Splitting Roles

Chris Eckrich

We often talk about the many hats each person wears in a family business.  On the business side, one individual may hold the titles of Chairman & CEO, or CEO & COO.  On the family side, one person can serve as both the Family Council Chair & Education Committee Chair.  Individuals that take on leadership in multiple roles in this way are to be greatly appreciated, as with multiple leadership roles come multiple responsibilities.

A challenge develops over time when the “multiple hat”-wearer begins fusing the roles and sees all of the accepted responsibility as “just my job.”  His or her ability to differentiate between the two–or more–roles may become lost over time due to task familiarity.

As succession approaches and it’s time to transition these responsibilities to others, it can be a bit perplexing as to how the various roles should be split.  Without clarity around this question, when a shift is made to allow different individuals to take on the newly split roles, role confusion and frustration are likely to occur.

A quick example:  Arnold had occupied the position of CEO & Chairman.  As Arnold neared the age of transition (in his mid sixties), he determined that the business would be best served by keeping his role as Chairman, while his daughter Alyssa–who had demonstrated much competency over time and earned the position –assumed the role of CEO.  Over the many years of holding both the Chairman and CEO roles, Arnold became quite used to behaving in a certain way. With the new split in roles, he found himself stepping on Alyssa’s toes inadvertently which caused both confusion and conflict.  This caught Arnold by surprise – not a lot of planning went into the role division as they just figured they could work it out over time due to their close relationship.

New approach:  Arnold is suddenly struck by the lack of formality he has given to this situation.  He initiates an exercise whereby each role would be defined clearly in terms of its expectations, responsibilities and reporting relationships.  He includes Alyssa in this process and they work through areas of confusion by asking their Board members for input in the job descriptions they are working on.  Once they have agreed on their positions and reporting relationships, and how they will communicate about the business (frequency, content), the tensions seem to melt away.  This allows each of them to function independently and motivates Arnold to give Alyssa space to be the CEO while he focuses on being the Chairman.

Arnold’s lesson: Just because you are family does not mean you always have to act like it.  Splitting roles, whether they are family or business roles, requires forethought and advance planning.  By approaching the splitting of long standing roles as a professional exercise, Alyssa and Arnold enjoyed a much improved working relationship, which made life easier both at work and at home.

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Sharpening Your Decision-Making Edge

Mike Fassler
Mike Fassler

Over the past 25+ years of consulting with family businesses, I have been witness to some incredibly effective family business leadership teams. They have a sharpened edge when it comes to making decisions. Not only are their financial results impressive, but the nonfinancial impacts to their families, employees, customers, industries, communities and philanthropic interests are even more remarkable.

In reflecting on the common ground leading to their effectiveness, the following attributes are noteworthy:

  1. They are clear about the strategic direction of the family’s business and their family is committed to the strategy.
  2. They have sufficiently transitioned responsibility for day-to-day operations to be able to spend adequate time focusing on strategic matters.
  3. They continuously focus on building trusting relationships throughout their families and their enterprises. As a result, their speed of decision making matches the urgency of opportunities presented and challenges faced.
  4. They understand the underlying variables that drive their business model and they have access to and use metrics to ground their decisions.
  5. They understand the final call on a decision is based on judgment and they have built confidence in and rely on their judgment.
  6. They cast their net wide for input from their families, management teams and external resources.
  7. They are determined enough to continue with execution through difficult and unforeseen challenges, yet humble enough not to escalate commitment of talent and capital “just to be right.”

Take some time and engage your leadership team in a discussion about effective decision making. Questions to consider asking:

  •  What are the attributes that drive the effectiveness of your leadership team’s decision making?
  • Do you have any gaps? If so, how might you start to fill them?
  • What needs to be done today to extend the effectiveness into the next generation?

Some reflection today can sharpen your decision making edge for tomorrow.

Family is Key

Craig E. Aronoff
Craig E. Aronoff

The New York Times columnist David Brooks focuses largely on parsing behavioral science and moral philosophy for practical use.  His most recent books, “The Social Animal” and “The Road to Character” are worthy reads in this regard.

