discussion I’m involved in, I share it on the spot with the person who sparked it, thanking them for the idea, but this time the context did not lend itself to that, so I kept it to myself.

So in some ways I’ve been dying to share this even more.

OK, That’s What They Want. How Do They GET It?

Anyone who has spent time with people who lead business families will agree that just about every family has these same three wishes.

Let’s dispense with the “growth” part first, as it’s a bit different, since it typically revolves more around the business or the wealth, as opposed to harmony and unity which are more about the family.

Actually, the growth is ultimately about the family as well, because the family will also grow, even exponentially over coming generations, and deep down there’s a fear that if the business’ growth doesn’t keep pace, that will impact the family negatively at some point.

But even though growth is important, it can always be worked on by all the management and employees, while harmony and unity are a family concern.

So how do you ensure harmony and unity?

Family Governance to the Rescue

Given the fact that a course on family governance was the genesis of this post, you won’t be surprised that my answer also lies in how a family governs itself.

Family governance, in turn, is all about communicating and learning how to make decisions together

These things don’t always come naturally to families, and so they need to work on them, sooner rather than later, in order to work out the kinks.

The ways that families come together and meet to discuss important topics need to be co-created and developed over time, by the family.

It isn’t exactly natural though, so many families get expert help, from people who have already played similar roles for other families.

Nothing Important Happens by Itself!

Of course no two families are the same, and so you can’t just use a cookie cutter and copy another family’s governance either.

Such trusted outsiders do exist, and the good ones will play whatever role the situation requires, from project manager to quarterback, from implementer to consigliere, and from facilitator to mediator.

But it will take time and effort, from many members of the family too, because nothing important happens by itself.

Hopefully, you’ll also end up with plenty of hugs too!

Green and Yellow Are OK; Red? Lookout!

Having recently been involved as an advisor and mediator with some families where the relationships could hardly be described as harmonious, this week I want to talk about how important it is to try to keep such situations under control, and not allow them to boil over.

I’ve written about aspects of this before, so there will be a few links to previous posts along the way.

In 2017, with Yellow Light Family – Proceed with Caution we looked at the “family dynamics axis” of a model that places families in a particular zone based on traffic lights, with which most people can readily identify.

Green light families are great to work with; when the light turns yellow, there are a few more challenges that many advisors with some experience can often help families overcome, but when the light turns red, all bets are off and many advisors prefer to head for the hills.

 

Kissing Your Proverbial Sister for Real

A couple of years later, in Kissing your Sister – Playing for a Tie in FamBiz, I shared this quote from a slide I’d seen during a presentation on Family Governance:

                         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 found that so perfectly appropriate for most family enterprise situations that I just had to share it.

 

A few weeks ago, I wrote Getting Legal Advice for your FamBiz vs. Lawyering Up.  In that post, I shared learnings from some recent work I was in the middle of, where I saw my role and my goal as keeping the siblings from instituting any legal proceedings against each other.

 

FWIW, up until now, I’ve been successful.  But things still feel more “adversarial” than I’d like.

 

 

Letting Things Cool Down

For some reason the word “adversarial” came to mind recently as I pondered how to approach this blog.

As I sometimes do, let’s see what comes up when I Google the word:

          “involving people opposing or disagreeing with each other”

Hmmm, I was really only considering the “opposing” part, and not the simpler “disagreeing” aspect.

When people work together, disagreements often come up, it’s only natural, and we need to learn to be able to work through them.

One expression around this that I love has to do with learning to “disagree without being disagreeable”, and that’s something I’m often called on to do when working with family members.

 

When Opposing Viewpoints Create Opponents

Situations that cause more opposing viewpoints often revolve around a Zero-Sum game, where everything one person gains is at the expense of someone else.

The greenlight families noted above typically involve businesses where things are already going well and they are expected to keep going and even improve.  

When you’re making a bigger proverbial pie, the fight over who gets which slice takes a back seat.

Whenever a family limits its view to what’s already there, and there’s no plan on increasing what’s available for all to share, the chances of adversaries taking up sides increases.

