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Don’t “Transfer” Family Wealth; “Transition” It

For years now we’ve been hearing about the huge multi-trillion dollar “wealth transfer” that’s occurring thanks to the demographics of the Western world.

As baby boomers age, there’s no escaping the new realities that this huge demographic shift is causing.  But hopefully, we can escape some of the negatives that might accompany it.

I believe that when we think about how a family’s wealth should move from one generation to the next, we shouldn’t be thinking about a transfer, we should be thinking about a transition instead.

 

 

Is It Just Semantics?

I’ll leave it to interested readers to Google these words in an attempt to parse all of their differences, and will instead concentrate on some simple and observable comparisons and contrasts.

The most fundamental aspect to consider is the time that something takes, from start to finish.

When I was a kid, one of my friends moved away because his Dad was transferred.  One day he was working in Montreal, then suddenly, he was transferred to Toronto.

He finished work on Friday in one place and started up his new job 500 kilometres away on Monday.

 

Wire The Funds

If you’ve ever wired funds somewhere you know that one day the money is in your account, and then the next it is not.

Somewhere during the day (usually at around 2 PM for some reason) the funds instantaneously go from one account to another.

They have been transferred. Boom.  Here one minute, gone the next. A single event has happened and is now complete.

When a family’s wealth, including the financial wealth and everything that comes with it, is transferred as a one-shot event, it can be a real shock to the system.

The word “shock” is rarely used as a positive in the area of family business or family wealth.

 

Arrow on wall

 

Slower, Smoother Transition

So what do I mean when I say “everything that comes with it”?

I actually wrote about a few of these details back in 2015, in Transition Planning: No Day at the Beach.

In that blog, I wrote about the transitions of management, leadership, and ownership.

Strictly speaking, a transfer typically deals with the ownership of the wealth.  When someone suddenly owns something, they are then usually expected to also manage it as well.

 

Ownership Is the Big One

One of the problems that can arise with intergenerational wealth is that the ownership sometimes goes from one individual to a group, who are often siblings.

This is where the questions surrounding management and leadership come in.

When more than one person now owns the wealth, how they will manage it, and who will take the lead are also questions that get put on the table.

If the word “governance” is suddenly coming to mind, congratulations, because that’s certainly where my mind is heading too.

 

Respect My Authority

Another related concept that doesn’t necessarily get discussed enough is that of authority.

With ownership of any asset comes certain authority, but it can depend on so many details.

And when you talk about authority, there is of course explicit authority and implicit authority, which do not always go hand in hand.  (Note to self: there’s a whole blog right there!)

Numbers and pie charts

Interdependent Wealth

The distinction between transfer and transition came up for me recently as I continue to make progress on my next book.

My working title is “Interdependent Wealth”, with a secondary title as follows:

How Family Systems Theory Illuminates Successful Intergenerational Wealth Transitions

That’s nine words in a secondary title, which feels like a lot, but I can assure you that a great deal of thought went into each and every choice that I made, right down to the final one, Transitions.

 

A Gradual Handover

It was during the choices I was making about these words that the whole transfer thing really hit me.

On a macro level, society is certainly witnessing a huge transfer of wealth.

But what’s more important to any family is what occurs on a micro level, and families should be concentrating on their wealth transition.

 

Event Versus Process

Bottom line, a transfer is more of an event, or one of many components or things that need to happen.  It is a tactic.

A transition is a process, it is the overall strategy required to make the right things happen, in the right way.

Focus on the whole transition, not just the transfer.

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Counterintuitive Thoughts

I can’t recall when it happened exactly, but sometime last century I first heard the word “counterintuitive” and I was instantly smitten.

What a great word.

It’s a word you don’t hear every day, that sometimes elicits a quizzical look from people.  A “fifty cent” word.

So today I wanted to blog about some of my favourite counterintuitive ideas.

 

Traffic Problems

Let’s begin with something that people who live in cities can all relate to, traffic.

When you expect that there will be lots of traffic, your first inclination might be to leave early to get where you’re going.

It may seem counterintuitive to leave late, but once the traffic has let up, you’ll have a less stressful drive and arrive in a better mental state.

 

Reliable Internet Service

I don’t know if it’s just me, or my choice of Internet service providers, but sometimes my hard-wired cable is pretty unreliable and inconsistent.

We couldn’t get cable at the cottage, so we had to “settle” for satellite instead.  I worried about reliability because I need to be able to work from there too.

