Globalization and the business family

David Lansky

David Lansky

Business families are increasingly composed of global citizens. It is not unusual for cousins who share ownership in a business or who share other financial assets to have grown up in different countries, to have been educated in different school systems, and even to have different religions.

How then to promote alignment around policies, plans and strategies when such globalization may introduce significant geographic dispersion and cultural diversity?

Some thoughts:

  • Develop an intentional plan to ensure that different family members spend enough time together to understand and strive toward a common family culture.
  • Increase the frequency of family meetings.
  • Encourage cross cultural and cross demographic sharing of personal and business experiences.
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Demographics and the business family

David Lansky

David Lansky

The Pew Research Center recently released its 2014 study of social and demographic trends in the U.S. Some results included:

Family members are living longer.

  • Average life span has increased from 46.3 years (men) and 48.3 years (women) in 1900, to 77.4 years (men) and 82.2 years (women) in 2013.

Family members have different views on what IS family.

  • Nearly four-in-ten survey respondents (39%) say that marriage is obsolete; in 1978 when Time magazine posed this question to registered voters, just 28% agreed.
  • 86% of respondents say a single parent and child constitute a family; 80% say an unmarried couple living together with a child is a family; and 63% say a gay or lesbian couple raising a child is a family.

Families LOOK different.

  • Rates of intermarriage have doubled since 1980.
  • About 50% of U.S. marriages end in divorce.

Good engagement with, and effective implementation of a family’s structures, policies and plans will be enhanced by recognizing the increased diversity that these demographic trends foretell.

Multiple active generations in the same room at the same time, multiple ethnicities and religions, and multiple views of exactly what constitutes “family” will require greater flexibility and tolerance on the part of all generations in a family.

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How one family got started with family education

Steve McClure

Steve McClure

When a large family was moving into its fifth generation of adults, their Family Council knew it was time to invest in future shareholder development.

The family had 20 fifth-generation future owners and beneficiaries who ranged in age from 14 to 39 (plus several more who were younger) and were geographically dispersed. There were also a few members in that same age range from the fourth generation. Some relatives had worked for the company in summer jobs, but most had not. Some attended shareholder meetings and many did not.

Faced with these challenges, the Council asked themselves: “How do you educate the family, and on what?”

They agreed to form an Owner Development Committee consisting of five fifth-generation members and one fourth-generation member. The mission was to research and design their own education program. Over the course of nine months, the committee organized their recommendations into four segments:

1) What should we do together? Seeing as some family members barely knew their cousins, the committee recognized that teamwork development was necessary to become a unified shareholder group. They decided to set aside one day prior to the annual shareholders’ meeting to conduct group programs. In turn, this would naturally increase attendance for the shareholder meetings. Programs would be oriented toward the whole group, but the day would also have three breakout sessions with age-appropriate content aimed (1) at the teens, (2) the college-aged group and (3) the older cousins. Programming would include tours, management presentations and education about the company. There would also be projects, plans and decisions requiring collaboration, leadership, organization and accountability. By learning and accomplishing projects together, they reasoned that teamwork would develop as they achieved their desired educational goals.

2) What body of knowledge and skills do we need to master? The committee identified subject areas based on their research drawn from attending family business seminars, speaking with other business families and reading related materials. Skill and knowledge areas included financial statements, investing, communication and negotiating skills, knowledge of their business and industry, family values and history, business strategy, and an understanding of the role of the board, shareholders, family governance and management.

3) What education should we provide and what should individuals learn on their own?  Next, the committee defined what individuals are expected to learn on their own (primarily from books, articles and seminars), what will be provided to the group (customized programs presented by other business families, speakers and trainers), or made available to attend (seminars, courses and training programs). For the seminars and other resources, they established rules and procedures to address education costs and set expectations about expenses covered by family members.

 4) How do we implement?  Understanding that implementing all the educational initiatives at once would be overwhelming, they designed a multi-year, roll out strategy. The first step was introducing the one day, pre-shareholder meeting to inform everybody of the curriculum and obtain buy-in.

The committee presented their recommendations to the Family Council, and then to the entire family at a family assembly meeting where they received unanimous support.

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The family council dream team

Steve McClure

Steve McClure

In my family, we don’t wait for the basketball madness to start in March.