Can you find ways to make it about more than what everyone can already see?  Sometimes you need to expand what you are looking to accomplish and consider some intangibles instead.

 

Many Kinds of Wealth and Capital

This brings us to some of my other favourite topics, examining what wealth and capital really are.

Too many families, and their professional advisors, seem to believe that financial wealth is by far the most important consideration for every family.

While the financial wealth is certainly not something to ignore, families who also work on their social capital and human capital actually have a better chance of success with all forms of capital.

Earlier in my career, I was managing financial wealth on a daily basis, with one eye on my computer screen and the other on CNBC. (No, I don’t miss those days.)

One market guru, whose name I’ve forgotten, used to talk about the two kinds of capital: financial and emotional. He was reminding his fans not to overspend their emotional capital, because it is a limited resource.

Families fighting over money end up wasting lots of time and energy dealing with negative situations, to the point of exhaustion or breakdowns. It’s just not healthy.

 

Were They Always Adversaries?

If family members are currently adversaries, I like to ask if they were always this way, or if there was a time in their lives when they were more cooperative and working towards common goals.

What changed?  Can they go back?  

Burying the hatchet can be good for the soul. I encourage it.

 

 

 

Getting Inside Family, Business, and Ownership

I’ve been a huge fan of the Three Circle Model (TCM) since I saw it for the first time. See: Three Circles + Seven Sectors = One A-Ha Moment. It is as useful today as ever, and continues to anchor much of the work that I do when interacting with business families.

I’ve seen many adaptations, some more useful than others, over the years.  It is quite simple, and because of that, it also lends itself to lots of possible uses.

I recently saw something that made me look at the three circles a bit differently, and that’s the basis of what I want to share this week.

The source of this idea is a local colleague and friend of mine who works mostly in French, allowing me to play language instructor or translator in this space once again

His way of looking at the challenges in the family, the business, and the ownership concentrates on the intergenerational transitions inherent in each of the circles, which in and of itself, was eye-opening to me.

 

Parents and Their Offspring, G-X and G-X+1

While the genius of the TCM is the simplicity with which it conveys the overlaps of the circles via a Venn diagram, it doesn’t do much for how to look at the generational transitions within each circle (not that it attempts to).

My colleague Michel Handfield, works mostly with family businesses where there’s a simple structure of a parent and one or more children involved, where they are all involved in both the family and in the business, and are also the current and future owners of the business.

So whereas the TCM is really good for more complex situations, because it outlines 7 different sectors where different people might fall, Handfield gets into the dynamics between the generations, but looks at them specifically as they exist in each of the three circles.

 

Mind Your P’s and E’s

I don’t shy away from ideas in different languages, and because I’m bilingual, I have access to things in both English and French as possible resources

By happenstance, Handfield has come up with an elegant model in French, which unfortunately loses some of its elegance in English, because of the way key words happen to translate. 

Have no fear, I’ll make sure the gist of it doesn’t get lost along the way.

Here are the three “P & E” relationships he’s identified:

 

                           Family:            Parent – Enfant 

                           Business:        Patron – Employé

                           Ownership:    Propriétaire – Futur propriétaire

 

So we have a Parent-Child relationship in the family, a Boss-Employee situation in the business, and an Owner-Future Owner scenario in the ownership circle.

No, it isn’t rocket science. But man is it powerful because of its simplicity.

 

Same People, Different Issues

The first important thing to note is that the people don’t change.  Actually, the people themselves do change, over time, of course, but we are always looking at the same people, no matter which of the circles we’re talking about.

In the simplest and probably most common version, it’s father and son, although there are now many more father-daughter combos than ever before, and also mother-son and mother-daughter. 

But no matter the genders or even the numbers, the relationships between the senior generation and the rising generation all fall under the Parent-Child, Boss-Employee, and Owner-Future Owner dynamic.

 

Different Hats, Different Rooms

There are a couple of analogies that people in this field go to when discussing the importance of recognizing which “hat” one is wearing (“Boss” hat versus “Dad” hat, for example) or which room the decision being discussed belongs (owner room versus management room). 

