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5 Things you Need to Know: Family Meetings

This week we are back to the “5 Things you Need to Know” format, and our subject comes via an emailed question.

An overseas colleague and fellow Family Firm Institute member recently asked me for my thoughts around family meetings.

Rather that send her a lengthy reply, I told her I would write this blog in response, and I hope that many of you find it useful.

(Note: we are talking here about enterprising families having an occasional get-together with many family members, some of whom are involved in business matters, along with many who are not.)

 

  1. Involve Many People

The more people you can have involved in planning the meeting, the better. Input and ideas should be solicited from as many of the participants as possible beforehand, and it should never appear to be a one-person show.

Furthermore, on the “many people” front, the execution of the meeting(s) or day(s) should also feature as many different people in leadership roles as possilbe, and active involvement by everyone (as opposed to passive) is a must.

 

  1. Not Just Business

The business aspects of the meeting are naturally important, otherwise you likely wouldn’t go through the trouble of officially convening everyone in the first place. But please resist the temptation to make it “all business”.

If you want people to look forward to these events and attend them regularly (see No.3, below), they ought to have reasons to look forward to them.

A mix of business, fun as a large group, education, fun in smaller groups, downtime, physical activity, icebreakers, and just plain socializing are all worthwhile considerations for the schedule.

 

  1. Regular, Repeating Forum

An error that some families make is to try to have THE family meeting, once, to finally share a bunch of information that they have been keeping private for a long time. That is rarely the best course to pursue.

Rather, having regular meetings, on a repeating basis (annual, semi-annual, or other) is almost always a better idea. Those in attendance who are new to much of the content need time to absorb it, learn, and get up to speed before they can even conceive of the questions they’ll have.

The idea is to have a “forum”, or “an exchange of views” that brings out interaction and learning, which is better suited to a regular and repeating event, with an agenda that evolves over time.

 

  1. Past History and Future Outlook

Most family businesses considering holding this type of meeting have been around for a few decades.

So, sharing stories and facts about the history of the business, 10 and 20 and 30 years ago (or often much longer) can help give everyone in attendance a better appreciation of what came before, including major milestones, successes, and failures.

The trip through time should not necessarily end with today, though. Projecting another 10 or 20 years ahead, and getting various points of view on how family members see the business and their potential future involvement is also an opportunity that should not be missed.

 

  1. Process is More Important than Content

You may approach the idea of a family meeting as a chance to tell, teach, or share a number of important pieces of information with those members of the family who are less aware than others, in order to “level the playing field” and make everyone feel involved.

That is a noble idea, and at the same time, the temptation for too much content is always there. People who are thirsty for information are not always best served with a fire hose.

A habit of regular meetings, with the participation of many people, including interactivity, talking and listening, sharing of information to level of the information playing field, getting to know each other better, and of course having fun, are the ways to judge the success of family meetings.

The processes involved in all of this are what you need to get right, and the actual content is secondary.

When you get different people volunteering to serve on various committees to plan parts of the next meeting, you will know that you have launched a worthwhile venture that will stand the family in good stead for the long term.

Although you won’t likely get there quickly, slowly but surely it can be done. And you will all be glad you made the effort.

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Start cleaning up your M.E.S.S.

Procrastinating is a topic that gets lots of attention, because people blame their problems on an inability to get moving to get things done.

I get that it can be difficult to get things started, but instead of talking about procrastination, I prefer to think in terms of “inertia” and “momentum”.

Procrastination is more about “why”, whereas inertia and momentum are observable phenomena.

 

Physics Over Psychology

Maybe it’s because the “physics” side of things seems easier to grasp than the “psychology” of procrastination, which is about why we put things off.

Recently I was talking to a member of a family facing some complex inter-generation transition issues. It became clear that the enormity of what was in front of them was a significant stumbling block to mustering the courage to move forward.

It was while I was enumerating some of the ideas around ways to get started that I stumbled upon a mess.

Well, not a mess, but a M.E.S.S.

 

Start Moving 

The M in the mess is for Moving, as in “Start Moving”.

This is all about creating some action. Thinking and planning are great, but by themselves they are useless.