In a recent column, Brooks probes the role of “family” in society.  He notes that individuals “emerge out of families…” and that “the family… is the essential social unit.”

He then turns to statistics that are familiar to all who work with family businesses, concerning the prevalence and performance of family businesses.  He also notes the frequency of multigeneral family heritage in politics, and fields like music, sports and literature. (And he could have added science, law, or virtually all other fields.)

Probing why this should be the case, and without mentioning genetics, Brooks offers five reasons why “certain families are breeding grounds for achievement.”  These include:

  1.  Identity formation by which growing up in a certain kind of family lets you think of yourself in those terms at a young age.
  2. Practical knowledge learned by the example of one’s kin rather than in a classroom or a book.
  3. Level of skills that are cultivated and accumulated across generations. (“It takes three generations to make a career.”)
  4. Audacity in which you can dare seek high achievement because of role models in your family.
  5. Time horizon in that families think and work for the long term, seeking to pass a legacy to those not yet born.

Some people think that being born into the “right” family confers unfair advantages, says Brooks. “Families are unequal.”  And while that makes it harder for others to compete, the result is to make “society as a whole more accomplished.”

His conclusion:  “We wouldn’t want to live in a society in which family influence didn’t happen.”

All those who see their family enterprises as precious to their owners, employees, customers and communities, and mightily strive to maintain and grow all dimensions of their family’s legacy, can thank David Brooks for his recognition of the reality and importance of what families who work together accomplish.

Level the Playing Field: Bring All Voices into Meetings

Anne Hargrave
Anne Hargrave

Have you ever walked out of a meeting thinking that it went very well, only to learn later that many in the group were frustrated and discouraged?

Or, have you worked hard to formulate your thoughts for a meeting and then just couldn’t find an opportunity to voice them?

The differences between extroverts and introverts in planning and decision making processes have a direct impact on how people feel about their roles, their ability to contribute and, ultimately, the success of the endeavor.

Adam Grant of Wharton, Dave Hofmann of the University of North Carolina at Chapel Hill, and Francesca Gino of Harvard conducted a study within 57 locations of a pizza chain to determine the impact on profitability of extroverted leadership when the employees were passive versus proactive.

They found that extroverted leadership was linked to significantly higher profits when employees were passive, but significantly lower profits with employees who were proactive.  In Gino’s Harvard Business Review article about the study, she notes that in stores with passive employees, those led by extroverts achieved 16% higher profits than those led by introverts.  However, in stores with proactive employees, those led by extroverts achieved 14% lower profits. The results suggest that introverts can use their talents more effectively with proactive team members because they are more open to those who champion new visions, promote better strategies and introduce changes.

Understanding and managing the dynamic in a group is essential to being able to have effective discussions. Extroverts have a tendency towards group interaction, talking to think and sharing ideas openly — they gather their energy from the group. Introverts don’t like to be interrupted, often prefer quieter environments and need to think before taking action or speaking. They gather their energy with quiet time, reflection and focus on topics of importance to them.

Structuring family business meetings to take into consideration the differences between introverts and extroverts levels the playing field, and provides a platform for everyone to be heard.

As a new client recently said, “We are listening to each other better, but we need to quiet the talkers so that they can hear the other great ideas!”

What can you put into place to encourage everyone to have a voice?

Here are a few ideas that have worked for other families:

  • Learn about each other’s personal style. Take an assessment like the Myers Briggs and learn about how people gather information, make decisions, gain energy and deal with the outside world.
  • Provide the materials for a meeting well in advance of the meeting.
  • Agree to read meeting materials in advance. Consider providing a “pre-meeting” time on the agenda for those who have a tendency to do it at the last minute.
  • Identify specific questions in an agenda for those who need time to reflect and collect their thoughts.
  • Offer an opportunity for meeting participants to ask questions in advance of the meeting to obtain clarity on a proposal.
  • Open the meeting by asking each person in the room to answer a question, setting a time limit for the answer. Use the opportunity to get to know each other better, share insights and practice listening to each other.
  • Have the group leader or facilitator actively create an opportunity for each person to speak, while encouraging the louder voices to enjoy the listening process.
  • Break into small groups, even twosomes, to bring out the thinking of those who may be less apt to speak up in a group scenario.
  • Offer opportunities for participants to write down their thoughts and have the facilitator read them out anonymously.
  • Have each person speak directly to the facilitator, not each other, if the topic has a lot of emotion attached to it. Invite others to ask a question of the speaker, but direct it to the facilitator.
  • Take breaks frequently to allow time for those who need to gather their energy and process ideas.
  • Focus on creating a valuable discourse, dig deep into insights and allow for thoughtful debate.

Let us know if these ideas work for you and what you have tried to bring everyone into the room effectively!

Avoid Scrapes and Bruises with Situational Awareness

Anne Hargrave
Anne Hargrave

My father flew F-106 jets in the Air Force. I recall hearing numerous stories about his many near misses. There was the time the control tower didn’t see that a plane had landed the wrong way and was heading towards him as he was landing in the right direction.  He also nearly had a mid-air collision over Canada with a fighter from another squadron who was being controlled by a different radar site.  And, he just missed colliding with a civilian Piper Club that was flying in a restricted area after he descended through the clouds going over 300 mph.

These stories, and many more well beyond his Air Force years, focused on the importance of being aware of one’s surroundings.  The value of this advice transfers beyond dramatic air maneuvers into our daily lives  — whether it’s dashing across a busy street, commuting to work or participating in a family business meeting.

In any given family business meeting, family members will figuratively walk in with a collection of hats. In one meeting, you might be the spouse, parent, child or cousin.  In another you’ll have that hat on in addition to being an employee, a shareholder or maybe everyone’s ultimate boss.

Taking time to reflect on who will be in the meeting, the role you and others are playing, the goal for the meeting and the impression you want to make lays a foundation for success.

In a meeting, look for information and behavioral clues so that you can be thoughtful about how or whether to ask a question, when to lean in and when to step back. Asking a difficult question or making a challenging comment in a group environment might damage a relationship, or how you are perceived.  Saving it for a 1:1 dialogue will likely foster greater understanding and collaboration.

To avoid scrapes and bruises, foster positive family engagement and enhance situational awareness, families might answer questions like:

  •  How might we respectfully respond if someone asks a question we don’t want to answer in a group?
  • What signal can we give others if our stress level is getting too high and we’d like to take a break on a topic?
  • How can we let other family members, management or advisors know whether we are speaking from a family member, employee or shareholder perspective?
  • What agreements might we put into place to help us not embarrass other family members in a family business meeting?
  • What can we do to remind ourselves to be thoughtful about who will be in the room and how we want to engage with each other?

If you have found a clever way to enhance family member situational awareness, let us know!

One More Time: Tradition and Change

Amy Schuman
Amy Schuman

The Everlane clothing catalog arrived in our mailbox last week — not because my husband or I are customers, but because it’s a favorite of my 28-year-old son, Benjamin. Its offerings are very limited: beautifully made, affordable, pure cotton or cashmere clothing. They carry a small number of items such as t-shirts, hoodies, sweaters and skinny pants that are largely available only in black, white and grey.  (And in sizes much too small for me to order for myself.)

However, the headline on page one jumped out and grabbed me:

Everlane Catalog

This very young, web-based, nontraditional company is obsessed with the same question that keeps 100-year-old private firms up at night. “How can we honor the need for both tradition and change?”

The answer they come up with is the exact same as many of my clients: “Know your story.”

Be as clear as possible about the underlying purpose, value and vision of your endeavor. Make sure that any innovation is unequivocally aligned with your fundamental guiding principles. Bold, fresh actions never before taken by an organization can be perfectly in line with the historical vision. And Everlane appears to be a wonderful example.

How can you apply this insight to your own tradition/change challenges?