(For more on the Four Rooms Model, check out my podcast interview with Josh Baron)

Outside advisors can sometimes be most resourceful to business families when they simply point out these distinctions and get the family to see things more clearly.

But Handfield’s P & E model focuses on the dynamic within each circle as it applies in the three situations, which is why I like it.

When an advisor works with a parent-offspring pair, recognizing what’s going on between them and offering guidance is made easier when they can separate out those dynamics for the benefit of those living them.  

Being able to grasp which relationship dynamic is at play in any situation allows one to understand the context in which the people are operating much more easily, which is quite useful when you’re trying to offer them guidance.

Nice to Meet You; Let’s Start Working Together

Working with business families and their members is always interesting and rarely simple.

From the outside it looks relatively easy to get going with any family, but if you’ve ever been in a position to do this, you know how complex it all can be.

That’s what I want to look at this week, and I’ll contrast different terms that come from various professions and how they handle the beginnings of working relationships.

Bottom line, there is no simple standard way that these relationships work, although each practitioner will typically try to develop one or two ways that they prefer to construct such relationships.

 

Discovering What Makes a Family Tick

Upon being contacted by someone about working with a family, the fascinating work of finding out who’s who and how everyone relates to each other begins.

That work often continues for as long as the relationship exists, although much of it is “front loaded” and the learning curve at the outset is generally pretty steep.

I used to laugh when people who do this work would tell me that they start off by drawing a genogram or family diagram, but I don’t laugh anymore.

I find myself doing that very early on, because once you get the hang of it, you can’t go back to just taking notes ever again.

The process that many call “discovery” starts from the very first call or email, and for some it is a key step that they actually outline as part of their process, that begins after they’ve come to a formal agreement to work together.

 

The Contracting Stage

The formal agreement between the advisor and the family can be quite simple or very complex.

Whether it ends up being several pages long and executed with a signature or if it is more informal and mostly verbal, it does make sense to spend some time upfront in order to properly set expectations.

The Family Enterprise Advisor program (FEA) I completed years ago, where I had my calling to this work, spends a good deal of time on making sure those who complete the program truly understand how important the contracting stage is.

The program also encourages advisors to collaborate with other professionals in service of families, and much emphasis is placed on the contracting that is required between such advisor parties.

As things change during the relationship, it will often be necessary to revisit the question and get into re-contracting too.

 

Designing the Alliance

Where FEA’s talk about contracting, coaches who trained with CTI like I did talk about “designing the alliance” instead.

I like that language because it gets at a couple of very important aspects that might otherwise go unnoticed.

The idea of “design” speaks to the fact that it isn’t always the same, and there’s a need and desire to customize the relationship between the coach and client.

The “alliance” part is all about the fact that while there are two parties, and the coach and client become true allies and work together for the good of the client.

The client is not alone, and they are also expected to be quite active during the coaching process, in fact, they will be the ones who do most of the work.

 

One Person or the Whole Family

My favourite part of all of this is that when I got into this business of serving families, I always imagined only working with families as a group.

Much of the work I do is of course still done with entire families, but thanks to some of what I learned during my Bowen Family Systems Theory studies, I realized that one can make great strides for the whole family even when working with just one family leader.

The discovery is very different when you only hear about people and never meet them, but a relatively clear picture does emerge, albeit from a subjective view of the individual client.

In all cases it is important to get these relationships off on the right foot, and that means asking a lot of open ended questions and then doing a lot of listening.

Coaching one person or facilitating for a whole family require different but related skills. It’s fascinating work and if you are naturally curious about people it can be lots of fun too.

Knowing “What to Do” Isn’t Enough

This week’s subject deals with some issues faced by every business, but we’ll be looking at their particular effect in family enterprises.

In addition, there’s an angle to this question that applies very much to advisors who serve business families and their members.  

In fact, the inspiration for this post comes from something directed specifically at those of us who serve families in this space.

Let’s see how far we can get in connecting all these elements.


