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Transférer son entreprise et son patrimoine ensemble?

Le transfert d’une compagnie d’une génération d’une famille à la suivante est un projet qui fait peur à beaucoup de gens, tant ceux qui font partie de ces familles que les professionnels qui les aident.

Il y a plusieurs choses qui peuvent compliquer la tâche des familles dans ce genre de transfert, surtout puisqu’il consiste en réalité de plusieurs transferts, et que ces transferts varient en ce qui concerne leur début, leur fin, leur durée, et le fait qu’ils peuvent se chevaucher dans le temps ou non.

Je parle ici non seulement de qui fait quoi, mais aussi de qui en profite, quand, et comment. En plus, qui décide, qui contrôle, qui a le droit de faire quoi, qui est responsable, qui doit être consulté avant, qui doit être avisé après, etc.

En grande ligne, il y a le transfert des actions d’une entreprise (en anglais, ownership), et le tranfert de la gérance de la compagnie (management). Plus l’entreprise est petite, plus il est probable que le nombre de personnes impliquées est petit, et plus l’entreprise est grande, plus il y a de monde, ce qui augmente la complexité.

Pour chacune de ces questions, il existe une variété presque infinie de possibilités, même s’il y a des “règles générales” qu’on peut suivre.

Aux États-Unis, la population est assez vaste et la valeur monétaire des entreprises familiales est assez grande qu’il existe un grand nombre de spécialistes qui sont disponibles pour servir ces familles et compagnies, et les avocats et fiscalistes sont très créatifs et les aident avec diverses façons de minimiser leurs impôts en même temps.

L’influence américaine se fait sentir également au Canada anglais, malgré que nous avons (heureusement) moins d’avocats. Au Québec, l’influence se fait sentir beaucoup moins.

De mon point de vue, le Québec est une société distincte à bien des égards, incluant évidemment la langue et la culture, mais aussi par rapport aux façons dont les familles traitent leur héritage d’une génération à l’autre.

Ici, quand on parle de la relève, c’est souvent vu comme une question de ressources humaines de la société, plutôt qu’une question de s’assurer qu’un membre de la famille soit intéressé et capable de remplacer le parent entrepreneur.

Comme exemple, quand j’ai appris que Groupe Relève Québec existait, je me suis intéressé instantanément, et j’étais très surpris d’apprendre que les gens qui se spécialisent dans les entreprises familiales sont qu’une petite minorité du groupe.

Il y a aussi le cas de CAFÉ, (Canadian Association of Family Entreprise) qui existe depuis plus d’une trentaine d’années, mais que depuis bien des années n’a aucune présence au Québec.

Nous avons pourtant beaucoup d’entrepreneurs, et beaucoup de compagnies familiales. C’est peut-être grâce au Groupement des Chefs d’Entreprises et son succès qu’il n’y a plus de place pour CAFÉ?

Il y a déjà eu des efforts pour créer des associations semblable à CAFÉ pour les Québecois, mais leur succès a été questionable. Je sais que HEC et McGill avaient eu le Centre International pour les Familles en Affaires (CIFA), mais ma recherche sur Google me revient avec des liens qui datent des années 2010 à 2012.

Je vois aussi des mentions pour Institut Québecois pour les Familles en Affaires, incluant une nouvelle récente disant que la famille Molson a contribué une somme d’argent pour son soutient.

Si je reviens au titre de ce blogue, je parlais de transfert d’entreprise et de patrimoine, en même temps. Ceci ne veut pas dire que je crois que garder la compagnie dans la famille est toujours la meilleure solution, parce que c’est loin d’être la réalité.

Ce que je préconise, c’est que les propriétaires d’entreprises fassent une bonne analyse et une longue réflection pour voir comment ils vont transférer non seulement la compagnie qu’ils ont créée, mais aussi la valeur de cette entreprise en tant que patrimoine familial pour la génération suivante, si possible ensemble.