Increase Efficiency by Slowing Down

Amy Schuman
Amy Schuman

Here’s an appealing headline, from the Harvard Business Review “Daily Stat” on May 7, 2015:

Taking Time to Reflect Makes People More Productive
“Trainees at a business-process-outsourcing company in India increased their performance by an average of 22.8% over the course of a month by spending the last 15 minutes of each day reflecting on and writing about lessons they had learned, Francesca Gino of Harvard Business School and Bradley Staats of the University of North Carolina write on HBR.org. Reflection prompts people to be more aware of their progress and gives them confidence to accomplish tasks and goals, the researchers say.”

My colleague, Deb Houden, recently shared this nugget with our group, knowing that we often engage our clients in thoughtful reflection as part of our consulting process.

For example, as a facilitator I regularly end meetings by asking participants to reflect on the time we spent together. Typical reflection questions might include the following:

“As you leave our meeting, what will you take with you and how will you apply it?”

“When you think about our meeting, what stands out?”

“Take a minute to reflect on the time we just spent together: Write down one word or phrase that captures a valuable nugget or insight. We’ll go around the table and briefly share before closing.”

Reflection doesn’t happen only at the end of meetings. If energy droops in the middle of the morning or late in the afternoon, you can take a short diversion from the planned agenda. Go around the table with a reflection question to focus and energize the proceedings, for example:

“What’s one of your unique skills or talents? How can you bring more of that to this meeting?”

“Think about leaving this room at the end of our meeting. What is the most important thing for us to accomplish? What action can you take — immediately — to help make it happen?”

It can be uncomfortable to ask a group to stop for reflection. I often have to weather some rolled eyeballs or other resistance. However, the discomfort is worth it! Meetings are invariably more productive, focused and enjoyable after even a very brief reflection break.

Have courage. Take the risk. Take steps to balance out the bias towards energetic forward motion. Use reflection as a tool to slow things down in order to  ultimately be even more effective.

If you are already trying this approach, let us know how it’s going!

Rules of Communication in Family Meetings

Dana Telford
Dana Telford

I’m mechanically disinclined.  My dad recognized this early in my life.  But he wanted me to at least understand the basics of a few mechanical functions.  This inspired him to create a simple, memorable, four-word description of how a combustible engine works: pump, squeeze, pop and blow.  Let me elaborate to (literally) the full extent of my abilities.  Fuel is pumped into a cylinder.  A piston squeezes the fuel, increasing pressure.  A spark plug pops and ignites the compressed fuel.  The explosion blows the piston up and blows the exhaust out.  The energy created by the explosion is converted into power.

Family businesses are like combustible engines.  Family members and non-family employees provide the talent and skills that make up the fuel.  Goals, objectives and compensation models create pressure to succeed.  Personalities and individual work styles create the sparks that can easily turn into explosions.  Governance (a la family meetings, policies and processes) is the exhaust system that regulates the pressure inside the engine and generates the power.

Consider this: Without an exhaust system, a combustible engine is a bomb.  And with too little pressure and too much exhaust, a combustible engine is nothing more than a lit flame — it doesn’t generate power.  I would argue that without effective governance mechanisms, family meetings will suffer one of the same two fates — either an explosion of emotion and frustration or not enough energy to accomplish goals and make progress.

In my experience, good governance begins and ends with effective communication. Family meetings rely on it to manage tensions that exist between family members.  One way to make progress toward excellent communication is to create rules together.

A couple in the southeastern USA had a family construction business and 10 children.  The business and family grew and grew until the couple decided it was time to pass the business to the next generation.  To facilitate the process, they hired me.  As I interviewed family members and started to understand their strengths and weaknesses, they told me about their most recent family meeting.  At a crucial point, when the family was asked to make an important decision, the eldest son became angry, yelling profanities and cursing his parents and siblings.  He stormed out of the conference room door, slamming it behind him and leaving the family stunned and shaken.  “We were so shocked by his behavior that none of us wanted to have another family meeting any time soon,” one sister said.