Last weekend, we watched the NBA all-star game and three-point shooting contest. Next week, my youngest son starts his high school basketball post-season playoffs. And next month during his spring break, we are taking a trip scheduled around a particular NBA game. Needless to say, at home we are talking a lot about players, teams and teamwork.

I don’t talk to my family much about Family Council teamwork, but I think about it a lot and see it firsthand every week.  Like a basketball team, the best Family Councils are teams with the right skills and attitudes.  Larger families with many choices have the luxury of selecting their best talent.  Business families who include spouses as candidates for the Family Council expand their talent pool.

When assembling the Family Council dream team, pick at least one who can be the Chair to galvanize and manage the team. He or she communicates well, facilitates, never bosses -yet can be directive when needed – and is great with follow up so that individuals are accountable. This team manager is the kind of person who can make a good idea seem like everyone’s and can tell the truth about what’s going on without an uncomfortable confrontation.

The chair is joined by some great teammates, all of whom:

  • Get things done by keeping conference call appointments and taking responsibility for Family Council tasks/projects without over-committing.
  • Can be flexible and adaptable about the family’s changing needs, yet be rigidly firm on values.
  • Understand the differences between the roles of shareholder, board, management and family and can respect the boundaries.
  • Have the spunk to decide what is right, rather than siding with an individual or family group (especially their own).
  • Are capable of working with differences among individuals, branches and generations.
  • Can inform, listen, respect and build trusting relationships across family branches.
  • Have the diplomacy to keep their mouth shut about sensitive matters but love to blab with the best of them on everything else the Family Council is doing.
  • Can respect, support and help the Chair accomplish the difficult, underpaid, cat-herding job – instead of pushing the buttons of their courageous brother, cousin, aunt, uncle, niece, nephew, father, mother or sister who agreed to do it.

Anything missing?  What talents do you value on a Family Council?

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Past, present and future focus in meetings

Chris Eckrich

Chris Eckrich

Spending our lives in business or family meetings is a huge commitment of time and energy.  In order to make those meetings most effective, we do best when we pay particular attention to the degree of past, present and future focus in meeting time.

In board meetings, often a pattern of focus on past performance develops into an expectation of what board meetings should be. At some point, the board begins getting frustrated that too much time is being spent on last quarter and not enough attention is being given to issues facing the company in the present, or future. This tension can bubble up and cause the board to question its meeting practices. Usually this results in movement towards a stronger and more robust board meeting process, with greater focus on responding to today and planning for tomorrow

Shareholder groups often experience this same pattern: the shareholder meeting consists mainly of a review of what has happened in the past. This may continue for a few years, but at some point as the shareholders begin to get anxious about the future. They begin to ask where they are going as a group, and how the entity or the assets they own will help them achieve their goals. Just as in boards, a process of meeting renewal frequently results in a shift of focus to primarily present concerns and future direction.

While it is easy drop into routines and use templates that can be repeated from meeting to meeting, engagement will typically be higher when the board, shareholder group, or even a family group (for those of you hold family meetings) ask the question: “What is our ideal balance of focusing on past performance and history, present situations and pressing conditions, and future direction and strategic intent?”

Posted in Business Governance, Family Meetings | Leave a comment

An imperfect gift

Chris Eckrich

Chris Eckrich

Over the years in which I have consulted with families, I have observed an important, and encouraging, pattern in numerous families whereby the senior generation – despite substantial tensions and challenges in working together – offers the junior generation an opportunity to have relationships unspoiled by the challenges of their parents.

It goes something like this…

The senior generation, often a sibling generation, struggles with managing the emotional aspects of being in a family business together. These struggles are not uncommon, and often simply due to the pressures of being a family together, working with their parents and facing the stresses of the day. Over time, they become overly sensitive to comments or actions that were not intended to cause pain but do nonetheless.

It would be typical that these frustrations would turn into toxicity, which is then shared with their children – the next generation. But in many families something beautiful happens. The senior generation members, recognizing the value of their collective children building supportive and nurturing relationships, suppress their own frustrations and insulate the next generation from daily dramas, allowing the junior generation emotional space to become friends and build relationships. The result is a group of cousins who enjoy their relationships and their time together, often independent of the parents’ participation. In these cases, the collective sense of family created among the cousin group is a powerful force.

Being in a family is sometimes messy and intense. As human beings, we are not perfect.  Many of us have emotional nerve endings close to the surface. We get hurt. We want to attribute the source of pain and frequently look outward for causes. In the worst of cases, we blame others for the entire balance of the messy relationship and are blind to our own part in the drama. In our frustration, we may even disparage our family members to our children, and even to their children.  This creates division within the family.