Pour moi, il me semble qu’ailleurs c’est beaucoup plus commun et c’est une plus grande priorité qu’ici, et j’aimerais faire partie de l’amélioration chez nous.

 

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Successful Planning: Who Should Be Involved?

“If you fail to plan, you are planning to fail!”

Benjamin Franklin

In no way am I claiming to be smarter than Ben Franklin, but I will take his quote one step further. Franklin was right that planning is very important, but more needs to be added. After all, he died almost 225 years ago.

In the realm of multi-generational family planning, for business families or families of even moderate wealth, it is very important to make sure that you have the right people at the table when it comes time to make the plans.

Let’s look at another great quote (author unknown) that is also very profound. I will give you the backstory in a second.

“Plans that are about us, but don’t include us, are not for us”.

This is a quote that I got from Matt Wesley, a man who I consider to be one of the gurus in helping families with the dynamics of their legacy planning work.

I first heard Matt mention this quote a few months ago during a teleconference presentation for the Purposeful Planning Institute. Then, a few weeks ago while he was co-presenting on another PPI call, an audience member quoted it back to him during the Q & A session.

He thanked the participant and then added a bit more context for those who had missed the original citation. It comes from New Orleans in 2005, post Katrina.

He told us that he got the quote from the work of Margaret Wheatley, who was examining the disaster of Hurricane Katrina. Actually, it was a series of disasters, starting with the hurricane, but then also the fallout from the government’s response, which for many people ended up making things worse instead of better.

So where did Wheatley get the quote? It was spray-painted on the outside of one of the flood-ravaged houses in New Orleans. The disaster of the government response stemmed largely from the fact that they were dictating what would be done, without consulting the people for whom it was to be done.

Anyone can make plans, but you will only know how good your plans are once you get to the implementation stage. If things fall apart then, it may have been due to poor implementation, but then, shouldn’t the implementation have been part of the planning too?

If you are planning how you will help people after a flood, you might want to ask them what they need.

If you are planning what assets you are going to leave to your children, and how they are supposed to work together to manage those assets, you just may want to get them involved during the planning.

Here are some common planning approaches:

  1. Parents and advisors make the plans, children find out after death.

Not great, usually pretty bad, family harmony is an afterthought, plenty of disappointment and lack of preparedness to go around.

  1. Parents and advisors make the plans, and inform the children of the plans as a “fait accompli”.

A little bit better, but only slightly. If the siblings get along alright, hopefully they can work through the details and still want to get together as one big happy family over the holidays every year.

  1. Parents and children (actually former children, now adults!) work together on plans, and decisions are made in the best interests of the entire family. Once they know what they want to accomplish, they THEN engage the advisors to fine-tune the details of HOW they will write it up.

Actually, I said that these were common approaches. The last one is easily the best, but it is not yet common enough.

Hopefully, we are getting closer to the point where parents are satisfied that they have done a good enough job as parents to allow their offspring to have some say in their destiny.

The old “it’s MY money, so I will decide what I am going to do with it” seems so 20th century to me.

 

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Over-Parenting: Worse than Neglect?

My wife and I were recently discussing a child who plays on a sports team with one of our kids, and at one point I uttered a statement that actually stopped me in my tracks.

The child in question seems to be very immature for their age, especially when it comes to social interaction.

“Terry always acts like such a baby, more like a first grader than a “X”th grader”, my child would say. My wife’s point of view was that the kid’s parents are to blame for this situation.

Our discussion then turned to the fact that the child’s parents are divorced, and so both parents are likely “over-parenting” the kid, to the child’s detriment. That’s when I said,“the kid would be better off if the parents chose to neglect them instead”.

Whoa! Really? Did I just say that?

Did I mean what I said, and could I back it up? Well here is to trying to explain it, at the very least.

What I see with this child, and others in similar situations, is that their parents have always been there to do everything for them, and as a result, the children are incapable of having any kind of a normal relationship with others.

One of the other parents from the team is a second grade teacher, and she said that she witnesses this quite often. Parents are trying so hard to be good parents, and doing so much for their children to “help” them, that the kids soon become unable to do anything for themselves.