In spite of this episode, we invited the brother to attend our family business workshop.  At the beginning of the meeting we turned our attention to creating rules of communication.  “How can we make sure we are listening and being heard? How can we make sure these meetings are productive?” I asked.  The responses were thoughtful and honest and included suggestions such as:

  • No interruptions
  • Be honest but respectful
  • Seek first to understand
  • Everyone has a responsibility
  • Set an agenda and stick to it
  • Set time limits set for topics and debate
  • Anyone can call a time out
  • All are equal
  • Everyone is included
  • The rules rule
  • Notes will be kept by the secretary

But the subject of the emotional outburst of the eldest brother had been fearfully ignored.  Finally, a brave brother-in-law raised his hand and suggested: “Nobody leaves without approval.”  We each held our breath but the eldest brother nodded in agreement.  The rules were approved unanimously.

Two months later, we met to review the first draft of a family constitution that would serve as the foundation of the family’s governance system.  The entire family was in attendance.  At the beginning of the meeting, we reviewed the rules of communication and each raised a hand to signal that they agreed to follow the rules during family meetings.  The meeting went very well until early in the afternoon. The topic was family compensation. Unexpectedly, a sister stood up and announced that she was tired of the meeting and hearing about her siblings “living in la la land” while she had to “struggle through every day.” She headed for the door (which, luckily, was on the other side of a large room) while the family watched her in frustrated silence.

Who came to the rescue?  None other than the brave brother-in-law, brandishing the Rules of Communication as his sword of Level Headed Truth.  “Jane,” he said quietly but firmly, “we all agreed to the Rules of Communication and we agreed that the rules rule.  Please, for the sake of your family and for this process, stay here and work with us.  We need and want your help.”  Jane stopped and scowled at him before sitting down in a vacant chair near the door, purse and car keys in hand.  She stayed put for the rest of the meeting, only to bolt out the door the instant it ended.  Two of her sisters were able to catch up to see what was bothering her.  It turned out that she and her husband were in the middle of a significant financial challenge that was causing her great stress.

Rules of communication, when created through an inclusive process and agreed to by all decision makers, can save a family meeting from falling apart and becoming a wasted, frustrating use of time and energy.  They create an expectation of professionalism in an otherwise emotion-filled gathering.  Without them, the frustrated, brave brother- in-law had probably said “Jane, sit down! You’ve always been a drama queen!” or something insensitive and hurtful.  Do your family a favor: If you already have rules of communication, dust them off and review them prior to your next family meeting.  If you don’t have them, set aside a half hour in your next meeting and create them.  As a result, your meetings will be more productive and respectful and the time spent together will be more rewarding.

First Struggle Then Strength

Dana Telford
Dana Telford

Is it possible to build personal strength without first going through personal struggle?

Sometimes as parents we are tempted to cushion our children from the pain of disappointment and failure as they mature. Too often as family business leaders we believe that we are helping family members by giving them a position that they have not earned when in reality the opposite is true. By helping too much we hinder growth. By enabling we create entitlement.

My teenage son Will loves video games. In his free time, he sits in front of our TV, thumbs a blur on the controller, eyes fixed to the screen, chattering away into his headset as he and his friends strategize how to counter the latest wave of alien invaders. My favorite game growing up was one played not on a screen but in a field: baseball. Despite my hope that this interest would somehow be passed down to Will, his interest in Little League was short-lived and unfulfilling. He tried some other sports and activities and has become a good tennis player.  He has found a passion for nutrition and weight-training. But video games are his first love, and his mom and I have given him the space to pursue this interest.

As Will’s gaming skills and interests have grown, so has the price of his hobby. Earlier this year, he set his sights on a high-powered gaming computer that was “on sale” and asked if we would order it online for him. “You know how it works,” I told him. Once each of our kids is old enough to understand, I explain to them our approach to large purchases: If we agree that the purchase makes sense, the child is expected to work to earn half the money.