I do plenty of meetings over Skype and Zoom and was worried that there would be glitches.

Counterintuitively, I cannot recall a single glitch in any call I’ve had with anyone from there, while my cable calls from both my home and office are often sub-optimal (another favourite word!).

 

 

Strong Steel, Weak Glass

Many years ago there were some home break-ins in our neighbourhood that concerned me.

I called in a security expert to see what we could do to fortify our home. I was told that one of our patio doors was a risk.  It’s a steel door containing a large window.

I assumed that the glass was the weak point.

Nope. It was the steel.

The steel is so thin that anyone with a sledgehammer could smash it, but the window is apparently virtually indestructible.

 

 

Family Wealth Transition Examples

Of course I now need to share a few examples from my professional world too.

There are many times when I suggest that people Zig when everyone else is suggesting that they Zag.

And one of my new favourite expressions is “Don’t just do something, stand there!”

 

 

A Bigger Pie Won’t Solve Everything

There is a propensity for people to think that more money is always better than less, and that therefore, making the proverbial pie bigger should always be the goal.

But for a family, there are other forms of wealth besides financial.

Families who concentrate solely on making more money, under the assumption that everything else will work itself out, are fooling themselves.

It may seem counterintuitive, but it’s true.

There comes a time in every family’s life cycle when the focus should switch from how to make the pie bigger, to how the pie will be shared and maintained in the future.

 

A Looser Grip is Safer

On a related note, many of those who create a lot of monetary wealth also like to control everything (and everyone) they can.

When it comes to family members, I will always maintain that holding on with a very tight grip is not a recipe for success.

You probably know people who are guilty of this, even if you have not thought about it in the same terms as my metaphor.

When anyone tries to exert complete control over others, it will eventually backfire.

It always does.

Kudos to those who recognize this and choose a looser grip.

 

Slow Down, Go Far

As I wrote in Going Far? Go Together, I believe that family business and family wealth are much more about “going together” than they are about “going fast”.

If you are concerned with doing things quickly, then going alone, or doing things by yourself, can make perfect sense.

But family wealth eventually reaches a stage where it becomes more about how those who will be on the receiving end of the transition are able to function together as a group.

This ability to work together is rarely something that they’re all born with, and as such, it takes time for it all to come together.

 

 

No Rush, Except…

You really shouldn’t rush the process.

In fact, there is only one thing you should rush here.

Hurry up and get started, so that you can then slow down and take your time getting it right.

 

 

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Family Governance: From Filaments to LED’s

Family Governance: From Filaments to LED’s

When it comes to “Family Governance”, there aren’t many bigger fans than me.

I’ve written several blog posts specifically on the subject on this site, and there’s even a chapter in my book, Shift your Family Business, titled “Governance, Ugh!”

That exclamation –ugh- makes it seem like I don’t like governance, but in the book’s context, it’s clear that I do.

For any family to have a realistic chance of their wealth surviving over generations, they’ll absolutely require some form of governance.

 

Family Constitution? Yes, but…

The form and structure of that governance, as well as how it evolves over time, is where all the many important questions and decisions come into play, of course.

My advice is to always start small and take it slowly.

You’re looking for a durable “solution” to last generations, so there should be no reason to rush something through in weeks or even months.

One place that I would almost never choose to

begin is with the writing of a family constitution.

And that’s especially true if it’s one dictated by the wealth creator and patriarch, by himself, without consulting any other family members.

 

Misguided Ideas

One of the peer groups in which I participate with other family business and wealth advisors recently tackled such a case.

Here’s a bit of the background provided by a colleague I’ll call Nelly.

A family patriarch, “Jack”, who was also the wealth creator, was approaching his 80th birthday, and one of his financial advisors had spoken to him about succession and transition planning.

Somehow the idea of a “family constitution” came up and Jack loved it. He then sat down and began to draft it by himself.

 

How’s That Working Out For You?

As Jack shared his progress with family members, he began to become concerned with their lack of enthusiasm.

The financial advisor who initially mentioned the idea of the constitution was way out of his league to be of use to Jack now, but thankfully, he called in Nelly’s firm for help.

As Nelly shared with our peer group, she was slowly encouraging him to involve other family members in the creation of their constitution.

After several repeated suggestions, he actually started to warm up to the idea.

