Defining what’s right for your generation

Deb Houden

Deb Houden

“We’re doing it that way because that is what Dad wanted. And for as long as he is alive, that’s how we’re going to do it. It was Dad’s dream, he built it, he gave it to us, and that’s what’s important. We have to honor Dad.”

The statement silenced the rest of the siblings who were trying to have a discussion around the development of a shareholders agreement. The agreement was a “last man standing” contract where upon the death of the shareholder, their shares were retired and the remaining owners had a larger stake in the company. The sibling group of eight were in their 50s and 60s, and contemplating their own future. Some of the siblings worked in the company but most did not. One of the siblings had been diagnosed with a chronic illness that had the potential to shorten her life, and she wanted to understand the consequences of her ownership for her children. She understood the children were to receive the financial gain for the sale of the stock back to the company, but one of her children also worked for the company and hoped to become part owner one day.

While there were many facets to the discussion, I stopped the conversation and asked all of the siblings to step back a bit. Why would their dad want the agreement to read like that? What would be the purpose of formulating such an agreement? The fourth child answered, “Because he wanted the decision making to be consolidated so no one who was running the company would have to ask anyone else for permission to do something.”

I asked the remaining siblings if that was true. They all nodded in agreement. I proceeded to ask why their dad would have felt so strongly about consolidating decision making. Then another sibling told me the story of their dad, his father and his uncles. It was a story of destructive work habits and entitlement that strapped the company and angered the siblings’ father. He eventually bought everyone out and turned the company around. Their father had a very compelling reason to have the shareholders agreement written in the way that it was. However, it was now time for the siblings to come together to decide what was right for them as a group and their families going forward.

Each generation must navigate their own waters. Each generation must decide what is right for them, and what to pass forward. Each generation must face the tension of what is right for their nuclear family, and what is best for the whole and come together to negotiate a decision. And the successful negotiation can only happen through communication.

Often as consultants we are asked to speak or write on best practices. We are asked to give advice on what works best. The problem with those answers is that in order to be a best practice we must answer, “It depends.” The best answer is that each group must come together to review, to communicate, and to decide together a path that moves the family and the business forward in a constructive way. What is best for one family enterprise may not be the best for another.

I was reminded of this the past week when I listened to a webinar on the next generation and how they need to individuate and differentiate from the family. They need to become their own person and understand their own identity, their own strengths and weaknesses. When they can stand on their own, make their own decisions in a healthy way, these children become an adult who can bring a lot of positives to the family and the business, regardless if they work there or not. It is the same with each generation of a family business. They must understand where they came from, appreciate the hard work of the older generation, but decide what their own strengths and weaknesses are, what they need to do for each other as a whole in order to put their own stamp on the family and the business.

The next time you are in a family meeting, work in individual generations to decide:

  • What are our strengths as a group?
  • What is a potential area that could make us unravel?
  • What do we want our generation to be known for?
  • What happens if we do nothing?

Honor your past and hope for the future, but don’t forget to make (as a group) your own impact on the family business.

Posted in Communication & Conflict, Family Business Values, Family Meetings, Mission, Vision, Values & Culture, Next Generation Development, Sibling Teams, Succession & Continuity | Leave a comment

The meaning of labor

David Ransburg

David Ransburg

We celebrate Labor Day on the first Monday of September, and I’ve always thought that this holiday may be the most important one for family businesses. If that statement strikes you as strange, please bear with me.

Labor Day became a national holiday in 1894, and it is dedicated to the social and economic achievements of workers. While originally conceived of as a celebration of organized workers, most people now see it as a celebration of all laborers, organized or not.

Family enterprises, representing the vast majority of businesses in North America, certainly contribute a tremendous amount of labor to our economy. For that reason alone, it would be appropriate for family businesses everywhere to celebrate Labor Day. But, there’s more…

The word “labor” has another meaning beyond “toiling at work” in its relationship to childbirth. A quick review of “labor’s” etymology shows that the original meaning referred to “toil, exertion, task,” while the secondary meaning associated with childbirth followed a few hundred years later. Refer to “labor pains” today, though, and there is no question that most will initially think of childbirth… especially for expectant mothers!

There is, unfortunately, no nationally recognized “Family Business Day,” but that is no cause for despair. The efforts of family businesses do not go unnoticed: their holiday is Labor Day – after all, what better holiday is there for family businesses to celebrate than the one whose meaning is both work and family?