You need to introduce some action, even if you aren’t sure that you know the perfect first move. Sometimes you need to move backwards before going forward.

If you’ve ever had your car stuck in the snow, you know that rocking the car is the best way out, and that means back and forth, and once you’re unstuck, then you can figure out the best way to your destination.

 

Start Early

The E in the mess is for Early, as in “Start Early”.

I know that nobody has a rewind button, so we can’t actually start something yesterday, but if you could, that’s often what I would recommend. (see: There Is No “Rewind” Button)

Like any kind of planning that involves multiple generations in a family, getting an early start on things is usually a good idea.

How often do you hear about people who got into trouble and then said “if only we had started earlier”, compared to how seldom they lament starting too early?

 

Start Small

The first S in the mess is for Small, as in “Start Small”.

It often doesn’t take that big a move to undo the inertia that holds us back. We think in long term moves over months and years, but it is the small gestures that take only seconds or minutes that are the essence of those bigger moves.

If you want to run a marathon but have never even done a 5k, well maybe you need to be more realistic and start with an attainable goal.

If you haven’t had a productive conversation with your kids without it turning into a screaming match, then planning a weekend family retreat is probably not the step you should be aiming at.

 

Start Slowly

The second S in the mess is for Slowly, as in “Start Slowly”.

One of the problems with the “overcome procrastination” mindset is that once you get up the nerve to move, there is a tendency to want to go quickly.

That can backfire, because moving too quickly can result in injury, mistrust, and confusion.

When you decide to try to run 20k to train for that marathon right off the bat, you will probably get hurt. When you suddenly start talking about writing up a family constitution next weekend, after hardly allowing any family involvement in decisions, it will be met with skepticism and confusion.

 

Recognize that it’s YOUR Mess

If you continue to do nothing, you will have a mess to deal with and it will be YOUR mess. If you don’t accept responsibility for it, there won’t be much anyone else can do to help you.

 

Start cleaning up the M.E.S.S.

It’s your mess, so start cleaning it up. Get Moving, and do it as Early as possible. Start Small and Slowly. And keep going, so that you can gain momentum.

As you begin to move and clean it up, that movement and progress will attract others to join in and believe, and they will help you.

At the end of the day, getting the others involved in figuring things out is what you are really after, isn’t it?

 

Bottom Line: Start Moving, start Early, start Small, and start Slowly

 

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There Goes the Neighbourhood

This past week was a little out of the ordinary for me as I took a quick trip to my cottage to get away and clear my head. My intention was to rest and plan, but instead it turned out that I was pretty productive.

I’m not sure if that makes it a successful week then, but as someone pointed out to me, sometimes a change is as good as a rest.

Good Fences = Good Neighbours

One item on my agenda during my visit to the cottage was to deal with a part of our property on which there is a building that’s in need of a lot of work. After initially considering demolishing it or carting it away, we are looking at salvaging it instead.

A neighbour from two doors down asked if he could purchase it and fix it up to rent to his sister who’s moving to the area.

After discussing it with him, I went to see the local land surveyor who had drawn up the plans a few years ago.

Sidebar: As a fan of languages, I’ll point out that the French term for Land Surveyor is “Arpenteur Geomètre”. An “arpent” is an acre, so that makes the profession one of “Acreage Geometrist” as a rough translation.

Warring Neighbours

While making small talk with the man, he noted that he was being more selective in choosing the jobs he’s taking on at this stage of his career, sticking to the “easy ones”.

It turned out that the degree of difficulty he was referring to has zero to do with the complexity of the land, and everything to do with the people who own the land.

All this time I had imagined that the profession of land surveyor was all about surveying land (and acreage geometry), but as it turns out, most of the stress of the job comes from the people who own the land.

Working with drawings, driving stakes into the ground, using a transit (the scope instrument on a tripod), calculating the square footage, well, that’s the fun stuff. Standing between warring neighbours who are each arguing that the line should be “further over that way”, well, not so much.

Déjà Vu All Over Again

When my new friend related this aspect of the job, I had a bit of a flashback. A few years back when I first became a member of PPI (Purposeful Planning Institute), I joined one of their weekly thought leader calls.

