All posts by Michael L. Fassler

Next Generation Development: Put Your Family Enterprise to the Test

Michael Fassler
Michael Fassler

Next generation development is a critical component of multi-generational continuity.[1] An effective process for developing the next generation of leaders requires a significant commitment of family resources. A test of whether your next generation development process is being effective involves answering three questions:

  1. Are family members developing the competencies to perform in their current and future family enterprise role(s)?
  2. Are family members developing the confidence that they can deliver in their current and future family enterprise role(s)?
  3. Are family members building credibility with family members, non-family executives and independent directors?

Development of competency, confidence and credibility go hand-in-hand. Competency is the combination of behaviors, knowledge and skills necessary to be well-qualified to perform in a particular family enterprise role, whether it be management or ownership. The opportunity to demonstrate competency combined with accurate feedback on performance is essential to developing confidence. Experiencing demonstrated competency sets the stage for family members to trust in themselves to further develop and prepare for increasingly complex roles. Experiences where learning is taking place and value is being created for the family enterprise is a powerful combination which builds family member credibility.

As individual family member competency and confidence build, credibility with other family enterprise stakeholders also increases as they come to believe and trust in the family member. Essential to building credibility includes having, and applying, a well-defined next generation development process which is understood and accepted throughout the family. This helps ensure that stakeholders believe decisions regarding access to development opportunities, including employment roles, are in line with what has been agreed upon.

As your family considers the significant commitment you are making to your next generation development process, test its effectiveness through assessment of the impact on developing competency, confidence and credibility in the family’s next generation of family leaders. This assessment will provide you with important feedback to drive needed adjustments and to encourage your family to continue to invest in this critical component of multi-generational continuity.

[1] See, for example, Developing Next Generation Leaders in Family Business; Stephen P. Miller; The Family  Business Advisor; 

Next Generation Development: Put Your Family Enterprise to the Test

Michael Fassler
Michael Fassler

Next generation development is a critical component of multi-generational continuity.[1] An effective process for developing the next generation of leaders requires a significant commitment of family resources.

A test of whether your next generation development process is being effective involves answering three questions:

  • Are family members developing the competencies to perform in their current and future family enterprise role(s)?
  • Are family members developing the confidence that they can deliver in their current and future family enterprise role(s)?
  • Are family members building credibility with family members, non-family executives and independent directors?

Development of competency, confidence and credibility go hand-in-hand. Competency is the combination of behaviors, knowledge and skills necessary to be well-qualified to perform in a particular family enterprise role, whether it be management or ownership. The opportunity to demonstrate competency combined with accurate feedback on performance is essential to developing confidence. Experiencing demonstrated competency sets the stage for family members to trust in themselves to further develop and prepare for increasingly complex roles. Experiences where learning is taking place and value is being created for the family enterprise is a powerful combination which builds family member credibility.

As an individual family member’s competency and confidence build, credibility with other family enterprise stakeholders also increases as they come to believe and trust in the family member. Essential to building credibility includes having, and applying, a well-defined next generation development process which is understood and accepted throughout the family. This helps ensure that stakeholders believe decisions regarding access to development opportunities, including employment roles, are in line with what has been agreed upon.

As your family considers the significant commitment you are making to your next generation development process, test its effectiveness through assessment of the impact on developing competency, confidence and credibility in the family’s next generation of family leaders. This assessment will provide you with important feedback to drive needed adjustments and to encourage your family to continue to invest in this critical component of multi-generational continuity.

[1] See, for example, Developing Next Generation Leaders in Family Business; Stephen P. Miller; The Family  Business Advisor

Family Relationships and the Power of Affinity

Michael Fassler
Michael Fassler

It never ceases to amaze me how family members in some family enterprises are able to function with relative ease while communicating and making decisions. Their ability to function this way results in uplifting family relationships along with enterprise growth and continuity. An observation about families with this level of functioning is that they have a high degree of affinity for one another – a natural liking for one another.

A high degree of affinity among family members is often not the case. This may cause family members to function with relative difficulty as they govern their family enterprise. However with deliberate effort the opportunity remains to overcome these difficulties. By family members rallying around some common purpose, they are often able to engage in rewarding family relationships along with growing and continuing their enterprise.