When the individuals within a generation commit to nurturing the junior generation despite their own pains and the complications associated with the complexities of being in an enterprising family, a great gift is truly given.

Posted in Communication & Conflict, Next Generation Development, Succession & Continuity | Leave a comment

Collected resources: Family councils

Editor’s note: A frequent question we hear from business families regarding family governance is: “Where do we start?” The following is a selection of articles and other resources that can be helpful in thinking about the role family governance might play in your family. 

Family Councils_Who Needs Them_blog banner

As family business advisors, we have been recommending to our clients that they form family councils for decades. In fact, councils are often considered the sine qua non for all families who own businesses together, particularly if the business has been around for more than a generation. But who really needs a family council, and what exactly is one?Read more…

Responsibilities of Family Councils by John L. Ward, Ph.D.
This comprehensive list outlines the obligations a well-defined council provides to the family firm. Read more…

A Renegotiation of Relationships by Chris Eckrich, Ph.D. and Steve McClure, Ph.D.
The “Hills” family asks: Are we ready to commit to changing our rules of engagement with one another? Read more…


Family Council HandbookBook: The Family Council Handbook
by Chris Eckrich, Ph.D. and Steve McClure, Ph.D.
An invaluable owner’s manual for family councils that includes beneficial models, strategies and real-life examples. Learn more…

Webinar: Providing Structure for Family Business Continuity
During this on-demand webinar, panelists Chris Eckrich, Ph.D., Steve McClure, Ph.D. and Amy Schuman explain how to use the family council to strengthen the family and the business. Learn more…


Other Complimentary Resources

These articles originally appeared in The Family Business Advisor, a monthly email newsletter published by The Family Business Consulting Group. To sign up for your free subscription, please complete this form. We also have a vast selection of online articles available at your fingertips!

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10 (plus one!) tips for strong families (Part 2)

Deb Houden

Deb Houden

For the first five tips, see part one of this blog post!

6) Accept What Others Can and Cannot Give

Accepting what others can and cannot give is tied to being the change agent. Strong family members accept that others are different and may not be able to give what they can give. Not everyone is a great communicator. Strong family members recognize that and check in. Brother is uncomfortable talking on the phone? Text him. Sister has trouble taking on too many tasks? Ask how you can help her. Of course we can point and say, “They should. . .” but why? Strong family members accept what others can or cannot give by adjusting their own behaviors to meet their other family members ½ (and sometimes ¾) of the way.

7) Don’t Dwell on the Past

Don’t dwell in the past, either. Stay in the present and allow your family members the same courtesy. Enough said.

8) Cheer on Other’s Success (no matter how small)

A healthy family I know sends out text messages to others in their family when something good happens. A family member I know shared his son’s success in making it to the Dean’s List his first semester of freshman year.  Immediately, the brother texted his nephew saying “Great job.” This not only allowed the family member to share their success, they paid it forward by acknowledging the next generation’s success. It is a quick pat on the back. Strong family members find a reason to say to each other “Good job!”

9) Realize No One Owes Them Anything

As there is a distinct difference in feeling an obligation vs. an opportunity with the family business, so too is the belief that you have been blessed with the ability to do for yourself.  Entitlement is the poison of families and businesses. No one, not even our parents, owe us a happy family business. We owe it to ourselves. It is when individuals feel fortunate to have a family business that they strive to make it better. Strong individuals focus on what they can give, instead of what they are owed.

 10) Reflect and Adjust

The strongest leaders are those who reflect on their decisions and make changes. The strongest family members are those who review their behaviors towards their own family and make adjustments as needed. Did they hurt someone? Then they apologize immediately. Did they reach out to say, “How are you doing today?”  Did they share in the joy of their nieces or nephews triumphs? Did they keep their mouths shut and open their ears? What did or didn’t they do, and what do they need to adjust?  Strong family members reflect each day on their own behaviors and change what needs to be changed.

11) Don’t Expect Immediate Results

Strong family members understand that any relationship needs continuous attention.  It is not a one-and-done kind of deal. A family I work with continually addresses the challenges they face.  They realize that years of negative behaviors cannot change overnight and their family is now fixed.  They look for incremental changes and face each day knowing that they are working towards something years from now in which they can look back on and smile.