We can all probably name a few people that we know who are able to function well in everyday life, and who are what one would call “well adjusted” and self-aware.

We all know people who live more at the other end of the spectrum, people who cannot figure anything out for themselves, cannot make a decision without lots of external input, and go from one unsuccessful life experience to the next.

What do the people in the first group have in common, and what do the people in the second group have in common? What is different about the two groups?

To me, the first group exhibits a certain degree of confidence, independence, self-esteem, and interpersonal ability to get along in life.

The second group is easily flustered, lacks self-esteem, has difficulty in relationships, and is generally unhappy with their lot in life.

Could the parenting that they experienced in their childhood have anything to do with who ends up in which category? (That was a rhetorical question!)

It is very easy to get into the habit of doing things for our kids. This reminds me of times when my kids were much younger and they wanted to “help” me do something, and when pressed for time I would reply, “no thanks, I’ll do it myself” because doing it with their help would actually take longer.

But what about my comment that neglect would be better for the kid. Well, if I could only choose between the two extremes of neglect and severe over-parenting, it would be a tough choice, but neglect might just win out.

Fortunately, nobody needs to make such a stark choice for their children. The key, like with so many things, is balance.

If you let your kids fend for themselves a bit more, but remain there behind the scenes “just in case”, you are probably doing them a favour in the long run.

Learning to let go is not necessarily easy, but it can be learned. We have choices to make, and one of the first ones is to choose to detach ourselves and let our children off of the leash, to go and run around and get dirty and maybe even get hurt.

You will most likely die before your children do. The time to begin to ensure that they will be self-reliant is now.

 

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What Is a Family Harmony “Breakthrough”?

Because I like to consider myself somewhat of a communications specialist, I attach a great deal of importance to my choice of words, as I always want to be as clear as possible about everything I say and write.

There is already plenty of miscommunication and misunderstanding going on out there, I certainly don’t want to add to it. I much prefer to help to try to clean things up instead.

At the behest of my business coach, Melissa, who has been working with me for almost a year now, I recently added a simplified service offering on my website, which we dubbed the “Family Harmony Breakthrough Package”. I have to admit that the word “breakthrough” took a while to grow on me, but now I love it.

Let me explain it a bit, in the hopes that its full meaning does not get lost in the “marketing-ness” of the way it may sound to some. I am all about the family harmony part, it was Melissa who came up with the “breakthrough package” part.

I won’t explain what family harmony is, but the other two words are something I would like to clarify. Let’s start with “package”.

In the field of family business advising, the offer the consultant makes to the family can never be easily and clearly defined to everyone’s satisfaction, and this contributes to the hesitancy that many families already have when it comes to bringing in an “outsider” to help them.

So, inspired by some coaches who offer a “six-month package”, or a “nine-month package”, I have now launched what I call the Family Harmony Breakthrough Package, where the term “package” is designed mostly to set out the stages and the boundaries of what is involved.

The package has pre-defined steps, has a clear starting point and end point, and a deliverable. The timeframe can vary due to complexity and logistics, but 2-3 months is about average. When a family signs on, they know in advance what to expect in terms of the process.

https://stevelegler.com/family-harmony-breakthrough-package/

I believe in the adage that it is important to under promise and over deliver, and that is the main reason that I hesitated to use the word “breakthrough” in the name of the package, but as I stated earlier, it grew on me. Let me tell you why.

Many families, if not most families, coexist in a state that I like to call “okay”. Everything is “okay”, pretty much. You may know this state by another familiar term, “fine”. Everything is just fine.

Okay and fine are a good place to be, right? Well yes, but…

A typical business family has a large number of moving parts, and an even greater number of relationships. On a day-to-day or week-to-week basis, “okay” and “fine” are much better than “crappy” and “lousy”.

One of the advantages that family businesses have over others is their long-term view, as the business is set up to provide for the needs of the family over future generations. Thinking long term, “okay” and “fine” just won’t cut it.