I’m not 100% sure who the guest was that week, but I recall that they got their start advising families after being called in to mediate a number of sticky situations. I also recall the guest stating that he now tries to avoid those types of clients, preferring to work with good families, helping them become great.

Professional Stress

So if the land surveyor is stressed out by the fighting neighbours, and the family advisor is stressed out by family fighting, how bad must if be for the parties on the INSIDE?

What can be done to lower the level of conflict and to help everyone coexist? Neighbours are kind of “stuck” with each other, and families even more so. Their interdependence is pretty high.

Sounds like some good, clear rules and guidelines would be helpful. Once again, it comes back to governance. (See Governance Aaaah!)

Drawing the Boundaries

Right now I own the land that is being re-drawn, so it is the perfect time to figure out where the stakes will go into the ground to divide the property.

Things are calm, and I control both sides, so I can divide it as I wish, and will make it clear what I am offering to sell to my neighbour BEFORE we make the deal.

When you look at your family situation, and how things will shake out when the next generation will be in control, are all of the lines and boundaries clear and well understood?

Although we hope and would like to think that our kids will just get along, hope is not a strategy, and many families who ended up feuding used to think the same thing.

Bottom Line: Draw the lines in times of peace, don’t wait for the fighting to start, because then it is MUCH more difficult.

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Who Gets to Decide Who Gets to Decide?

The old “Hercules” animated TV show from my youth featured a centaur named Newt, who had the annoying habit of saying everything twice.

He even sang a song, “I’m glad, I’m glad, to have, to have, a friend, a friend, like Hercules, like Hercules”. The title of this post is NOT a homage to him.

It’s actually a question with two parts, which could be rephrased as “who gets to decide who the decision makers will be”. Saying it out loud with the proper inflection makes the point better than any way I could write it.

Last week in part 1 (Who Gets to Decide?), we talked about family systems and collective decision-making and how important leadership and alignment are to family governance.

Kicking it Up a Notch 

I promised a follow-up in which we looked at the question from a higher level. So here goes.

There are different levels of decisions that need to be made in any business. Even the lowest level employees have some decisions to make, and we need to train them and then hope that they make good decisions on day-to-day issues.

At higher levels, decisions like who to hire, or promote, come into play, and at even higher levels there are major purchases, and strategic business decisions that are made less frequently, but that have much more importance.

The Case in Family Businesses

As a family business grows and ages, different family members can become involved in business decisions, as their abilites and responsibilities grow.

But as long as we’re only looking at the decisions made in the business circle, this is all pretty mundane stuff.

Things get much more interesting in the ownership circle and in the family circle, and of course in the areas where they overlap.

Generational Groups

As a single founder gives way to a group of siblings, the dynamics change completely. When it gets to cousins and different branches, it gets even more hairy.

Day-to-Day operating decisions of the company are understandably usually left to those who manage the business. What about bigger questions?

Major Decisions

The stickiest decisions usually center around power and money, and when family members are working through these things, discussions can be heated.

Sometimes it helps to identify which group should be making the decision before going too far. If it is strictly an ownership issue, then the owners of the business or shared assets should be involved. If it is a family issue, then it’s the family.

Each group, or system, is comprised of certain people, and ideally each should have its own governance procedures and systems. Even when the two groups comprise exactly the same people, it’s important to consider this.

But governance doesn’t just fall from the sky.

Off the Shelf?

If you think you can just get your lawyer to draft something for you, well, good luck with that. The likelihood of it being adequate, fair, useable and acceptable to all is pretty low.

Governance systems need to be developed by the group of people they are going to serve in order to have the greatest chance of success.

The Business Circle

For the business, top management and or a board is usually sufficient, but even then, the more you get the people involved who are affected by the decisions, the more likely they will be followed.

The Ownership Circle

A shareholders agreement is a pretty standard name for the document that governs this circle, but the agreements themselves are never “standard”.

Getting everyone to hammer out a document that they all believe fairly represents their relationship is a huge task, but well worth the effort.