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Little League Rules and Learnings for Family Business

David Ransburg

David Ransburg

As the Little League World Series recently wrapped up, there’s much we can learn from these terrific players and coaches. Important ideas like sportsmanship, respect, effort, accepting defeat with grace, and fun immediately come to mind. Also, if you believe that Little League baseball is simply about winning, treat yourself to this video of the post-game speech by the coach of a Rhode Island team that had just been eliminated from the tournament:

Little League Speech

There’s also a specific lesson from Little League that is directly applicable to family businesses: The 24-Hour Rule.

I recently attended a local Little League game and learned about an interesting policy that this particular league calls “The 24 Hour Rule.” There’s no documentation of the rule for my local Little League, but the Middletown (NJ) Little League has a similar policy that they articulate beautifully on their website:

If an issue should arise that requires communication with the coaches, please wait 24 hours. During this time we ask you think about what you want to say and how you want to say it. The cooling off period prevents matters from getting out of hand when they shouldn’t. Never approach the coaching staff on the field or at practice.

I’ve worked with many different family businesses, and occasionally the issues that they address are significant and emotionally-charged. In these instances, tempers can easily become inflamed, leading the conversation to become destructive instead of constructive. In those cases, the best remedy I’ve found is a simple “timeout” – stop talking for a few minutes and let the group disperse with no interaction at all until everyone has “cooled off.” In my experience, participants regain their bearings within 30 minutes or so – rarely does it take as long as a full 24 hours.

Everyone is different, though, and every situation is different… so, that 30 minute guideline is just a rule of thumb. But, however long it takes you and your family to cool off, once you do return to the conversation, you all will do so with clearer heads. That timeout may seem like a setback or even a “loss” in the moment, but it will actually get you closer to progress long term. Just like that Little League team from Rhode Island, what seems like a loss will actually be a win.

What other tips would you recommend for dealing with “explosions” within a family business?

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A chairman defines the role

Drew Mendoza

Drew Mendoza

Did you ever hear the expression:  Tell them, remind them and remind them again?

For decades, FBCG has been preaching the value of corporate governance in general and the very special role played by the board’s chairman in particular. This short piece, originally published in The Family Business Advisor in print version in 1993, still captures the essentials of what it means to be the chairman of the board in a family enterprise. It’s worth a review.

A Chairman Defines His Role

We know a thoughtful family business leader who is retiring as CEO, but will continue as Chairman of the Board. (The firm has an active board with for outsiders and two family representatives.) In preparation, he attempted to define the chairman’s responsibilities. We wanted to share it with our readers.

  1. Assure that shareholders are kept adequately informed of affairs of the company, and develop and maintain shareholder relations program of the company. This includes giving thoughtful consideration to shareholder concerns and needs and reporting those concerns and needs at least once per year to the board.
  2. Accountable, with other directors, to shareholders for proper execution of duties and responsibilities of the Board in connection with shareholder rights and interests.
  3. Develop responsibilities to be assumed by the company’s Board of Directors.
  4. Through the President and CEO, (a) offer counsel when asked; (b) assure that Board decisions are understood and implemented; and (c) assure that management has an active and effective strategic planning process.
  5. Keep informed on state of the company’s affairs, and through the President and CEO, assure adequate flow of information to the Board.
  6. Develop Board as dynamic, constructive force in company and guide it in discharging its responsibilities. Propose methods to the Board to help it identify opportunities and means to improve Board functioning.
  7. Ensure Board members are knowledgeable in industry matters.
  8. Propose time and place of Board meetings; call meetings; preside at meetings of shareholders and meetings of family shareholders.
  9. Review reports and proposals of management with officers prior to presentation to the Board.
  10. Lead Board in preparing annual slate of directors and selecting candidates to fill vacancies.
  11. Responsible to secure reliable, certified audit to verify management’s conduct of the business.
  12. Make recommendations to committees of the Board. Present to the Board reports and recommendations made by committees of the Board. Serve on the compensation committee.
  13. Maintain top level contacts with members of the community to ensure that company is properly recognized, dealt with and appropriately represented in community affairs.
  14. Identify ethical dilemmas in the company and report on those annually to the Board.
  15. Consider leading special projects as proposed by CEO.

 Excerpted from The Family Business Advisor, Copyright © 1993.

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Sustainable family policies answer “Why?”

Drew Mendoza

Drew Mendoza

Increasingly, owning families rely on an array of policies intended to guide future decisions and actions. They may address who can serve on the family council or the board, set compensation for next generation members, determine whether in-laws can own stock or guide how profits will be deployed (re-invested or paid out to shareholders).