The key people will grow into new roles, the founders will age and exit, and the people involved will see their relationships change too, and not always for the better.

The breakthrough comes when some time and effort is put into looking at, thinking about, and planning where these relationships are now, and talking about how the people are going to work together in the future. There is a whole heckuva lot of inertia to overcome, and few families will do this on their own, without an independent outside expert to guide them.

The time to act is when things are going well. On my business card, I say that I am a “facilitator, coach, and mediator”. It is much more pleasant to work the first two roles, and less fun to mediate a dispute.

The back of my card has my tagline: Helping business families create the harmony they need, to support the legacy they want. Is your family ready for a breakthrough?

 

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When Did You Spring Forward?

The ritual takes place twice a year, and people handle it in different ways. For some, it is no big deal, for others it is a source of problems, from disturbed sleep patterns to missed appointments.

I am talking about changing our clocks because of the observance of Daylight Savings Time throughout most of North America and many other parts of the world.

After moving our clocks back an hour last November, two weeks ago it was time for everyone to “Spring Forward” an hour, in order to “save” an hour of daylight. The whole notion of “saving” daylight is ridiculous or course; all we are doing is making the daylight more convenient for most people.

As someone who enjoys observing people, I find it instructive to look at how different people handle some of these mundane situations, because you can often gather a pretty accurate picture of someone from how they handle relatively insignificant events.

Ever since I have known my wife, she has complained about having to change the clocks twice a year, while pointing out that the practice was started to help farmers, at a time in our history when they made up a far larger percentage of the population.

While she does like to complain about this twice a year, it really has not ever negatively affected her, but she just dislikes the inconvenience and the couple of days it takes to readjust her body clock.

Personally, I find it hard to relate to the people who are readjusting their watches and clocks on Sunday, ex post facto. Wow, did they really NOT see it coming?

OK, so maybe I am a bit extreme in my modus operandi; I start changing the clocks around the house right after supper on Saturday, along with my car and my watch. That way, I actually start to make my body clock adjustments in advance.

I do a similar “purposefully fooling myself” trick when I fly to a different time zone. As soon as I board the plane and get seated, I change my watch to the time of my destination city, and I begin to slowly adjust to my new reality.

When you know that something is going to change, why would you not begin to make the adjustments in advance if you could? That is a rhetorical question, but what the heck am I really getting at in this blog that is usually (at least tangentially) related to family business?

Well, if you know that some day you are going to retire and that you expect your children to be running the company, would it not make sense to start to act as if you realize that the day will arrive at some point? Maybe let them have an opportunity to make some decisions, or run a department or division without looking over their shoulders too much?

Also, if you know that you will someday actually retire to do other things, have you started to try to find out what those other things are going to be, so that you can prepare them and maybe actually find out what you are looking forward to doing?

If you do it right, you could actually accomplish both of these things simultaneously. Give your offspring (notice I decided against using the term “children” again, since they really are more like “former children” once they are adults) an opportunity to take on more responsibility AND also take some time away to work on figuring out what you will be retiring to.

You will help the rising generation to “Spring Forward” into the roles that they have likely longed for, and you will “Spring Toward” the lifestyle that you have been working so hard to obtain. Sounds like the ultimate Win/Win situation to me.

One more thing: When did you really “spring forward” in life, how old were you? How old are your offspring now?

 

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There’s Only So Much I Can Do

A few years ago, I adopted a new “mantra”, or “credo”, after a particularly stressful few months of my life. “There’s only so much you can do”, is how it went.

It is not that I had been a perfectionist beforehand or anything, but I was working pretty hard on a project and I became frustrated that it was not being as well received by everyone as I had hoped, and I became sensitive to some criticism of what I was doing.

Then one day it dawned on me that I was never going to make everyone happy, no matter how hard I tried, even if I bent over backwards. I resigned myself to doing my best, being satisfied with the effort and the result, and thinking, “to hell with it if some people aren’t happy”.