Personal Connection to Stories About This

When I began planning to write about “knowledge vs. skills”, for some reason I flashed back to my Dad, and I want to share two very different ways this was really relevant in his life.

Dad was trained as an apprentice in Austria before immigrating to Canada in the 1950’s. He had not realized what an advantage that European training in “how to do” his work for the steel fabrication industry would give him a leg up when he got here.

There was a skills shortage in those post-war years in North America. Many knew what needed to be done, but we didn’t have enough skilled hands to do the work.

Much later in Dad’s life, he’d often make sure we took the time to distinguish the “what to do” from the “how to do it”. 

“Let’s figure out ‘what to do’ first, then we can figure out ‘how to do it’”.


Onboarding the Rising Generation Family Members

In lots of family businesses, the first generation who founded the business need to have the skill to pull off the important work to get the company off the ground.

A generation later, the questions of how and where to integrate the next generation into a company typically arise.  Naturally, there’s always more than one “right” way to do things in any particular situation.

Many families struggle, though, with whether or not to start their offspring “on the ground floor”, like working in the factory, or whether they can just saunter into an office job, because they were educated, and therefore arrive armed with lots of knowledge.

Some really interesting challenges can arise when one sibling ends up with skills useful to the operation and another is better educated and has lots of knowledge and they’re expected to get along well together and complement each other for the good of the business.

It’s great when it works, but fraught with negative consequences when they don’t get along.


What About Those Who Advise FamBiz?

A couple of weeks ago in When Being Wealthy Doesn’t Equal Having Money, I mentioned the work of someone I look up to in this space, Dr. Jim Grubman, and I’m going back to his well and wealth of experience in the field of serving enterprising families again here.

In a sense this post will serve only as a tease to further writing about the recently formed Ultra High Net Worth Institute, and their work, where I know Jim was involved in the creation of their new model, The Ten Domains of Family Wealth.

I first became aware of the UHNW Institute last year, and when I saw that they had created this new model to help understand all the important areas that wealthy families need to consider, I was hooked.


Great Knowledge, Yes.  Skills Also Required.

One of the points Grubman makes is that while knowledge is great, it is not sufficient, for those who wish to truly serve families well.

Many people know that families need to work on their governance and have family meetings, but knowing that doesn’t automatically make one the best person for a family to hire to help them with such matters.

And when merely knowledgeable people act as if they are also skilled, bad things can occur. Skills matter.

It’s More Art than Science

This blog idea has been simmering in my “future posts” folder for a while now, and it finally stuck its hand up and said “now!”

It’s based on  a great book that I read during the winter, called The Art of Gathering, How We Meet and Why It Matters, by Priya Parker.

The book is a great resource for anyone who is occasionally charge with organizing any kind of get-together involving people, for whatever reason they might have to be in one place together.

Of course most get-togethers do involve people, unless you spend a lot of time at the local dog park. The issue is that many gatherings seem to forget the importance of the people attending.

Now that such gatherings are once again becoming possible, with much of the pandemic hopefully behind us, this is topical again.


Family Gatherings Are a Particular Subset

While the ideas in the book can be applied to all sorts of gatherings, I read it with a particular interest in family gatherings, because I sometimes work with families who are just getting used to having regular family meetings, and some of the details can be pretty important.

The organizing of such events typically falls onto the shoulders of one or two people, and most families can readily point to the “usual suspects” who play that role in their clan.

Such “family champions” or “CEO’s” (Chief Emotional Officers) would do well to pick up the book to get some ideas and tips that they’ll find useful.

Even experienced gatherers will get something out of it, if only for a better understanding of why they’ve already been successful.


Parallels to Other Areas of My “Family” Work

Aside from wanting to plug Parker’s book, there’s a bigger reason why I wanted to write this particular post.  Regular readers know my penchant for metaphors and analogies so that’s naturally at play here.

It has to do with the experts whose advice is typically sought when one begins to make important plans, and what those experts focus on.