Ask any lawyer who drafts these how often they remain unsigned, though, and you will understand how difficult this can be.

The Family Circle

The long-term legacy of the business rests with the family more than the business. The family’s governance is unfortunately usually left for last.

Getting a bunch of people with the same last name together and having them figure this stuff out on their own will almost never happen.

Bringing in someone from the outside is the first step to making progress in this area. Do that and start early, small and slowly, and it can be done.

It takes one family member to drive this, along with an outside expert, and it can be done.

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Who Gets to Decide? (Part 1 of 2)

Last weekend at the Bowen Center spring conference there was plenty of food for thought, as expected, as we talked about family systems and how they also apply in other organisations.   (See A Systematic Business Family?)

There was also lots of fascinating scientific information presented about collective behaviour in the animal kingdom, and we learned some surprising things about how schools of fish and groups of locusts work together, subconsciously, to move about en masse.

Wait, am I saying that human families work the same way as fish and locusts do? Well, not exactly. But I’m not saying that we’re completely different either.

Family vs Other Groups

It’s also really interesting to think about how a family group is similar to and different from other types of human groups. Things we learn in the family realm are used in other circumstances, and things from other groups of people are used in our families.

There are more similarities than most of us realize and the same goes for animals and humans. We’re obviously the most advanced species, but our evolution surely followed many similar paths.

Leadership and Decision-Making

But how do groups of people and animals make their decisions, especially those that affect a group?

Leadership has been written about ad nauseum and there’s little doubt that it’s important to the success of groups. One thing that I’m starting to notice more is that the singular leader is becoming less of a phenomenon, and group leadership is getting trendier.

Authoritative and dictatorial styles are giving way to collaborative and consensual ways of leading. (See: Is Your Family “In Line”, or Aligned?) And what better area to look at these benefits than family business and intergenerational wealth transitions.

Family Business and the 3 Circles

The Three Circle Model has been around for over 3 decades now and while some find it too simplistic, I’m still a huge fan. (See: Three Circles + Seven Sectors = One A-Ha Moment )

Each of the circles, Family, Business, and Ownership, are separate, yet overlapping, systems. By “system” here, I am referring to a group of interrelated people.

In a first generation family business, there’s usually lots of overlap and having circles with the exact same group of people is a real possibility. Even then, it’s important to make family decisions as a family, for the family, and business decisions for the business, as a business.

If you’re lucky enough to transfer the business and wealth to subsequent generations, things invariably get more complex. The family will usually continue to grow, and the business may grow even faster, especially by adding non-family employees.

System = Group of Related People

But you still have three systems, or groups of related people. Some will have formal leadership positions, with titles and clear roles; others, well, not so much. But why not?

In order to make decisions, a business has a CEO and an organisation chart, and formal roles and procedures. Should it be the only circle like that?

If there’s an ownership group, or system, shouldn’t it, too, have a formal structure, along with decision-making bodies and procedures? A shareholders agreement should contain most of this information, but is it actually ever used, and do the owners know what’s in it?

Last, and certainly NOT least, is the family. Talk about a potentially thorny group, and likely the circle with the least formal structure and rules. But decisions still need to be made.

All in the Family

So if a business is run based on some sort of formalized hierarchy and procedures, and an ownership system is subject to a shareholders agreement, then at least some governance exists for these interrelated groups of people in the family business realm.

Is there a good reason why the Family should be the exception?

Question:

Do families really go through the trouble of working this stuff out, “just for family issues?”

Answer:

Only the ones that care about their legacy and want to make sure that all of their hard work doesn’t end up being for naught.

Bottom Line:

Family Business is complex stuff, and “formality is your friend” when you want to ensure that that the transition to the next generation will be successful, because decisions will always need to be made.

Next week in Part 2, we’ll look specifically at the Family circle and take this to another level, literally, with “Who Gets to Decide Who Gets to Decide?”

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A Systematic Business Family?

This week we’re going to venture into the area of Bowen Family Systems Theory (BFST) and look at how it might be useful in understanding business families and how they tick.