I actually began to frequently repeat the phrase around the house, so much so that my wife actually printed it out and framed it for me to put it up in my office, where I continue to see it daily.

If you have been paying close attention though, you will have noted a slight difference between that mantra and the title of this blog post. I still like the mantra as it is, but I have also come to a major realisation recently, which had me switch out the word “you” and bring in the word “I”.

Now I want to be clear about the reason for the change in words, and also to say that one saying is not necessarily “better” than the other, but that they are slightly different.

My wife might cynically say to me that my preference for the first person pronoun stems from the fact that I always act as if “it’s all about me”, but I would beg to differ.

Instead, I am looking at it more from the “personal responsibility” perspective. When we see the pronoun “you”, it looks like a second person pronoun, but it isn’t really, in this case, is it?

If I were to say, “there is only so much you can do” to a particular person, in response to a particular situation, then yes, it clearly is a second person pronoun.

But if I say it in the usual context in which I made it my mantra, it is really saying that there is a limit to what “any person” can do, which really makes it a third person pronoun, and what does that really mean?

To me, it is kind of like giving up, and not taking responsibility for MY part in it. During my coaching training, the course leaders often used a technique to drive this point home when a participant would use the pronoun “you” as I way to escape responsibility.

For example, someone would say, “you know, it’s really difficult, because you feel silly, you feel like you might be misunderstood, etc.” The instructor would feign confusion, and say “excuse me, who? Who is ‘you’? Do you mean ‘I’?”

If the person is speaking about himself, then the correct word is “I”, first person. But what is the reason for not saying “I”? In these cases, I think that the person is either trying to de-personalize it, and/or make it seem that that is the reaction that “any normal person” would have.

For me, saying that there is only so much “I can do”, is starting to feel more natural. It can be difficult to get someone to be more personally responsible for their actions, but like any habit, practice, more practice, and even more practice is required.

Once you have that down pat, there are surely others things you can work on too. Here is a suggestion: get rid of the word “but”, and substitute the word “and” in its place.

You may be surprised how much negativity you can get rid of with that simple change. And there is only so much I can do to make you try it!

 

 

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Mélanger les cartes d’affaires

Ayant récemment fait traduire mon livre en français, j’ai réalisé que mes cartes d’affaires anglaises seraient probablement mal perçues en compagnie de cette version de mon livre.

Un “business card” peut aller avec un “book”. Mais ça prend une “carte d’affaires” pour aller avec un “livre”. J’avais donc une autre traduction à faire. Et par la suite, ça sera la traduction du site web. En effet, des sites webs, en commençant avec le site spécifique au livre et finalement le site principal.

En traduisant la carte, j’ai fait une réflexion sur les différentes cartes d’affaires que j’ai eu au courant de ma carrière. Wow, de ma première, (Steve Legler Jr., B.Com., Marketing Manager, Tri-Steel Industries Inc.) jusqu’à ma plus récente, (Steve Legler, MBA, CFA, FEA, Conseiller, PME Familiales), j’en ai probablement eu une douzaine, sinon plus.

Il y a plusieurs décisions à prendre quand vient le temps de se faire une carte professionelle, surtout pour les gens qui travaillent à leur compte. Si tu travailles pour une compagnie, tes options seront sûrement limitées aux versions “standards” de la compagnie. Mais pour un “solopreneur”, c’est illimité.

Cette fois-ci, étant donné qu’il s’agisssait d’une simple traduction, il y avait moins de décisions, puisque les choix du logo, du style, des titres, etc. avait déjà été fait quand j’avais fait faire mes “business cards”.

Mais même à ça, il y avait assez de complexité. Comment dire “facilitator” en français? J’ai opté pour “animateur”, mais j’aurais pu aller avec facilitateur aussi.

Même mon titre principal de “Family Business Advisor” n’était pas nécessairement évident. J’ai finalement décidé que Conseiller PME familiales était la meilleure façon de dire ce que je voulais dire.