It’s the same principle I learned from my mother. Whenever I wanted a new baseball bat or bike or expensive toy, my mother made me earn half the money to pay for it. That not only made me think about how much I really wanted the item — not surprisingly, a lot of things dropped off my “must-have” list when it was clear I had to help pay — but also created space for me to earn the item through hard work, rather than having it handed to me.

“But this is a lot more expensive than anything else I’ve wanted,” Will said when I reminded him of the policy. “I’ll have to earn $800 and I don’t have a job!” I told him I understood that earning the money would be difficult, but reminded him of a few pending expenses in the household that were higher priority – Anna needed braces and Sarah needs her wisdom teeth pulled.  “And,” I reminded him, “your half is going to be more than $800.  Don’t forget tax and shipping charges.”  He let out a sigh of frustration but accepted the reality and agreed to the deal.  Over the next few weeks, I observed him working and saving diligently, putting aside the money he gained from extra chores, babysitting and selling other gaming equipment he didn’t need.

One day Will came to me excitedly and said, “Dad, the computer sale is ending this week.  I need $1600 now!” I reminded him of our deal – that we would order the computer once he put $842 (don’t forget tax and shipping charges!) in my hand or my bank account. He looked disappointed. “I only have $500 saved,” he said. “But my Xbox is for sale and I’m sure someone will buy it.  Could you just order it and I can owe you the rest?”

I admit that it was tempting to give in to his request.  The clash of family socialism and breadwinner capitalism clashed inside me in a major way.  He had worked hard to save more money than ever before. But my wife and I realized that giving in would fail to uphold the principle we wanted him to learn, and would limit the space he needed to grow fully.  Obviously Will was disappointed, but he kept working toward his goal.

Within two weeks, Will sold his Xbox and reached his goal.  We were thrilled to see that the price of the computer was still $1,600 and ordered it straight away.  When it arrived it was everything he’d hoped for and he beamed with joy as he opened the box.

My wife and I told Will how proud of him we were for earning that computer.  He had become very resourceful as he pursued his goal of buying the computer: He had worked and saved and sacrificed his time and other valuables. He had become much more confident in his ability to figure out a way to make things happen. And he gained a greater appreciation of the value of money.

Through the struggle comes the growth.  As leaders we need to keep this principle in mind as we offer jobs and financial benefits to family and non-family employees.  We need to provide them adequate time and space to struggle.  Time to filter through the emotions of disappointment and space to figure out what they really want and how to earn it.  Without it how can they ever hope to develop their own strength?

Family Governance: Who Needs It? (Part 2)

JoAnne Norton

Will, a young member of the third generation of owners of a highly profitable family business, told me his family business had recently been sold.  His family members had been so wrapped up in dealing with the financial elements of the transaction there had been no discussion and very little thought given to the future of the family.

Will invited me to meet with his family, and I began by asking thought-provoking questions. “Are your family members going to split up the proceeds from the sale and all go your separate ways, or do you all want to leave a lasting legacy? Do you still have common goals? Are there wishes you share for the future? Dreams you want to dare together? And what about the logistics? Will each family branch want their own wealth advisor, or could there be an advantage of keeping your money together? Will you want to use a family office? Establish a family philanthropy? Provide wealth education for the next generation together? Will you want to meet with your immediate family — as well as aunts, uncles, and cousins — regularly to have fun and to come together for the common good? How will you make decisions together in the future?”

Will and his family had not thought about most of these issues before. At our meeting, there was a lot of discussion, some tears, and thankfully a great deal of laughter as they discussed the answers to these important questions. Plans were made and committees were created to explore the family’s new vision.

After the meeting, Will shook my hand and looked into my eyes. “I had no idea our family would still need a family business advisor after we sold the business. This isn’t the end of our family business, it’s Act II for our family.” More importantly, he said he was fired up about finally working with his family to create a vision, mission and values and having the opportunity to truly make the world a better place.

Good governance makes worthy goals easier and more enjoyable for families who want to work together successfully whether they are in or out of the family business.