I’m currently at the Spring Conference of the Bowen Center for the Study of the Family. As a student of BFST and a practitioner who works with business families, it’s really interesting stuff, and there’s still another full day to go.

Bowen Theory is used in many fields, from therapy to coaching and family counselling to clergy working with their congregations. This year’s conference is geared to organisations, which naturally includes family businesses.

 

The BFST FamBiz Book

I initially learned that the “family is a system” in the first module of the Family Enterprise Advisor program I took in 2013. But we didn’t learn specifically about Bowen’s version at the time. It was later that Murray Bowen’s name came up for me, and I decided to investigate further.

My natural reaction was to search for a book on BFST and Family Business, and when I did, I couldn’t find the book I was hoping to find.

Later, I got this crazy idea that maybe I should write it. I have been immersing myself in this ever since, and I may just be crazy enough to try it.

 

BFST covers LOTS of ground

The possible applications of the theory are vast, and I thought I’d share a few of my notes, just from today, to give you a flavour. I normally don’t take lots of notes, but when you’re thinking about writing a book on something, well, notes could come in handy.

 

Anxiety

  • The way a family operates when things are calm is different from the way it functions when it’s tense.
  • Business families are involved in coordinated functioning towards attainment of goals, so decreasing anxiety in the system is very helpful.

 

Time Factors

  • Families are open to innovative solutions, BUT they want quick results
  • Real shifts don’t occur quickly
  • You can’t use BFST to “fix” someone

Unproductive Effort 

  • So much unproductive time and energy gets used up dealing with anxiety and the emotional issues that family members deal with.
  • Collective intelligence requires diversity of opinion.
  • Hierarchical leadership models are being replaced with distributive leadership.

 

So many “clients”

Family business advisors work with many different constituents:

  • Individual family members
  • Single generation groups
  • The entire family
  • Business system
  • Ownership system
  • Other advisors and consultants

There is a lot of work involved just in defining these groups to themselves and to each other, and then to work with them in a coordinated way.

 

Automatic Behaviour

So much of human behaviour, and therefore family behaviour, is automatic. We do so many things without really thinking about them.

People need to be aware of these things in order to learn that they can control them, and they need to practice doing that.

Awareness precedes the ability to exercise the free will required to change behaviour patterns.

 

More Questions than Answers

BFST doesn’t actually answer that many questions, but it sure can help ask a lot of the best ones. It’s a lens that Bowen practitioners can use to help see things differently, by looking at them from a new point of view.

It doesn’t rely on “cause and effect” thinking, it’s all about the relationships between the individuals, because it’s a “systems view”, where the way the parts are connected together is highlighted.

 

My BFST Book

One thing that’s becoming clear to me is that if (when?) I write a book on BFST, it will likely just be about how I use it, and will not attempt to be THE book on the subject.

A few respected colleagues have suggested that I actually write the book for a very small audience. This isn’t because there aren’t that many people who could benefit from it, but maybe because so many people could.

 

An Audience of One

I will likely write the book for an audience of one. Yes, just for me. But I will certainly share it too.

Do I mean that the act of writing can be selfish, and that some people write things for themselves, first and foremost? Well, I know a guy who started blogging like that, and now he just can’t stop.

 

 

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Is Your Family “In Line”, or Aligned?

The subject of family alignment is near and dear to my heart, and it has been for a few years now, probably since I first heard it.

Family alignment can mean different things to different people, but in the arenas of family business, family legacy and family wealth, it seems to be more and more common, and recognized as increasingly important.

The first time I tackled this subject, last year, I didn’t just write a blog on it, I created an entire “white paper”. However, since I kind of despise that term, I called mine a “Quick Start Guide”. Link here: Family Alignment – What it IS, Why you NEED it, How to Build It.

Part of what prompted this blog now is my newfound interest in the subject of family governance.  Well, it’s not really a newfound interest in that subject, it’s more of a newfound appreciation for the word governance, especially as it applies to families.

Back in January, my blog, “Family Governance, Aaaah!” recounted how I had come to terms with my revulsion of the “G-word”, thanks to repeated exposure to it from more and more respected places.