Les cartes d’affaires sont peut-être moins importantes ces temps-ci, étant donné que nos communications sont surtout électroniques et qu’une fois que j’ai ton numéro de téléphone dans mon iPhone et ton adresse courriel dans mon Outlook, j’ai plus ou moins tout ce qu’il me faut pour te contacter. C’est rendu presque plus important d’avoir une bonne “signature” sur ses courriels.

Dans certains pays, notamment au Japon, le rituel d’échange de cartes d’affaires est pris très au sérieux. Si un japonais vous donne sa carte et tu le mets tout de suite dans ta poche sans l’avoir étudiée comme il faut, il parait que c’est l’équivalent de lui sacrer une claque sur la gueule.

J’ai récemment fait un échange de cartes avec plusieurs personnes en même temps, autour d’une table, et j’avais ramassé les 4-5 cartes et les ai mises dans ma poche sans trop regarder. Plus tard, en les regardant comme il faut, je me suis rendu compte qu’un des monsieurs m’avait donné la carte de son assistante par erreur.

Quand je l’ai rencontré le lendemain, je lui ai signalé ce “mélange des cartes” et il s’est excusé et m’a donné une de ses cartes personnelles. Mais c’est là que je lui ai expliqué que si nous étions au Japon, j’aurais assurément remarqué l’erreur immédiatement. À moins que j’aurais voulu lui donner une bonne claque, bien entendu.

Mais une carte d’affaires a le potentiel de laisser une bonne ou une mauvaise impression sur quelqu’un. Et puisque nous donnons souvent notre carte lors d’une des premières rencontres avec quelqu’un, il peut s’agir d’une bonne ou mauvaise première impression.

Si vous êtes comme moi, quand vous recevez une carte “cheap” et mal pensée, vous commencez parfois à avoir des sérieux doutes sur le professionalisme de la personne. Ça fait partie de notre “branding”, quand même.

Quand je vous donne ma carte d’affaires, je le fais avec fierté, parce qu’elle n’est pas “cheap”, et je sais qu’elle est bien pensée. Vous pourrez la mettre immédiatement dans votre poche si vous voulez, et je ne serai pas offusqué pour autant. Et je ne vous donnerai jamais la carte de mon assistante par erreur, parce que je n’ai pas d’assistante!

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I Just Sold My Business for $50 Million. Now What?

This kind of situation happens in real life, and it certainly causes people to be seen differently by others, but that is only the beginning of how their lives will change. Most people will be envious of anyone in this position, but that doesn’t mean that they have necessarily solved all of their problems either.

So what does change, and what problems are you now faced with if you are the person at the center of this?

I will focus my comments on a “plain vanilla” family business situation for simplicity’s sake, but keep in mind that things can be much more complicated these days, with complex family structures that sometimes seem to be the norm with reconstituted families.

Let’s look at just three aspects of the new reality this person would face in the months and years after the business sale: the money, the person, and the family. Let’s call the person “Pat” for the sake of gender neutrality.

The Money

So Pat was recently running a business worth $50 million, and was probably doing a pretty good job, seeing as a company that size doesn’t typically run by itself. Good job, Pat. In comparison, running a $50 million pile of cash should be a walk in the park, right?

Well maybe yes, but not necessarily. The company surely had lots of qualified people looking after different departments. Money is certainly more straightforward, but it doesn’t manage itself either.

Pat may be surprised by how many new “friends” show up with great opportunities to invest part of that money, as well as how many experts materialize all of a sudden, each insisting that they are the best person for Pat’s particular situation.

Take your time, Pat, there is no big rush. Yes, you probably want to get your capital working for you, but taking a few weeks or months to figure out just how you want to manage your wealth is highly recommended. If any potential advisor tries to rush you, that is likely a sign that they are more interested in how your wealth can help them, and not you.

The Person

So Pat, what do you want to do? Travel, play golf, great. But what else?

Is there enough there to keep you challenged? People who work for someone else are often satisfied to no longer have to work for some A-Hole boss after they retire, and they can often be found on the golf course.