As Nelly shared with us, there was a light bulb going off from time to time, maybe with only “one or two filaments flashing”, but she was starting to get through to him.

 

Input from the Rising Generations

Of course, a couple of filaments do provide some light, which is better than complete darkness.

But it’s 2018, and those bulbs harken back to Thomas Edison and aren’t exactly “current” anymore.

I pointed out that perhaps what they needed here was some LED lighting, not more filaments.

Jack was preparing to leave his wealth to his children and grandchildren, but he was missing out on the opportunity to have them involved at this key stage of planning.

 

For the Family, By the Family

I’m not sure what became of Nelly’s work with Jack and his family, although I suspect it’s ongoing.

I’m not saying that involving the family is simple or easy, because it’s not.

But I am saying that it’s more than

worth the effort when done right.

Jack created the wealth, so he can technically do what he wants with it, and even give it all away to charity.

But he has expressed a desire to pass it on to his family. So what he’s actually trying to do is transform his personal wealth into family wealth.

The best way to do that, is to create some form of governance, for the family, by the family.

 

And What IF He Does It “His” Way?

If Jack rejects Nelly’s ideas and simply ploughs ahead with authoring the constitution himself, I predict one of two results will occur after Jack dies.

If the family gets along and the wealth is structured rather flexibly, the family will make whatever changes they see fit, using his constitution as a mere guideline, which will fade away over time.

Or, more likely, if the family does not get along well, or if the structures are very rigid, the family squabbles will begin right after Jack’s funeral.

Jack has a choice, but I sure hope he listens to Nelly.

Grandpa’s filaments won’t be quite as useful in his grandkids’ world of LED’s.

 

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5 Ways FamBiz Rising Gens Can Prepare

5 Ways FamBiz Rising Gens Can Prepare

People in and around family businesses everywhere spend lots of time worrying about the rising generation of the family, wondering if and when they’ll ever be “ready” to take over from their parents.

There are as many variations of the situation as there are families and businesses, but there are some things that many have in common.

Those who are not content to just “wait their turn” can do a lot more than simply “be patient”.

With that in mind, here are…

 

“5 Ways FamBiz Rising Gens Can Prepare”

 

  1. Get Mentored

A mentor is usually someone older than the mentee, typically by more than a decade (and often two or three decades older).

The most important detail for a rising generation family business mentor is that they NOT be the parent, or any family member who is ultimately their boss.

A mentor can be from within the company, or from an outside organization, and will have some life and career experience that can be shared, on an occasional basis, over lunch, coffee or by phone or Skype.

 

  1. Create and Lead a Project

Up-and-coming family members in a business often have difficulty carving out their own leadership abilities, separate from those of their parents.

Creating their own project, either within their department, or as something new and intrapreneurial, is a way for them to show that they are able to make something happen on their own.

Of course they need to do more than just conceive an idea, and actually lead the necessary steps to do the work and bring it to a stage where the project can be deemed an accomplishment.

 

  1. Work on Sibling Unity

Unless the person is an only child, they will need to continue to deal with their sibling relationships for many decades to come.

Whether their siblings are working in the business or not, and even if they seem to display no interest in the business, those relationships should not ever be taken for granted.

Especially when there are siblings who never work for the family company, it behooves the ones who do to continually over-communicate what’s going on.

This should be done as “matter-of-factly” as possible, and never as bragging about one’s accomplishments or complaining about how tough it is to work for the parents.

Siblings may not be part of the business circle, but they are always part of the family circle, and don’t forget that they’re likely long-term ownership circle partners too.

 

  1. Build Your Network

While it is very important to get to know the people from outside the company who currently deal with the leading generation, from bankers, to customers and suppliers, having their own network is also beneficial.

Joining peer groups and making sure that they develop connections in their own age group will pay dividends down the road.

When their turn comes to take the lead on things, they’ll want to be able to call on their own contacts and people that they trust, and these relationships take time to develop.

It’s never too early to begin to cultivate a network of people you know and can trust.

 

  1. Round Yourself Out

Most people come into the family business from a certain specialty like finance, accounting, or marketing.

It is great to have a big strength on which to build your career, but the higher up the organisational ladder you go, the more that you can be a “generalist”, the better.

So if they’re known for their skills in one particular area, it may be a good time to work on building some skills and getting experience in another area where they’re currently less strong.

Once they get to the top, they’ll need to be able to properly relate to everyone, from a position of strength.