 

Collaboration and Leadership

Around the same time, I read the book “The Collaborative Leader”, and another light went on.  In that book, authors McDermott and Hall talk about two words that seem to have a symbiotic relationship (my words, not theirs).

They explained that the words “collaborative” and “leader” are actually very difficult to separate, because one is almost always used to describe the other. There is almost an implied nature of each within the other, so to speak. (Again, my clumsy words, not theirs)

To collaborate requires leadership, and to lead requires collaboration.

Hmmm, interesting, I thought to myself.  I wonder if I can think of other pairs of words like that.

 

Alignment and Governance

So naturally, my thoughts lead me to alignment and governance, admittedly, two much less common words.

My thinking goes like this.  If you want to align your family, it needs to be governable, and if you want to govern your family, it needs to be aligned.

Now if you really want to pick holes in my arguments you certainly can, and maybe not just small holes, but bear with me here.  And let’s agree to take a 2017 perspective, not one from 1987 or 1957.

Just as the definitions of collaboration and leadership have evolved, so have those for alignment and governance.

 

Getting Everyone in Line

Decades ago, having everyone in your family “in line” had a different meaning, likely much more autocratic and “top down”. I think we can all agree that that horse has left the barn.

In the same way that leaders today need to be collaborative and collaboration needs leadership, today’s governance structures exist best in situations where there is alignment.

It seems like this would be true in any situation, not just in the areas of family governance and family alignment.

 

Where do you Start?

The good news with these pairs of words is that in order to get moving, you can start working on whichever one resonates more.  If you want to help someone with their ability to lead, but they don’t really see themselves as leaders, you can work on their collaboration.  And vice versa.

If you have an aversion to family governance, you can work on family alignment, and for those who think family alignment is too “touchy feely”, maybe you can convince them to work on family governance.

 

Are You Feeling Lucky?

If you’re lucky, your family (or the families that you work with) will automatically have leaders who love to collaborate and people who “get” governance and are easily aligned.

Most people aren’t that lucky. Most people need to work at these things.

My favourite expression in this regard is “Things don’t just happen by themselves”.

Some of the current buzzwords that I hear and like on this subject are the following:

  •  Deliberate
  •  Intentional
  •  Purposeful

Please recall that your legacy comes from both people and assets, and your wealth and legacy won’t preserve themselves.

Bottom Line: You can work on better alignment through governance, or better governance through alignment, but you need to work on them. Intentionally.

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Putting Perspective into Perspective

We all see things from our own unique perspective, first and foremost. Our personal point of view serves as our default view of the world.

The ability to see things from another’s perspective is important, and not everyone is good at it, since this ventures into the area of empathy.

But whenever we force ourselves to look at things from a different perspective, it’s almost always enlightening. “Hmm, I never thought about it that way”.

 

Always Worthwhile

Getting help to look at things from a different point of view is especially useful for those who are successful.

Smart people who’ve had great success can sometimes start to believe that they know everything, and they frequently overestimate their abilities.

For these people, stopping themselves to take a second look can be especially beneficial. Do you know anyone like that?

If you live alone on an island, the perspective of other stakeholders is a moot point. But what about if you work in a business with other family members?

 

Insiders Vs. Outsiders

Working with business families, I am often forced to remind family members to think about how their ideas will impact the other people involved. Some do this easily, others require more practice.

The truth is, by the time I enter the picture, they’ve already made the most important decision.

Families who take the step of hiring an independent, unbiased, objective outsider to advise them have recognized that a new perspective is not only useful, but essential to successfully dealing with many important issues.

 

Definitions of Perspective

The more complex things are, the more important the independent ousider becomes. Here are a couple of definitions of perspective (emphasis added):

       – the state of one’s ideas, the facts known to one, etc., in having a meaningful interrelationship

       – the faculty of seeing all the relevant data in a meaningful relationship

Family business situations are full of complexity, with plenty of interrelated issues, stemming from the overlap of the family system, the business system, and the ownership system.

Add in everybody’s individual preferences and, well, good luck!