But Pat, you built a company, and now you sold it. I sure hope you already have some ideas of what you want to do with your time, some kind of projects, to replace the “work” part of your life.

Take a break, recharge, yes, great. But then what? I hope you will try a few new things and keep going until you find something that keeps the drive alive. Or better yet, you can find a few different “somethings”. Hint: Try volunteering. Plenty of good causes need good help.

The Family

Now this could be the toughest one of all.

Assuming that you have children, some of whom may have worked in the business, things have now changed for them too. Depending on whether or not they saw this coming, whether or not they remain with the company for some period, and whether or not they have marketable skills to find a similar job elsewhere, this is not something to dismiss lightly.

Please take the opportunity to share your thoughts with each of your children, individually and together, on how this sale changes things for them too. An attitude of “well, that’s their problem” is not very helpful.

If you have spent most of your time focussing on the business at the expense of spending time being a parent, maybe you can start to make up for that now?

When I wrote “share your thoughts” with your family, I wasn’t talking about a one-time event here, but regular contact. Get to know them each a bit better, treat them fairly, be a good parent, and help each of them become the best person they can be. Now there is a worthwhile project.

 

Steve Legler “gets” business families.
 
He understands the issues that families face, as well as how each family member sees things from their own viewpoint.
 
He specializes in helping business families navigate the difficult areas where the family and the business overlap, by listening to each person’s concerns and ideas.  He then helps the family work together to bridge gaps by building common goals, based on their shared values and vision.
 
His background in family business, his experience running his own family office, along with his education and training in coaching, facilitation, and mediation, make him uniquely suited to the role of advising business families and families of wealth.
 
He is the author of Shift your Family Business (2014), he received his MBA from the Richard  Ivey School of Business (UWO, 1991), is a CFA Charterholder (CFA Institute, 2002), a Family Enterprise Advisor (IFEA 2014), and has received the ACFBA and CFWA accreditations (Family Firm Institute 2014-2015).
 
He prides himself on his ability to help families create the harmony they need to support the legacy they want. To learn how, start by signing up for his monthly newsletter and weekly blogs here.
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Transition with Purpose

This past week I was in Toronto for a few days, where in addition to meeting with various interesting people, I also attended an event put on by IFEA (Institute of Family Enterprise Advisors – ifea.ca) where I gained some insights into a subject that is beginning to affect workplaces and families everywhere.

The presentation was entitled “The Multigenerational Complexities Business Family Succession” which sounded like it was going to be right up my alley, but made me almost feel like I would not be learn much of anything new. I am happy to report that I was wrong on both counts.

The presenter, Lisa Taylor, founder of The Challenge Factory, started off by asking a few questions about retirement age and life expectancy, and as soon as I heard the first few answers, I had a good idea of where this talk was going. But I had no idea how eye-opening it would be.

Let me summarize a bit by saying that when 65 became the “official” retirement age, life expectancy was 62. The fact that many people continue to operate from a paradigm of “65 = retirement” is pretty befuddling in that light.

What ensued was an in-depth discussion about how increased (and increasing) life expectancy has affected workforces everywhere, as many people who are approaching 65 are not interested in retiring, and instead wish to continue working, for a variety of reasons.

Taylor used an analogy of riding up an escalator, and looking up ahead of you, when all of a sudden the person nearing the top decides not to get off, but instead takes a step backwards in order to keep the ride going just a bit longer. (You can watch a brief video of Taylor talking about the escalator analogy on her website at challengefactory.ca)

It does not take long for that one person at the top of the escalator, taking steps backwards, to begin to have adverse and dangerous effects on everyone else trying to ride to the top. This occurs in family businesses all the time, but also in many other kinds of workplaces.

In fact, the talk did not focus much on family business at all, but was actually quite interesting from a societal perspective, as longer life expectancy has created new realities for everyone, even if many people have not really noticed or begun to change their views of work lives.