The best way to set this up is with a direct quote from the book:

          “Because so much gathering advice comes from 

            experts in food and decor rather than from facilitators

           that advice almost invariably focuses on preparing 

           things instead of preparing people.”

Preparing things instead of people….


Focusing on What, When, and Where

There are plenty of people who can help you find a great place for a gathering, and they all have a calendar on which they can see if your date will work, and they’ve likely held similar events to yours too, so you can count on their advice to make yours great, right?

Likewise, when planning for the future of your business and wealth, and how they will affect your family, there are also plenty of experts who have done similar work for other families, and can tell you exactly how you should set things up legally and financially.  

And guess what; if you follow their plan, you’ll save your family lots of money in taxes!  Because that’s what’s really most important.

Not!


Let’s Think About the WHO (Or Is It Whom?)

You may see me coming from a mile away, but just in case, let me suggest that the people, those members of the rising generation of your family, may be an important factor to consider here.

And, it probably makes sense to actually speak with them, and perhaps even involve them, before, during, and after you make such important decisions and plans.

Here’s another quote from The Art of Gathering:

       “This advice makes the pregame window about physical 

         setup rather than human initiation, about the 

         gathering space and not what it holds: people.”

What the gathering place holds: People.  Hmmm.


Preparing the Heirs for the Assets, Not the Other Way Around

One way to make sure that you’re preparing the people for their future roles in managing and stewarding the family’s wealth is to gather often and discuss these exact subjects, in regular family meetings.

These meetings don’t just happen by themselves, they need to be planned and coordinated, and you need to make sure that you make some progress towards the goal.

That goal is to make sure that everyone understands what will be expected of them, while also figuring out how they’re going to make decisions together when their turn comes.

Yes, the work the experts do to prepare the assets for the heirs is important, but it’s definitely not sufficient.

When Being Wealthy Doesn’t Equal Having Money

Things Aren’t Always as They Seem

There are all sorts of wealthy people in society, and you may think that you know how to tell them apart from “regular” folks.

And, on many occasions, you’d be completely wrong.

Not only that, you’re as likely to make errors in both directions: overestimating and underestimating.

Even within the same family, attitudes towards wealth, and how one goes about putting it on display or carefully concealing it, vary greatly. This happens between generations, and also within them.

Today we’ll be looking at this from a few different angles to see what we might learn from this nebulous area.

 

Immigrants and Natives to the Land of Wealth

One of the reasons that parents and their children often differ in their views on wealth is that for the “wealth creators’” generation, there’s often a process of “immigration” to the land of wealth.

I wrote about this in 2015 in Independently Wealthy vs INTERdependently Wealthy where I wrote about the book Strangers in Paradise, by Dr. Jim Grubman.

Grubman details that parents are often born into a lower class life, but then make the journey to a new land of wealth, much like immigrants who uproot their lives to move to another country.

The children of those immigrants, though, are born into the land of wealth, and therefore typically consider themselves natives.

How Parents Treat their Offspring

I’ve been involved in youth sports much of my life, and the way that parents who coach their children’s sports teams has always fascinated me.

The vast majority of the fathers I’ve witnessed who had their sons on the team they coached would either severely overestimate or underestimate their child’s ability.

For every coach who thought his son was the next Gretzky and always put him on the power play, there was another whose child actually was the best player on the team, but was constantly treated more harshly.

Few could find the proper balance.

And so it seems quite often with parents and their children when it comes to wealth.

 

Entitled Kids Showing Off on Social Media

Many of us are familiar with one extreme, where the entitled children of the uber-rich have huge social media followings where their excesses are on display for the world.

Like the sports example, there’s another side to this coin, and it doesn’t get any press coverage.

There are plenty of cases where families are quite wealthy, financially, by any measure, but where the offspring spend much of their lives without much access to any amount of liquid wealth that they can actually spend.

I was part of a group Zoom call recently where a colleague referred to this by quoting a typical sentence uttered by one of these wealthy family members as follows:

 

“Yes, we’re rich, that’s nice, thanks.

                           Now, can I also have some money?”

(Thanks, T.H.)