 

“Why the world NEEDS family business consultants”

I read a lot of stuff about family business, because I write a lot of stuff about family business. When I get something from the Family Business Consulting Group, I always read it.

This week, they sent out a piece about our profession, and why it is important. I knew that I needed to share it, and wondered about the best way to do so.

Since I was already planning this blog about “perspective”, I decided to incorporate it here.

Here’s an excerpted paragraph, and a link to the article. Please take the time to read the whole piece.

“An excellent family business consultant is probably the only advisor you’ll work with who considers how family,        management, ownership and governance impact each other on a day-to-day basis and is able to create a safe place to openly and creatively consider how these four necessary systems uniquely and powerfully affect your family and your enterprise.”

Link: Why the world NEEDS family business consultants

Relating to ALL the Pieces

A family business consultant (or family legacy advisor), will see how all the pieces of the puzzle fit together from a different perspective.

Seeing and understanding how the pieces relate, without being one of those pieces, is essential.

Anyone who is part of any of the systems simply cannot offer a fully objective viewpoint. And anyone trying to sell you other services will also be biased.

 

Defusing the Emotions

There are many emotions in family business because family is all about love and business is about money, and when you put them together, things get messy.

Some suggest removing emotions, but they might as well suggest not breathing; emotions will always exist.

This is where a trained outsider is most useful. Someone who can remain calm despite the anxiety in the room, and can slow things down, reminding everyone of the number of different perspectives in the room.

 

The View from 30,000 Feet

An independent outsider with no stake in the game can provide the proverbial 30,000-foot view, and offer a new perpsective on all the interrelated pieces of the puzzle.

That can make all the difference in creating a shared perspective that everyone can believe in.

Families who have successfully transitioned their business and wealth have rarely done so all by themselves.

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5 Things you Need to Know: Professionalizing your Family Business

Most family businesses start small and are run rather informally, usually with one or two people calling the shots. As the business grows, more people are brought in, and things can go along for years without much in the way of any formal procedures or written rules.

When one person can no longer stay on top of everything, their ability to delegate will largely determine how much the business can grow.

As the next generation joins the business, a certain level of informality may be part of the culture as well. That isn’t necessarily a bad thing, but behaving at the office as you do around the dinner table can have its drawbacks.

Many people recommend “professionalizing” your family business, and with good reason. But what exactly does that mean, and how do you do it?

I’m glad you asked…

1. Education

An obvious place to begin is with the education level of the next generation of family members entering the business.

If your children have the ability to go to college or university and get a degree, that’s a plus.

If they can get an advanced degree, that’s better.

If they can do that AND go and get a few years of work experience working for an unrelated business, that’s best.

If you are inclined to hire your kids right out of high school, I urge you to rethink that plan, as their future and that of the company will likely be limited by that choice.

If it’s “too late for that” in your family, there are plenty of education opportunities that last anywhere from a few days to a few months that are probably worth looking into.

It is never too late to learn new things and to upgrade one’s skills and abilities.

2. Hiring Non-Family Employees

The quickest way to professionalize any business is to hire people who are professional in the way they operate, hopefully also bringing along some work experience.

Aim to bring in outsiders who are MORE professional than the people you currently employ, treat them professionally, listen to their ideas, and learn from them.

You can only go so far without great non-family people on your team.

3. Outside Professionals

Every business needs and has outside professionals that they deal with, like accountants and lawyers. They often began with friends or whomever they could afford when starting out.

As the business grows, it is sometimes necessary to move up the ranks and switch to professionals who are at the level you require.

It is quite possible that your business has outgrown your professional advisors, and an upgrade will be needed. It isn’t always easy to cut these ties, but can be necessary.

4. The HR Department

During the growth of any business, the need to begin to treat Human Resources as its own department becomes key. The sooner you acknowledge this, the better.

Your business can only grow as quickly and as far as the ability of your people to grow along with it.

A real HR department will think twice (hopefully) before agreeing to blindly hire a family member and put them into a role for which they are ill suited and unqualified.

This issue has tripped up more family businesses than you can imagine, as mistakes like this cost not only the department where the person works, but can get everyone shaking their heads about what is important to the business.