On one of her slides, Taylor illustrated the difference between a typical career path using the “retire at 65” model that had prevailed through the second half of the past century, and a more recent variation that is becoming more prominent nowadays.

What struck me was her use of the expression “Transition with Purpose” that can occur at a couple of junctures in one’s work life, with a notable one (for me) around age 50. It seems that many people feel the need to make some sort of career transition at this age, and seeing this makes me feel more “normal”, as it really “fits” my reality.

If we had had more time during the discussion, I would have liked to talk about the concept of “Transition with Purpose” as it could benefit many business families.

What I am getting at here is the problem that many family businesses face when the founder keeps stepping backwards on the escalator, which results in many complications for the rest of the family and the business. My feeling is that if more time and effort is made in helping the founder find his or her “Transition with Purpose”, we would go a long way to minimize the number of these situations.

If we look at each of the two main words in the expression, I think that “transition” is the part that most people “get”, as the realities of aging and family life cycle mean that we go from one role to another over the course of a lifetime. But it is the “Purpose” part that seems much more elusive, and therefore requires more effort.

Every effort made to discover a worthwhile purpose is well worth it in the end.

 

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Do Differences Make a Difference in Family Business?

In any Family Business, and in any Business Family, there will always be a lot of agreement and “sameness” but also a great deal of difference. One of the keys to success is to make sure that any difference of opinion does not result in “irreconcilable differences”.

This topic came to me this week as I checked the discussion board of the Governance course that I am currently taking through the Family Firm Institute. There are about a dozen of us enrolled, as part of their Advanced Certificate in Family Business Advising (ACFBA) accreditation program.

Our instructor, Dennis Jaffe, asked us to share some thoughts on whatever topics we wanted to discuss, and I found a post from Krishnan Natarajan from India to be quite interesting. Now the fact that I met Krishnan a few months ago might have had something to do with the fact that his post grabbed my attention, but not necessarily.

Here is an edited version of what he posted:

Some of the family challenges that we face are as follows:

Addressing differences at an early stage. (Non-Alignment if not addressed leads to Differences; if not addressed leads to Conflict; if not addressed leads to Incompatibility)

I took the “extra” repeated words out to simplify it into a better visual, and came up with this:

Non-Alignement => Differences => Conflict => Incompatibility

I thought that it was a good representation of a spectrum, showing how things can flow from small issues, into much bigger ones, if they are not addressed early.

Rather than re-writing my thoughts, here is the cut’n’paste of what I wrote back to Krishnan on the discussion board:

“If you can align people, they will have less difference, less conflict and more compatibility.”

“Conversely, if you have incompatibility, it is likely rooted in some conflict, which, in order to sort through, you need to figure out where the differences come from. Once you find the root of the differences, hopefully you can re-align the people.”

“This is clearly a case of “an ounce of prevention” being far better than “a pound of cure”.”

“If you know you have differences, you can explain to the family the importance of resolving these before they become conflict, and where you have conflict, you can explain to the family the importance of figuring out their differences.”

After writing this on the board, it struck me that this model seemed so well thought out, that perhaps Krishnan had seen it or read it somewhere, and since I planned to write a blog about it, I figured I needed to verify this with him.

It seems that it just came to him during a discussion with a client, as he was attempting to convince them of the importance of dealing with their differences early on.

Allow me to add my customary advice here, about the importance of communication. If you are looking to get everyone aligned, and keep them aligned, it is imperative to keep them “in the loop”, so that they at least have the opportunity to hear what is going on, and why.

It helps, of course, if this communication is truly two-way communication, with the opportunity for questions and clarifications. People can become mis-aligned due to lack of communication about what is going on in the family and the business, but it can be just as bad if there is communication but it only flows in one direction.

If you find yourself in a situation where a family is not getting along, I think that this model at least gives the advisor a way of talking about the situation with the family in a way that clarifies just how far along the spectrum they are, and what areas they need to look into to find a resolution.

I know that I expect to refer to it again, and I will have my friend Krishnan to thank for it. Please feel free to use it yourself with your family or your clients.

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