 

And Don’t Do This

The five ideas above are some ways that they can begin to take important and useful steps to ensure an eventual smooth transition.

Here is what they probably want to avoid.

  • Complaining to anyone who’ll listen that the current leaders are hanging around too long.
  • Whining that nobody takes them seriously
  • Bad-mouthing key employees
  • Being a part of “the problem” rather than bringing solutions
  • Displaying work habits that make them appear entitled

There are plenty of positive things they can do while they wait, and that includes some of the ideas outlined above.

Good luck!

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Great Nuggets from Denver

Great Nuggets from Denver

Regular readers of this blog know that there’s one annual event on my calendar that I look forward to more that most.

I just got back from Denver, where I spent most of the week trying to milk as much as possible out of the conferences put on by the Purposeful Planning Institute (PPI).

Rendez Vous is the one time each year that I “fill up” with great ideas and input from other members of my “tribe”.

Working with families on the difficult tasks of transitioning their wealth from one generation to the next can be lonely work for some, so getting together with others who do similar work is energizing.

 

One Nugget at a Time

This was my fifth time at Rendez Vous, and after each one in the past I’ve used this blog space to capture and share some of my thoughts and take-aways.

(There are links at the end to those posts if you’re interested.)

For 2018 I’m taking a “random” approach, sharing some nuggets from my notes from at least a dozen of the thought leader speakers and breakout session leaders.

Here goes…

 

– Difficult Subjects: 

From Emily Bouchard, two of the biggest subjects in everyone’s lives are also two of the most difficult to discuss: Money and Death.

This work involves both of them, so it’s no wonder that bridging those subjects with clients is difficult.

But that doesn’t mean we shouldn’t take up the challenge.

 

– Business Exits:

From John Brown, transitions usually involve owners exiting their business. But the owners want and need to exit on “their own terms”.

If we want to be useful to them, we need to recognize this, and focus clearly on “owner-centric” exit plans.

 

– Financial Transitions

From Susan Bradley, wealth transitions usually present a lot of confusion to those affected. Within that confusion also lies an opportunity.

Each person needs to “figure it out”, and that often necessitates time and help. If we want to help, we need to recognize that everyone figures it out at their own pace.

 

– New Vocabulary

As usual, John A. Warnick, the founder of PPI, had plenty to share with his tribe, including an update on the new vocabulary required to advance how we work with “Legacy Families and Families in Business”.

He’s working to compile, clarify and disseminate a primer on the words we use in this space, to improve our ability to work with such families more consistently.

 

– Five Voices

From Mark Hartnett, I now know about Giant Worldwide’s Five Voices tool, and that based on it, I’m a Connector, as well as a Nurturer.

And my nemesis is the Pioneer, perhaps because that was my Dad’s main voice.

 

– Don’t Try to “Change” Families

From Matt Wesley, I better understand the folly in trying to “change” any family.

Any attempts to “violently homogenize” a family to fit into a particular way of being is bound to fail.

 

– Book Club Benefits and Bird Language

 From Amanda Weitman, I learned that creating a simple “Book Club” within an organization can have benefits far beyond what anyone could ever had predicted in advance.

From Jon Young, I learned that those who master an understanding of bird language also discover the secrets to sensory integration.

 

– Appreciative Inquiry and the Importance of Voting

From Courtney Pullen, I learned how quickly one can go from “I have a problem” to “I AM the problem”, and how appreciative inquiry can help resolve that uncomfortable situation.

From Ian McDermott, I better understand the importance of how I “vote” with my Time, Money and Energy, and that “Trusted Advisors” become so when they “trust themselves”, making them “congruent”.

 

– Adult Development Levels

From Cathy Carroll, following up on Christine Wahl, I now realize that one can only properly advise others up to our own level of adult development.

 

– Purposeful Planning as a Career

From Michael Palumbos’ panel of industry veterans (Bradley and Pullen, plus Bruce DeBoskey and Kristin Keffeler) I know that we need to keep showing up “dynamically”, should avoid billing for our work by the hour, and not expect many referrals from lawyers or CPA’s.

 

– Last But Not Least, Jesus  

From David York, a perennial favourite PPI speaker, I know that Jesus is considered one of the greatest teachers of all time, yet, according to the bible, he asked many more questions than he answered.

And his most frequent question was “What are you looking for?”

If you’re looking for a tribe to support you in this kind of work, come join us in Denver next July.