Posted in Communication & Conflict, Family Business Values, Sibling Teams | Leave a comment

10 (plus one!) tips for strong families (Part 1)

Deb Houden

Deb Houden

Many of the families that we work with use their strong relationships as a competitive advantage for their business.  The underlying trust and goodwill towards each other are distinct benefits when individuals know their family has their backs and are there for them. The workplace is a pleasant, productive environment where employees are confident in how decisions are made.  However, there are also families where the relationships are a distinct disadvantage for the business. The tension between members makes the environment uncomfortable; the employees are not sure who to please or are getting direction from multiple members who disagree with each other.

Inevitably, when the relationships are troublesome, there is blame: “If I could just get my brother to stop meddling in my department;” or “She micromanages every action in her department.”  I call it the “If I could just get them to…” trap.  The finger pointing goes outward instead of inward. Strong families are made up of individuals who point the finger at their own nose and challenge their own behaviors.

Here are 11 behaviors that individuals from strong families do to keep their competitive advantage:

1) Don’t Waste Time Playing in the Pity Puddle

Life is full of challenges; it gets rough. Blend family and business together and it can be a tempestuous storm. Strong family members don’t waste time by thinking woe is me. They get themselves out of the Pity Puddle by focusing on their gratitude list. And they really focus on it.  When I work with families who are having trouble, their homework assignment is to focus on what they are grateful about each other. And sometimes it’s hard! Strong family members don’t stay in the Pity Puddle long – they focus on gratitude list and add to it every day.

2) Laugh at Themselves and with Each Other

Strong family members realize that they are human and subject to some not-so-pleasing behaviors themselves. They fight against being defensive and are able to laugh when others point out their shortcomings. Laughter is a wonderful elixir. Laughter triggers the release of endorphins and produces a general sense of well-being. When we can laugh at ourselves, and with our family members, we can produce a shared sense of feeling good. Strong family members look at reasons to laugh at themselves and with (not at) each other.

3) See their Family through Rose-Colored Glasses

Strong family members look at their family and see the good, not the bad. We all have a choice in how we want to view the world; we all have a choice in what we see in individuals. Strong family members choose to look for the positives in their family, not dwell on the negatives. It is easy to say that your family is dysfunctional. Our own worlds are all about our perceptions of them. Strong family members tend to view their families as a source of strength and good.

4) Don’t Let Others Have Power over Them

Strong family members believe they control their own emotions. They accept that it is their choice to be bothered by someone else’s behavior. Strong family members rarely believe other’s drive them crazy. They are able to walk side by side without reacting. They check and control their emotions so they can interact instead of react.

5) Be the Change Agent

Strong family members don’t repeat negative messages about each other. They don’t keep their family stuck in the same place by waiting for someone else to change. They accept that if they keep doing what they’re doing, they are going to keep getting what they’re getting. Strong family members accept that they need to be the change that they seek in the situation. By being the change agent, and staying the course, others will be able to change, too.

Our next post will share six more tips about what strong families do to keep their competitive advantage.

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Establishing a family philanthropy

Norbert Schwarz

Norbert Schwarz

Several of my clients have wanted to begin or continue a philanthropic culture with their families but have been hampered by the costs of establishing their own foundation. The advice generally given to them by the experts is that it takes an initial investment of $250,000 to $500,000 to make the foundation cost effective. However, there are vehicles that can accomplish the objective for far less.

Our family was recently made aware of Vanguard Charitable. It is a public charity that was founded in 1997 by the Vanguard Group and provides investment management and administrative services for charitable purposes. A majority of Vanguard Charitable’s trustees are independent of the Vanguard Group.  The minimum contribution to establish a fund with them is $25,000 and you can make grants to acceptable charities of $500 or more. We were able to fund our initial tax-deductable contribution utilizing appreciated mutual funds.

The process to establish a charitable account was very easy and the company was extremely helpful in working us through the enrollment process. Making grants to your favorite charities is also simple. Vanguard Charitable does the due diligence, and you can choose the charities for your grants. Grants must support recognized public charities. You can also designate how you want your remaining fund balance to be invested at Vanguard Charitable. The annual fee based on our initial funding was .6%

If you are looking for a vehicle to establish family philanthropy at a conservative funding level, this type of vehicle might be well worth investigating.

Posted in Financial Management, Mission, Vision, Values & Culture | Leave a comment