 

Testing the Limits of Patience

This phenomenon is present in many families, and sometimes it gets passed down from one generation to the next.

Other times, when one generation has been forced to wait decades to have any real access to the personal benefits of their family’s wealth, they might realize the negatives of this reality and adopt an attitude of sharing the wealth with their offspring at an earlier age .

Getting back to the quote from above, when I heard it, I was reminded of something I once heard from an Asian-American who wasn’t good at math, who lamented that it wasn’t easy for her to deal with that because it doesn’t fit society’s expectations.

Some professionals who work in the family wealth space refer to such offspring as “waiters”, and when they do, I’ll typically add “Yes, and they don’t work in a restaurant!”

 

Is There a Cure for This Phenomenon?

I touched on this in Great Expectations in Enterprising Families last summer. My view is that the rising generation have a right to know what they can expect, and that it must be a lot more specific than “someday this will all be yours”.

Many professionals who advise wealthy families convince the senior generation to maintain a tight grip on their wealth and happily provide them with horror stories to make them believe that grip is necessary and actually beneficial.

It’s also typically self-serving for those advisors.

All I know is that I have personally told my offspring that I won’t set things up in a way that’ll make them hope I hurry up and die so they can have some money.

 

Who Are the Decisions Really FOR?

This week we’re delving into something that will hopefully hit close to home for some readers because we’ll get into some deep areas that might feel uncomfortable for some.

Founders of successful businesses often come from humble beginnings, and thanks to some great achievements, they go on to build enterprises that far exceed their initial expectations.

Having played an instrumental role in creating what has now become a family enterprise, it’s natural for them to wish to continue to exert maximum influence on things, now and well into the future.

 

Figuring Out What Needs to Come Next

Hopefully at some point these leaders realize that it makes sense to shift their focus from continuing to build their enterprise, to pondering how they will create their legacy by passing down what they’ve worked so hard to create.

See: Is your Continuity Planning “PAL” in Danger? for more on the fact that more wealth won’t guarantee a legacy.

The idea for this post comes from an interaction I accidentally had with a Zoom meeting participant a few weeks ago, that was then followed by the retirement announcement of a relatively young hockey player who spent a few seasons with my local team.

I’ll try to weave those stories into some useful and entertaining prose.

 

Can’t I Decide How to Leave this to my Kids?

So picture a webinar where both advisors to family businesses and members of business families are all participating, and where a case study is being shared.

The case involves a business where some of the offspring work in the business, while others do not, which is quite common.

The facilitators ask for comments, and some advisor from Montreal (guess who!) mentions that the son who is running the company may not love the fact that his siblings who aren’t employed by the company are set to inherit a share equal to his.

Soon afterwards, another participant jumps in and says that he wants to reply to my comment, saying “Can’t I decide who I want to leave my business to?”

Well, since the situation did not allow for me to respond to the man, here we are. Perhaps he will read this.

 

The Short Answer or the Longer Answer

Of course the man can decide to do whatever he wishes. But just because you can do something, that doesn’t mean you should.

I’m flashing back to the story about the rich old lady who bequeathed everything to her cat, or was that an urban legend?

When you own something, a company, a property, a stock portfolio, you have the right to decide who will own it after you die. People sign wills every day that lay out such directives.

But we’re talking about a family business here. Yes, it is quite simple to divide the ownership of the company by the number of offspring and leave each an equal share.

Perhaps it is too simple. It is certainly worth a bit more thought and ample discussion with the intended inheritors.

 

Hanging Up His Skates for the Sake of his Family

A week or so after that interaction on Zoom, I learned of the premature retirement of a hockey player who was forced to hang up his skates before he turned 30.

There are only so many concussions a brain can take before they affect one’s quality of life permanently.

“I’d play until I died”, he said, “If it were up to me”.

However, considering his wife and young children, he made the only reasonable choice that he could, for their sake.

 

More Wisdom at Half the Age

The business owner was certainly much older than the hockey player, but who is wiser?

The hockey player’s children are way too young for him to truly consult about his decision.  The business owner’s offspring are certainly old enough to warrant not only consideration, but also consultation, about important matters.