 

 

My blog posts from previous Rendez Vous:

2017    Sharing Some Rocky Mountain Kool Aid

2016    Sweet Secluded Rendez-Vous 

2015    Rendez-Vous with a Purpose

2014    The Rising Generation in Family Business

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Rest in Peace, While You’re Still Alive!

Rest in Peace, While You’re Still Alive!

Every so often I have an “A-Ha” moment as a result of seemingly random discussions that occurred weeks apart.

Writing this blog allows me to process these in some sort of useful way.

Today’s subject is “Peace”, which came up in conversations with my coach, Melissa, even though we typically don’t spend much time on that subject.

 

Inner Peace Through Meditation

After months of hearing good things about meditation, I brought up the topic during one of our weekly coaching sessions.

Melissa mentioned an App called “Insight Timer” that she’d been using for a while, and suggested I try it out.

A good coach will mention plenty of ideas that a client might want to look into, and then it’s up to the client to act on them, or not.

I did act on this one, downloaded the App into my phone, and tried it out.

Long story short, I’m a big fan, and maybe even an addict.

 

What Was I Looking For?                                  

A few weeks later, I mentioned that I was using Insight Timer a couple of times a day, and I was enjoying the ways it was making me feel.

Melissa noted that she thought it was pretty cool that I was working on finding “inner peace”.

“Wait, what?”

I never said that I was looking for inner peace (did I?).

The truth is, I didn’t know what I was looking for when I decided to try it, and I’m not sure that I know what I found either.

 

Mr. Legler Is Resting in Peace

Weeks later, as we were starting our weekly call, she asked me something along the lines of “So, how is Mister Legler doing this morning?”

I pulled out the old “Mr.Legler? That was my father!” line that I often use when I feel like someone is being more formal than necessary.

“And, he died in 2008, so I guess he’s resting in peace”.

There it was again. Peace. “A-Ha”.

 

Seek and You Shall Find

So many questions were now bouncing around my brain, and, as usual, that meant that I’d eventually blog about this.

Did Mr. Legler need to die to find peace?

Did he find it there? Or did he find it before?

What about me, am I finding it?

Was it even what I was looking for, don’t I already have it?

Do you need to seek peace in order to find it?

Do some people search for it and never find it, while others just sort of have it without much searching?

 

Multi-Generational Peace Process

As usual, I’ll now attempt to take the subject of this post and introduce the family business angle, because that’s the area in which I claim to have some subject matter expertise.

Business families, almost by definition, involve people from different generations.

One of their goals is typically to find ways for the family business and/or wealth to move smoothly from the senior generation to the rising generation.

Okay, so what does “peace” have to do with all this?

 

Everything and Nothing

The quick answer is that peace has nothing to do with this at all. It’s the easy answer, and the one that many people would prefer.

Of course, that means that I’m interested in the other side, the one that says peace has everything to do with it.

Many families struggle with the important discussions and planning that are necessary to effectuate successful inter-generational wealth transitions.

 

Peace, Love, and Harmony

Families too often delay talking about how they will handle all the details around who will get what, and who will do what, precisely because they are worried about upsetting the peace and harmony that exists in the family.

In fact, they’ll do anything to avoid upsetting the peace.

In many cases, however, the harmony that seems to be there is actually rather fragile, precisely because of the uncertainty around what’s going to happen after the senior generation has passed.

 

Settle it Now, Reap the Peace Dividend

The lack of discussion leads to lack of clarity and adds uncertainty to both generations.

Those who take care of these things in advance reap what I’ll call the “peace dividend”

I like to think that Mr. Legler found peace while he was still alive because he had put his affairs in order and communicated everything to his family well in advance.

Don’t forget that peace dividend is shared by both generations.

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Questions of Discernment in Family Business

Questions of Discernment in Family Business

 

Discernment: Noun

  1. The ability to judge well
  2. Perception in the absence of judgement with a view to obtaining spiritual direction and understanding (in Christian contexts)

This week’s blog is sponsored by the word “Discernment”.

Okay, so that’s not literally true, as there are no sponsors of this blog. Maybe I just had a little Sesame Street flashback, and should have said that it’s “Brought to you by the letter D”.

I keep a file of blog ideas and every couple of months I put together a calendar of topics. This is the first time that I’ve noted my subject idea with a single word, i.e. discernment.

