When people cite statistics about family businesses, they often talk about how many such businesses exist, what percentage of GDP they produce, and how many people they employ. That’s a lot of human resources.

Most of these businesses, however, are actually quite small, so very few of them have a human resources, or “HR” department. Some companies, when they get big enough, will get to the point where they actually hire someone for the role of specifically looking after employee issues.

In my father’s company, we were well on our way to 200 employees before he decided that it was time to hire a “personnel manager”, as the position was often called back in the 80’s.

His job was to look after labour negotiations with the union, as well as benefits, hiring, grievances, and eventually an employee assistance program. The greatest relief in this hiring was experienced by our CFO, because before that, all this stuff was just considered “admin”, and was therefore under his responsibility, by default.

Lately I have been noticing that many people are throwing around the term “HR” more and more. Working in Montreal, I spend lots of time dealing in both French and English, and for some reason I feel like I hear the term (“RH” – resources humaines) quite often.

It could be my imagination, but it feels like it has come to take on a meaning that is broader than the sense of employee work issues. And maybe that’s not a bad thing, because I think it lends itself quite well to my new interpretation.

It is nice that we actually consider people to be a resource, you know, something to be valued and the supply of which you need to spend time and money acquiring and developing. But “resource” also feels pretty impersonal, more like a thing than a living, breathing, feeling person.

So when someone says something like “I don’t like to get into all that HR stuff”, or “our company has been having lots of HR problems”, I like to think about it as if they are issues about Human Relations instead.

There are very few jobs in any company where you don’t need to worry about relations with other humans. We all do it, and we could all do it better too.

You can have one personnel manager whose job it is to deal with major employee issues, but you can’t have just one person in any company worrying about human relations.

Of course like most stuff surrounding the way things work in a business, everything starts at the top and works its way down. The way the owners treat their hired employees becomes a huge part of the culture, and good culture beats great structure.

In a family business, as usual, things are a bit trickier. Do you treat your VP like your VP, or like your daughter? Do people with the same last name as the boss get treated better than others, or worse?

How about the relationships with family members at work versus relations with those same people outside of work? Should they be the same, or should they be different?

There are no standard right or wrong answers, but there are plenty of things to think about and talk about. In smaller companies, everyone knows everyone else, which can be good or bad. As the business grows, it gets harder to know everyone, but communications from top to bottom become even more important.

Culture and communications, and developing good employee working relationships, are not just things that matter in large organisations. They can be even more important in smaller companies, and in family businesses, they can be a key factor in the success of the business and the family.

And you cannot just delegate this stuff to the HR department and the personnel manager.

 

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This week’s blog post is one that I have been thinking about for a while, because I really liked the story from the time I started blogging, but I could not figure out how to relate it to the subject of business families. Until now.

The title, asking where the problem was, comes from a question that my father asked me over a decade ago, after I had tried to describe a situation that I needed his help with.

My wife and I had a couple of toddlers in the house back then, and during a trip to Costco, we saw a swing set with a circular slide that we thought would look great in our backyard. We hastily decided to buy it, not realizing the monumental task of assembling it that lay ahead.

Now I love Costco because they sell really good stuff at the lowest prices you will likely find anywhere, but that does not necessarily make their merchandise “user-friendly”. I am not the most “handy” guy either, but my wife is actually one of the best IKEA furniture assemblers I have ever met.

How hard could it be? “Next to impossible” was the eventual answer.

Literally four or five weeks later, the structure stood in our yard, but just barely. We hesitated to allow the kids to use the equipment, because we could not trust the thing the way we had put it together. “Maybe your Dad could help us”, suggested my wife.

So I called him up and described the issue as best I could. “Is it a problem of design, material, or workmanship?, came his question. I thought about it and answered “Yes, Yes, and Yes.”

In retrospect, I had not realized how good he was at getting to the root of the problem before trying to offer solutions, and I Iike to think that I inherited some of that from him, to make up for the lack of handyman skills that I got.

He came over a couple of days later to analyse the job we had done and immediately began shaking his head at the monstrosity we had cobbled together. Within an hour, we had put together a list of material and we headed to the local lumberyard to buy what we needed to address the shortcomings.

A couple of days later, after he returned with his tools and equipment, we had a veritable fortress of a structure. It was now strong enough for the whole family to climb aboard, and was eventually a heck of a job to remove later when the kids were too big for it and me opted for a pergola instead.

The business family lessons here are numerous. Dad founded a company with certain skills and abilities, some of which I inherited, some of which I did not. We still managed to work together and produce a great result, but it was not necessarily straightforward.

Let’s look again at the design, material, workmanship question. How does the family design the way it will work together, especially over the long term, and how are they going to govern the family enterprise as one generation will make way for the next?

The material of the business family is basically the family members, the human assets that are the heart of the operation, the ones upon whom the focus should be (as opposed to the widgets the company makes).

Is the family putting the emphasis on making sure the materials are the best they can be, thinking about education and finding the best role for each person?

What about workmanship? Hmmm, this one took a while for me to put my finger on. I am not 100% sure that this is the best fit for the analogy, but I am going to go with relationships.

When looking at a business family and attempting to diagnose where to begin to help them, you might ask if their key issue is Governance, Human Capital, or their Relationships.

Hopefully it won’t be all three!

 

For the past three years I have been writing this weekly blog that deals mostly with issues surrounding family business. Some subjects have been treated more than once, in different ways, and I have touched on a variety of things to think about.