The biggest part of this comes down to attitude. Have you realized how important humans are to your company, as a resource?

Finding, onboarding, and keeping great people is a must for just about every business. And so is having the right people filling all key roles.

5.   Board of Advisors

Last but certainly not least is the company’s board. I know that even fathoming a true Board of Directors is a complete non-starter for most small family businesses.

So why not start small and informally, with a board of advisors?

The outside perspective alone is worth it, even if it is only to help you look at your own family members more objectively.

Bringing in independent advisors (preferably NOT your current lawyer and accountant) can be the single biggest step to professionalizing your family business. Just ask anyone who has done it.

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Is your Continuity Planning “PAL” in Danger?

This past week on Tuesday, at Noon Eastern time, as I quite often do, I participated in the weekly teleconference of the Purposeful Planning Institute. https://purposefulplanninginstitute.com

I’ve been a member of PPI since 2014 and will be attending their annual Rendez-Vous in July in Denver for the fourth straight time. If I could only attend one event each year, this would easily be the one. http://purposefulplanninginstitute.com/rendezvous2017/

 

Planning Fatigue

This week’s call was about “planning fatigue” and dealt with ideas professional advisors could use to overcome situations in which client families don’t move forward on transition plans as expected, hoped, and required.

Because the entire process is long and complex, clients sometimes lose sight of why they are doing all this work and things can begin to slide, and sometimes never get completed as intended. This can be a huge issue, and PPI is the only organization I know of that actually talks openly about this kind of stuff.

Every Tuesday PPI holds a teleconference, with a host and an invited guest expert. This week’s featured Timothy J. Belber, PPI’s Dean of Fusion, with guest Kristin Keffeler. They’ve collaborated on client family files in the past, which was evident, as they gave plenty of real life examples of situations they faced together.

These PPI weekly calls are all recorded and archived, so even when members can’t make it live, we can always listen to the recording later.

 

Three Major Classes of Danger

While discussing the problems of not completing a family’s planning work, Belber mentioned the three major classes of dangers that exist when things are not carried out to the end.

“Hmmm”, my ears perked up, “I wonder what these three classes are!”

These three main danger areas, can actually serve as the three major headings that we should be thinking about at every step along the way: People, Assets, and Legacy.

 

Checklist?

I wrote them down, and immediately wondered if everything could all really be boiled down to those 3 simple elements. The fact that I am writing a blog about it should give you my answer.

In fact, as someone who thinks in lists of 3, I will now incorporate these into an easy-to-recall checklist, but not necessarily just while thinking of “dangers” per se, but as important elements to always keep in mind.

I expect them to become a good PAL of mine and I don’t like it when any PAL of mine is in danger.

 

People

This one should be front and center, but often isn’t. When we are working with a family to make decisions on “what to do” in an estate plan, tax plan, business plan, or more generally “continuity plan”, I always think about how every decision will affect the people.

(See: https://stevelegler.com/2015/04/12/successful-planning-who-should-be-involved)

Many professionals in this space are specialists in protecting the assets, and they do a great job, but sometimes the people are given secondary consideration (if any).

It should go without saying that when those people for whom we are making the plan are adults, it is wise to seek their input at some point. This is heresy to some, I know, but it is 2017, not 1977.

 

Assets

This element usually doesn’t get forgotten, mostly because it is the domain of so many professionals in the family’s sphere.

I won’t give this one too much space, save to remind you of one of my favourite expressions on this point.

“We spend too much time and effort preparing the assets for the heirs, and not nearly enough on preparing the heirs for the assets.

 

Legacy

This one is a bit trickier because it’s less tangible, but Belber also mentioned his way of thinking about this too, and I want to share it here as well.

He noted that your legacy is what others think, feel, and say about you.

If we try to tie a Legacy to People and Assets, exactly HOW you leave those Assets to those People should be pretty important, shouldn’t it?

If you worry too much about either the Assets or the People, at the expense of the other, your Legacy will surely suffer.

 

Conclusion

Maybe it should be People + Assets = Legacy?

Either way, I have a new PAL. He can be yours too.

 

  

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