 

Bowen Family Systems, Spring Conference 2017 

Discernment first popped onto my radar screen over a year ago, in Washington DC at the Spring Conference of the Bowen Center.

Murray Bowen’s theory has eight concepts, but the one he called “Differentiation of Self” is both the “biggest” one, and one that people have the most trouble truly understanding.

Some Bowen fans, myself included, tend to explain it to newcomers as “emotional maturity”.

At this conference though, some speakers proffered the word “discernment” instead.

Hmmmm, maybe they were on to something. But I also wonder if most people “get” discernment right off the bat.

(See: A Systematic Business Family? for my blog on that event.)

 

Definitions

I began this post with the definition that I got when I Googled “discernment” and found it both sufficient and interesting.

“The ability to judge well” is a great start to understanding what I’m getting at, and I feel like it fits with the “emotional maturity” part too.

Number 2, “Perception in the absence of judgement” almost threw me off at first, but then it made me flash back to my post “Judgement, Not Judgement” from back in 2016.

The take-home message there was that having good judgement is laudable, but being “judgemental” is not.

The spiritual and Christian angles also intrigued me.

 

Questions to Help Understand Discernment

In order to get a handle on discernment and how it applies to business families, let’s look at some basic questions and examine them from a discernment angle.

I’ll start with questions requiring low levels of discernment, and then move along to those that call for higher and higher levels.

 

– “WHAT” Questions

Asking about “What business are we in?” or “What markets should we look to enter?” are simple and relatively straightforward for any business.

They are also necessary to consider from time to time.

They require good business sense, but don’t necessarily require much in the way of discernment.

 

– “WHO” Questions

Then there are questions about people, like “Who should we hire?” and eventually “Who should take over when Dad retires?”

Now the need for discernment gets ratcheted up a bit.

And in some sort of “meta” way, we are looking at judging people about their judgement!

Once you get into questions about people, things usually get a bit trickier, and emotional maturity is often called for to make the right choices.

 

– “WHEN” Questions

Those “Who” questions can be tough, but so can those around timing, like “When should we start working on succession?” and “When should we start having family meetings?”

Regular readers will quickly recognize my bias around these topics, and that’s okay too.

As long as we’re on the topic of my biases, let me be clear that my preferred answers to those questions is always sooner rather than later.

There’s a certain maturity required to start tasks that have been kicked down the road long enough.

Combining “Who” and “When” questions, well, now we are getting into the area of “How”.

 

– “HOW” Questions

To me the types of questions that require the most discernment are about “How”, like “How do we make sure we include everyone?” and “How de we make sure we follow through on all our plans?”

I’m reminded of the expression “Ideas are a dime a dozen”, which is all about simple “What” questions.

Execution and implementation are the key to making any idea work, and that’s where you need people with discernment.

A “good sense of judgement” requires plenty of maturity and wisdom around the all of the “Who”, “When” and “How” questions that are part of getting things done.

 

Whose Discernment Are You Counting On?

If you’re a family business leader, and you’re hoping for your family and business to be successful in the long run, finding people high on the discernment scale should be a priority.

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Forced Into the Family Business

Forced Into the Family Business

I don’t have many “rules” I share with family business people I work with, mostly because every family is unique.

I also think that every family can and should come up with its own rules, “BY the family, FOR the family”.

But if you twisted my arm and insisted that I give you one rule that I think most families should follow, it’s this one:

 

Before working in the family business, rising generation family members

should first get a job working somewhere else for a few years.

 

Exceptions to Every Rule

There are exceptions to every rule, but I think this one will stand every family in good stead.

My Dad had heard this suggestion when I was younger, but he believed that our family was the exception, so I went straight into the company out of school.

The fact that I believe in this rule, despite having been an exception myself, should tell you a lot.

(Hint: I have long wished we HAD followed that rule).

 

Forcing Kids Into the Business

Many people who work in their family’s business are there because, to one degree or another, they were “forced” into it.

Sure, they don’t want to miss out, it’s their “duty”, and often the path of least resistance.

But deep down inside, if they had their druthers, there are other jobs or careers that would have suited these people much better.

Also, I really don’t think that forcing people to do anything is a very good idea for long-term success.

 

Can Forcing Them Be a Good Idea?

So I guess that it may come as a surprise to you that I actually support forcing your kids to work for the family business.

There, I said it. Yes, it’s true.