Today’s subject is one that I am touching on for the first time, and to be honest, I am not sure why it has taken me this long to get to it.

A few weeks ago I was reading a book called The Trusted Advisor Fieldbook, and there was one sentence that really struck me, so I highlighted it and put it into the “future blog post” pile. Here is that sentence:

For most human beings, the only thing worse than being controlled, is being controlled AND being lied to about it at the same time. 

This sentence was in a section that dealt with people’s attempt at “closing” a sale with a potential client. I agree that closing objectifies the customer and I personally HATE being “closed”, and hence I stay as far away from those techniques as possible.

But what struck me was how applicable that sentence is to the world that people in business families live in for large periods of their lives.

All too often the generation that is currently in the driver’s seat will be preoccupied with staying in control of as many things as possible for as long as possible, and they will usually believe that they are acting this way because they know best. This is where they may also be lying to themselves.

Those who are in the “Next Gen” seats (now often called the “rising generation”) are often left to wait for their turn behind the wheel, and that can be a very frustrating place to be, just ask Prince Charles.

Thankfully, a family business has quite a few moving parts, which offers forward-thinking families the opportunity to take a very incremental approach to transitioning control from one generation to the next.

There are roles within the management of the business where responsibility can be handed over gradually to those who show an interest and some abilities, to gain experience and slowly move into more senior roles.

There are ways to transition ownership of shares from one generation of owners to the next, and the ways to do this are limited only by the imagination of the CPA’s and lawyers you can find to put together the legal documents.

And let’s not forget the family circle, where some family members can be encouraged to look after the non-business issues, and some form of family governance structures can begin to be instituted.

In the end, if it is to remain a “family business”, then the family will be expected to continue to control the business, into the next generation. But how are they going to control it, if they have not figured out how they are going to work together?

The lawyers and accountants can come up with all sorts of ways to make things fit together in the legal sense, but if the family harmony is not there, chances are something is going to give.

Control is a very tricky issue to figure out, and when it rests in the hands of fewer people, it is often much simpler. But when you go from one generation of owners to the next, you often increase the number of people who will be sharing control.

When a parent is the person who “controls you” by being the one who calls the shots surrounding important things like wealth, it is one thing.

But in a situation where that family member is a sibling, or a cousin, then being controlled can be much more difficult and uncomfortable.

If that is a scenario that you are looking at someday, you may want to begin the process of working out those control issues NOW, or else some family members may begin to feel like they are being controlled in ways that they may not stand for.

And don’t think that you can lie your way out of it either.

The family business space is a fascinating area because of all the complexities that can arise when you mix business with family. When a business is successful enough to provide the family with not just a job but with significant wealth, things can get even more interesting.

I just finished reading a great book, Strangers in Paradise, by James Grubman, that does a superb job explaining how and why family members from different generations can have such different views about wealth.

The book is worth a read for anyone interested in this subject, whether they are part of a business family or a family with wealth, or advisors to such families. Grubman makes the analogy that those who are not born wealthy, but become wealthy along the way, are like immigrants to a new land.

When those immigrants have children, the children are natives to wealth, and will thus view wealth very differently. The book gives detailed explanations of the different ways that these immigrants make the adjustment to being wealthy, again comparing the journey to that of people who uproot the family and move to a new country.

I recently spent some time with my late father’s sister, asking questions about their childhood and their immigration to Canada, and I can tell you that packing up and moving to another country that you have never even visited can be a terrifying experience, even if you do end up in “paradise”.

One of the things that surpises most people is that wealthy people are not always happier than middle class folks. Money can solve lots of problems, but it can cause just as many, if not more. But few people will feel sorry for those whose problems stem from having too much money.

One of the take-aways for me from readig Strangers in Paradise was Grubman’s use of a new term (for me), which I decided to feature in today’s blog title.

When a family has accumulated significant wealth, and they have decided to keep the wealth together as a family, they need to learn how to get along and figure out how to make decisions together. This is not new to me, or to any regular readers of this blog.

What is new to me is the wonderful term “Interdependently Wealthy”.

Most people have heard the term “independently wealthy”, even if they would not necessarily be able to define it. Just so that we are all on the same page, here is a definition that I just Googled:

Possessing enough wealth that one does not need financial support from another person and does not require income from employment.

So if you have enough wealth that you do not have to rely on anybody else, and you do not need to work, you are independently wealthy, fair enough.

But what about a wealthy family? OK, so maybe they don’t have to work for money, and many families are in the position where the next generation do not have to find a job to pay the bills, and hopefully they can find something productive to devote their lives to (but that is the subject of another blog).

Now let’s look at the part about “does not need financial support from another person”. When the wealth is created, it is very often because of the efforts of one person, and for simplicity’s sake, let’s call him Grandpa.

As long as Grandpa is still alive, things are usually pretty clear, since it is “his” wealth, so he calls all the shots, and few will argue with him.

Once Grandpa is no longer around, and there is not one person, but a number of people who own and control the wealth, I strongly suggest that these people learn to get along.

They are NOT independently wealthy, they have become INTERdependently wealthy.

The difference is huge. Some families have figured out how to make it work. Many other families have great difficulty with the distinction, and unfortunately those are the ones that we hear about the most.

 

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.

 

“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.

 

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.

 

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?

 

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?