In our experience, an important quality a sustainable policy will have is that the reason or rationale for why the policy was written is explained in the form of a preamble or some sort of introduction. When preambles describe the philosophical basis of the policy, it conveys the intent of the policy. It’s akin to understanding the meaning or intent of a law as compared to the letter of the law. A policy that doesn’t convey the intent may be difficult to interpret or enforce as holes or ambiguous language is put to the test in later years.

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Addiction in the Family Business

Bernie Kliska

Bernie Kliska

Addiction is an unfortunate but common issue that many families have to deal with. Families in business together are not exempt from this issue.

When a family member has an addiction, be it drugs, sex, gambling, alcohol, etc., it is necessary to address the problem in order to have long term family harmony and stability. This is especially critical if the addict is the anticipated successor.

Unaddressed, addiction can wreak havoc on a succession plan. As a consultant and family therapist, I have seen the results and consequences of addiction on families. The addict places a huge burden on the family. Their erratic and irrational behavior takes an emotional toll on everyone.

Unfortunately, for a family in business together, a lack of family harmony not only affects the family, but negatively impacts the business’ success as well.

There are two common ways families deal with an addict in the family. The first is they pretend the problem doesn’t exist, or they end up enabling the addict as a way of coping.

However, in reality the problem does not magically disappear. If your family is facing this tough situation, here are some steps family members can take to effectively deal with an addict.

  1. Encourage (not threaten or force) the addict to seek professional treatment. The best case scenario is for the addict to enter treatment willingly and take responsibility of his or her own healing.
  2. Regardless of whether or not the addict decides to seek treatment, you should attend support groups. Support groups will teach you about setting boundaries, consequences, compassion when it comes to dealing with an addict, not taking on the responsibility for the addict staying in treatment, being supportive versus enabling and what to expect from the addict.
  3. Have all family member’s employees sign a Family Member Employment Policy that includes the requirement for them to be addiction free. You can stipulate in the policy that anyone found to be suffering from an addiction must seek treatment and show proof of successfully completing a treatment program as a condition of continued employment.

The third step is important for any business owner, whether or not you currently have a member of the family suffering from addiction, in recovery, or even if everyone appears to be doing well.

Implementing policies and safeguards to protect what you have worked so hard for is just common sense. No one knows what tomorrow may bring, but planning for all possible contingencies will provide for the best chance of future success for both your business and family.

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Hiring a family business consultant: Key questions and considerations

Bernie Kliska

Bernie Kliska

As a consultant to family businesses, I am frequently asked, “When will I need a family business consultant?” The simple answer is, when you need one, you will know it.

A consultant is usually brought in to help a family resolve particular issues that they do not have the time or expertise to resolve by themselves. There are basically two types of systems consultants often used:

Expert or project consultants will give you solutions to particular problems and help implement those solutions.
Process consultants help you define the problems and then assist you in reaching your own conclusions and solutions.

What should you be looking for when hiring a family business consultant? The first and most important factor is straight forward: can they help solve your particular issues that are hurting the family and business or both?

Before hiring a consultant, here are some questions you should ask yourself:

  • What type of experience do they have working with family businesses?
  • How broad and deep is their training?
  • How long have they done family business consulting?
  • Do they demonstrate expertise on the pertaining issues the family is presenting?
  • Have they helped other businesses with similar issues?

Two other basic criteria are cost and time. Is the consultant affordable for you and is there a time constraint? Do you have confidence that the consultant will complete the project on time?

While these are important factors, the real question is, does the consultant have the experience and ability to manage the specific issues that are involved? A quick and cheap solution that doesn’t solve your problems is not very useful.

Helping to cultivate harmony is an important part of the consultant’s involvement. Family businesses are incredibly complex entities. Family business members inherently need to work through a broad range of complicated challenges, with the consequences of failure being not only the loss of the business, but also potentially the loss of the love found in family relationships.

Succession, ownership, communication, family dynamics, and governance all require different types of management. However, to be successful, all of these things need to be functioning in harmony. Thus, there are many different skill sets that a consultant needs to work with a family business.

Running a business is hard, especially these days. Trying to run a profitable business with your family, while maintaining harmony within the family, can be even more difficult. Fortunately, there is help available.

Family business consulting is basically the art and science of helping a family business find the delicate balance of peace and success among the family and the business.

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FBCG Celebrates 20 Years

Chris Eckrich

Chris Eckrich

In my last post, I wrote about the need for families to celebrate and build memories. This week marks the 20th anniversary of The Family Business Consulting Group’s founding by Drs. Craig Aronoff and John Ward. Since then the group has grown significantly and we have consultants spread throughout North America serving clients here and around the world. We consider it an honor to build upon the foundation our founders laid and are taking time this week to reflect on all the hard work and effort that went into building an enduring organization that serves the needs of enterprising families.