If you have a family business and you have kids, I think that it is a good idea to force your kids to work for the business.

 

Important Clarification

Now, there is a very important part of the statement that I want to make sure that everyone also understands.

You may have noted it already, thanks to my word choice, which I repeated, twice.

The important word here is “kids”, that is, minors, specifically teenagers.

And, notably, I’m also talking only about part-time or summer jobs.

 

My A-Ha Moment

The idea for this post came a couple of months ago during the #FamilyBizChat that happens about once a month on Twitter.

The topic was family employment policies.

All of a sudden I noticed a Tweet from someone who mentioned that he thought that making the kids work for the family business was a great idea!

Wait, WHAT???

 

A Voice of Experience

When I looked at the Twitter handle of the person who posted it, I didn’t recognize it at first. Upon further inspection, I realized that what the man posted made perfect sense.

Looking at his bio and last name, I quickly realized that he was the son of a colleague I know through FFI (Family Firm Institute).

That colleague is one of the few FFI members I know who’s a family business founder.

(Most FFI members are people who work with family businesses, many of whom also have a family business background as well).

Very few run large family enterprises.

 

Personal Flashback

The poster noted that he believed forcing kids to work for the business teaches them responsibility and work ethic.

Who am I to argue?

I started working for my Dad’s company when I was 15, and before that, I was “forced” (strongly encouraged?) to have a paper route for 3 years.

Responsibility? Check. Work ethic? Check.

I think I turned out OK.

 

Devil in the Details

So let’s do a quick recap.

Part-time jobs on weekends or after school, yes, having the kids work for the family business is usually great.

This assumes that both sides are getting what they need out of it.

The same goes for summer jobs or internships, they’re a great way to learn and experience what a full time job is like.

BUT, once they’re no longer teenagers, and they’re beginning their career, that’s a new phase.

This is when my only real “rule” comes into play.

Please insist that they go and find a job elsewhere, for at least a couple of years, and then, and only then, invite them to join the family business.

You’ll all be glad you did.

 

See Also:  From my Quick Start Guide Series:

My Kids in My Business? [Yes/No, When, How, Why]

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Five Things FamBiz Can Learn from Fortune 500’s

Five Things FamBiz Can Learn from Fortune 500’s

People who work in family businesses often relate interesting stories about how things are done in their companies.

These tales can be difficult for some outsiders to understand and believe sometimes.

The most intriguing part is usually the fact that so many of these family companies are very successful, despite some of the non-traditional ways they operate.

Today I want to outline five ways that family businesses can improve the way they do things, by learning from bigger companies, like those found in the Fortune 500.

 

  1. Succession At ALL Levels

Large corporations usually put a priority on having a great bench of people in every department. They also typically have regular movement via promotions to keep everyone and the company advancing.

Most family businesses don’t put much priority on this, and loyalty and stability are often the focus for employees.

Owners of family businesses could make this more of a priority by starting at the top and insisting that other departments below them follow suit.

“Human resources” is actually a great term that tends to get lost. Seeing “humans” as a “resource” is key.

 

  1. Formality Is Your Friend

Many family businesses operate very informally, with few “procedures”, and many tasks that remain centralized in the heads of one or two key people.

Family businesses are often limited by how well the leaders can delegate and teach others to do many tasks.

Delegating would enable them to work ON their business, instead of working IN their business.

There are plenty of books on empowering employees, time management, and learning to delegate.

It behooves family business leaders to learn to formalize things so the business can grow beyond their own personal abilities.

 

  1. Distributed Leadership

Large corporations typically have many leaders, whose operations are guided by leadership groups and teams.

Many family businesses are led by one person, or a very small group of people who call all of the shots.

Understanding that the growth of any company will be limited to its leadership abilities is the first step.

Then they need to learn that growing their leadership team takes lots of time and needs to become a priority.

If you are starting to see a theme in these five things, good for you, it’s not an accident.

 

  1. Executing On Strategy

Every Fortune 500 company has a corporate strategy, and their focus is to then execute on that strategy.

Many family businesses do not take the time to make and formalize the long-term plans that go into a true company strategy.

When family businesses begin to do the things noted above, the result is the ability to have strategic planning meetings, with strong leaders from every department, who can then work together to outline the best strategy for the company to follow.

Once they have a strategy, they can then focus on executing it. If they haven’t made the effort to come up with and agree on a strategy, their chances of success will be limited.