 

Me vs. Us vs. Them

When thinking about this subject, I believe there’s a certain progression at play.

We begin by thinking about ourselves first, i.e. “me”.

As we mature and our family comes into being, we shift into much more of an “us” mentality.

At some point, we need to become conscious of our own mortality, and then we need to shift again, with the ultimate unselfish shift, to thinking about “them”, in the eventual absence of “me”.

 

Post Script

I connected with the man on LinkedIn.

An email exchange followed.

A Zoom call was scheduled.

He cancelled the night before…

To be continued?

Collaborating for Co-Creation as the Goal

Working with members of a family and trying to keep them engaged and aligned towards common goals can be both challenging and rewarding at the same time.

While many family situations can already seem complex on the surface, when you go just a little bit deeper, they often seem even more complicated.

It can take a lot of work, or labor, to make progress, and this week we’re going to look at a couple of take-offs from the “labor” aspect to help us see some ideas in new ways.

 

Things Don’t Just Happen by Themselves

Regular readers may have noticed that I like to harp on the fact that important things do not simply occur, they take effort and intention

Now, if you wanted to summarize “effort and intention” in one word, you could do worse than arriving at the word “work”.

We’re back in the land of “labor” again, which happens to be a key root word of the verb “collaborate”, where the “co” brings in the concept of working together with at least one other person.

When talking about the challenges of working with members of a family for the common good of that family, collaboration is typically at the top of my list of good ideas to help surmount such challenges.

Allow me to elaborate on this.

 

Wait, There’s “Labor” Again!

Yes, indeed, I snuck in another word with “labor” smack dab in the middle of it again; seems like work is never far away.

In fact, the similarities in the words “elaborate” and “collaborate” are what launched me into this blog idea in the first place. 

And, as has occurred in the past, a meditation recording is at the root of this idea.

I’m not sure if my hearing is going, but while listening to a session one morning, the speaker said “elaborate” and for some reason “collaborate” bounced around my head before I realized that that wasn’t the word I’d heard.

 

The Verb Versus the Adjective

Now my mind started jumping around (this is NOT how an ideal meditation session goes) and I ruminated about the verb elaborate (“elabo-RATE”) versus the adjective (“elabo-RUT”).

But it eventually calmed down again and I got to wondering how these words, elaborate and collaborate, might be useful in examining how families can do a better job of making sure that they’re engaged and aligned around how to best transition their business, or their wealth, from one generation to the next.

The fact that they both have “labor” as their root, and that I harp on the fact that this requires work, had me thinking I might be on to something.

 

What About the “E” Versus the “Co”

Let’s look at the difference the prefixes make, maybe that can give us some clues. 

Elaborate can be both a transitive or intransitive verb, and explaining that is beyond my pay grade and a perfect chance to remind readers that my elementary schooling was all in French.

But Merriam-Webster gives the following definitions:

  • To expand something in detail
  • To work out in detail
  • To produce by labor

I like the way that “work” and “labor” both show up, and I’ll come back to the inclusion of “expand” later too.

Collaborate, on the other hand, is all about:

  • To work jointly with others or together
  • To cooperate with….

 

Co-Creating, Elaborately

So because it is important that decisions affecting a family’s wealth transition be made while including those family members, a spirit of collaboration makes plenty of sense.

That is sometimes easier said than done, though. But how about adding in an element of elaboration to it?

Allow me to elaborate on that, so I can model this a bit.

If you ask for someone’s ideas and opinions, don’t just stop them or interrupt them after a few words.  Ask them to continue, to elaborate and expand for you, so that you can truly understand not just what they are saying, but also why. Hear them out.

 

Everyone’s Ideas    >    Anyone’s Ideas

When collaboration results in co-creation, you will discover that everyone’s ideas are better than anyone’s ideas.

And a key to doing that properly is to take the time to actually hear and understand those ideas, from everyone, by asking them to elaborate on them.

You may even discover some simple solutions, that aren’t necessarily very elaborate!