When reflecting on our first 20 years as an organization we are most drawn to the many stories of hard work, creativity, perseverance, courage and even humor that are part of our history. These stories become the bedrock of our culture and continue to provide clarity around our core purpose. Ultimately, however, the impact our organization makes is determined not by our stories, but by the stories of those with whom we’ve had a chance to interact, either through consulting or through our writings and presentations. As we pause to reflect on our own first 20 years we want to thank all of you, our readers, who have made this journey meaningful and worthwhile. We look forward to being part of your stories as we begin our next 20 years of serving enterprising families.

Blog note: As in Chris’s previous post, we believe in the importance of building connection and history within FBCG. As a thank you to the consultants and staff that support families across the world, and in gratitude to their families who support them in this work, we gathered together to celebrate 20 years of service and collaboration. We’ve shared a peek at that event in the photos below.

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What’s a celebration without cake?

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Our youngest attendee, Rebekah, tries out the silly hat photo booth.

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Cheers!

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Releasing lanterns with notes of gratitude and for future success.

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 Closing out the evening with a little music and dancing.

 

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Creating Memories

Chris Eckrich

Chris Eckrich

Summer time for most allows at least a partial chance to break from the hectic pace of everyday life and find time for relaxation often in the form of a vacation away from the busyness of home and work. Far from being a marker of laziness, the ability to take time away from intense thought and activity and allow the body and mind to restore allows us to come back to our work or vocation refreshed, often with new perspectives on how to achieve our goals.

Summer is a good reminder that even working families need time for restoration and reigniting the bonds that connect. Some business families only engage in competitive (and sometimes stressful) work environments with each other, but lose touch with (or never develop) opportunities to just be a family. This missed opportunity to create new bonds can prevent the family from building new memories and new stories in the family’s history. Having time together to explore new things (think vacation spots, cruises and such) and to just relax and have fun (think down time in which business does not need to be discussed but joy is experienced together) becomes the fodder for the stories that will become part of family folklore.

It is easy to drop into a mode of “all work and no play” but that truly does make Jack (and Jill) dull and less connected as family members.

As we reflect on the benefits of summer time and look forward to the coming year, in what ways will new family memories have space to be created and banked in the family’s history?

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Asking and listening…

Dana Telford

Dana Telford

I visited my mother in law last Tuesday. Before I left to drive home, she insisted that I take a sack full of “windfall apples” back to my wife and kids. “Windfall apples?” I thought to myself as we began picking red apples off the lawn. “I’ve never seen Windfall apples in the grocery store. Fuji and Gala and Macintosh and Granny I recognize, but Windfall apples? Are they grown in Chicago or on a windswept tropical island somewhere? She must be confused.”

Had I stopped there, and gone on assuming that I knew more about apples than this mother of 7, grandmother of 18, I would have missed a valuable lesson. She was describing the way the apples had been harvested, not the brand.

I asked her, “What are they called? Windfall apples?” She said, “Yes, they are the ones knocked out of the trees by the wind. My dad used to call them that, so I do as well.”

A light bulb went off in my head – windfall. Like in Monopoly. A windfall is defined as a “sudden unexpected gain or piece of fortune.” I’ve played Monopoly for decades with my siblings, friends and now children, and have never understood the meaning of that word.

Too often in life we forget to ask family members what they know and how they know it and what they believe and why. By listening to their reasons for doing certain things in a certain ways, we can discover, not only more about them, but also more about ourselves. Why does mom put the paper towels on the roll one way versus the other? Why does granddad add water to the pancake batter? Why does Uncle Steve say “a quick nickel is better than a fast dime”?

There are usually very good reasons why people believe what they believe and behave the way they behave. But if we never ask, we’ll never learn. We can gain so much from each other, regardless of age or gender or role in the family. And learning will ultimately help us avoid some of the pitfalls that others have experienced and shape our views of the world and how we want to experience life. It is not uncommon for adult children to take their experiences from younger years and find ways to improve on them. Watching parents struggle with financial challenges, for instance, and living paycheck to paycheck can cause a young adult to focus on discovering ways to ease those challenges in her own future.

Improving our ability to ask “why do you do this or believe that” and listening carefully to the answer will provide greater benefit than simply observing and either dismissing or mimicking behaviors. This is a habit we can begin to instill into future generations. And when one of our children or grandchildren ask us why we ask so many questions and listen so intently to the answer, we’ll know we’ve reached our goal.

Posted in Communication & Conflict, Family Business Values, Next Generation Development | Leave a comment