Even if most of the employees are good at executing their jobs, if those tasks are not part of a coherent strategy, many opportunities will be lost.

 

  1. Best Person for Each Key Position

Family businesses often have people in positions for which they are really not well suited. These are often family members who are there because they have the right last name.

This is so much easier said than done, but qualified people are necessary for any business to function well.

There are of course several issues at play in these cases. One of them is the salary that the person is being paid for sub-optimal performance.

But the bigger problem is the performance itself if there could be a better, more qualified person in the role.

Sometimes a lateral move is the answer, so the family member can still be paid, but the key role is actually filled by a qualified person.

 

Take It Or Leave I

I’m sure that some people in family businesses will read this and think that my ideas are not worth the effort to pursue.

I am NOT saying that every family business MUST do these things to be successful. That is certainly NOT my feeling.

For those trying to create a long lasting business that they can pass on to future generations of their family, well, these ideas are merely the first few logical steps.

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Choosing Sides in a Family Business

Choosing Sides in a Family Business

I sometimes write about conflict management and resolution, because family businesses are rife with opportunities for clashes of personalities and ideas.

(See: Embracing Conflict in Family Business & FamBiz: Conflict is NOT an option)

But this post will be a bit different from others I’ve written in the past.

Today I want to get into a family conflict and ask readers which side they would choose in a fictitious war between two sides in a family.

 

The Guerrero Family

Vince and Walt Guerrero are the two oldest brothers in the family that owns a specialized factory in a mid-sized northern town.

Their father, Guillermo, started the business some 40 years ago and is preparing to retire, leaving the business to his four children.

Sabrina and Teresa, the two youngest siblings, used to work in the business as well, but both left because there was just too much conflict.

 

Vince’s Side or Walt’s Side?

Vince and Walt don’t exactly see eye-to-eye on many things, and each of them wants to be the new President when Dad finally retires.

Sabrina and Teresa get along very well with each other, and they both love their brothers equally, and the boys are constantly trying to get their sisters on their side of every issue.

Which side should they choose?

 

A Common Scenario

While the scenario I just described is actually quite typical, the question that I’m asking you is not.

Of course, there isn’t enough information to give a reasonable answer to the question, and I already spent a couple hundred words describing it.

It’s actually a really stupid question because I’m asking you to “choose sides” when there really aren’t any sides to choose!

 

Study Group Example

One way that this post is different from my usual format is that I usually start out by giving some context to the genesis of the post, but this time I’ve saved that for here, in the middle.

I’m part of a peer study group through the Family Firm Institute (FFI) and we had a meeting recently where some of us got together to discuss a variety of topics, including some real case examples we are dealing with.

 

Conflictual Family Drama

One group member spoke about two siblings who were always in confrontations and how the other family members were always trying to decide which one of them to support.

We have a long-term FFI member who acts as a mentor and moderator on our calls, and she made a statement that resonated with me, so I wrote it down, intending to use it for a blog.

Nancy said, “Oh, so they’re choosing sides when there really aren’t any sides to choose!”

“Bingo!”, I thought.

 

Whose Side Are You On?

The point Nancy was making (I think!) is that while the combatants are trying to make it about “my side” versus “his side”, anyone else who looks at it that way is falling into a trap.

Taking sides is usually a false choice.

Oh, I get that this happens in family businesses, and it still happens far too often.

Family members who work together or manage assets together won’t always see things the same way and will often try ot get others to come to their side of every argument, but that doesn’t mean the other family members need to oblige!

 

Interests versus Positions

If you’ve read even a little bit about negotiation, you’ve likely heard about the difference between “positions” and “interests”.

Fisher and Ury’s “Getting to Yes” was the first place I recall reading about this, and that was in the 1980’s, so this isn’t anything new.

If each side simply holds to their position, the negotiation will likely remain a zero-sum game, where any gain by one side is a loss for the other.

 

Digging Their Heels In

Sometimes in a negotiation, both sides really dig their heels in, usually because there’s some emotional aspect to the conflict that prevents them from letting go.

And yes, sometimes in family businesses people get into conflicts that are complicated by emotional issues.

 

Get Past their Positions

In order to have a better chance at a successful resolution, you need to get past their “positions” (My way / I’m right) and get to their interests.

Then, when you can find the common interests that both sides have, there’s something to work with.

Can the other family members avoid taking sides, and look for common interests instead?

I sure hope so!

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