To begin, accept the reality that just because family members share the same genetics and grew up in the same environment, that does not necessarily result in a high degree of affinity. There is going to be diversity in beliefs, behavior, talent and interest among family members. Affinity is a natural occurrence, you cannot mandate or will it into existence. However, the following actions can help what affinity exists to express itself:

  • Maintain an ongoing dialogue to uncover (or discover) some level of shared purpose for working together.
  • Acknowledge one another’s contributions within the family and the enterprise as they are made and express gratitude for the impact they are having.
  • Through assessment and study, develop a basic understanding of your own and other family members’ behavioral tendencies. This understanding can lead to increased acceptance of other family members and can help you manage your own behavior as well.
  • Remind yourself that your family enterprise is a group of people working together. To be effective as a group there are times when self-interest must be secondary to the group’s interest.
  • Add structure to conversations and decision making whether they are in the realm of family, management or ownership. Both informal and ad hoc communication and decision processes can get in the way of productive interactions.
  • As your family and your enterprise evolve, know that evolving your governance process will contribute to rewarding relationships, growth and continuity.

And one final thought: Yes, when there is a low level of affinity productive interactions can be really difficult work. The pay-off is protection of relationships with family members you love.

Renewal Energizes Multi-generational Continuity

Michael Fassler
Michael Fassler

The new year is upon us! This is a great time to consider the power of renewal and its impact on multi-generational continuity of your family enterprise. Multi-generational continuity requires commitment to the future for the family enterprise to sustain itself and renewal results in commitments. Consider engagement in renewal on three fronts: family relationship, strategic and personal.  This engagement will result in commitments on these fronts, all working in concert and serving to energize the family business system for multi-generational continuity.

Let’s consider the meaning of renewal. The Merriam-Webster online dictionary defines renewal as “the act of extending the period of time when something is effective or valid; the state of being made new, fresh, or strong again.” When you consider that “it’s natural for families to tend toward dis-organization and separation over time”[1], that business strategies are always moving toward commoditization, and that individuals tend to get into and remain in their comfort zones and become complacent, renewal on all three fronts extends and strengthens the effectiveness of your family relationship, your strategy and yourself.

The most significant risk to multi-generational continuity is deterioration of the family relationship. The result of engaging in family relationship renewal is an increase in affinity throughout the family making it more attractive to be together and work together thereby decreasing the risk. Increasing affinity requires spending time together in settings where individual family members feel their voice is heard, their contributions matter, and they are able to enjoy the company of other family members. Options include family events such as family celebrations, family meetings, family vacations, family business conferences and family retreats.

If your family events are feeling stale and the lack of energy or participation is waning, reach out to a broader segment of the family for input on freshening up the content and activities. Sharing your own expectations and getting updated on others’ is perhaps the most powerful outcome of family relationship renewal.

Competitive pressures are fierce and maintaining an edge in your marketplace is a continual challenge. Strategic renewal helps you maintain, if not gain, an edge. Strategic renewal involves making decisions to commit resources to evolve how your business creates value and competes in the marketplace. It results in commitments such as: deepening customer and/or vendor relationships to increase their cost of switching; building your brand; evolving your processes to achieve a higher level of operating efficiency; divesting of a legacy business enterprise; or increasing your geographic or product line scope to gain economies of scale.

You know a commitment is strategic if the investment requires making a trade-off such as between the investment and increased dividends. Investing in strategic renewal takes courage, particularly when things seem to be going along rather well and there is not a crisis at hand.

Personal renewal is about focusing on yourself in order to learn and grow your capability to be effective in your multiple roles as a family member, business leader, shareholder and director. Although seemingly more simple because it requires only you to commit, personal renewal requires courage as it involves self-examination and an increase in uncertainty. Personal renewal involves engagement in such things as changing the way you behave, learning a new or deepening an existing functional skill, understanding better the impact you have on others, taking on new responsibilities which involve risk of failure, and sharing power and control. Making commitments in these type of areas can be tremendously energizing for you due to the sense of satisfaction gained from the growth which takes place.

A practical framework to apply to renewal on each of the three fronts – family relationship, strategic and personal is:

  1. Reflect on the past.
  2. Assess the present.
  3. Imagine the future.
  4. Commit to action.

Periodically applying this renewal experience framework will result in commitments which create the energy critically important to achieving multi-generational continuity.

What will you do this year to renew your family relationship, your strategy and yourself?

[1] David Lansky article: “Ties That Unbind” in Private Wealth Magazine; March/April 2015.

Sharpening Your Decision-Making Edge

Michael 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.

Communication in family enterprises: The role of assumptions

Mike Fassler
Mike Fassler

Family enterprises are complex systems due in part to the overlapping roles of family, ownership and management. Effective communication in the midst of these overlapping roles is crucial to being able to work together effectively. Part of human nature is to use assumptions in an effort to simplify and make sense of complex systems. So it is natural for stakeholders in family enterprises to make assumptions as they seek to communicate with one another. It is these very assumptions that often get in the way of communication and in turn working together effectively.

An assumption is “something that is accepted as true or as certain to happen, without proof.” Assumptions have a powerful impact on communication because they can become fact in the mind’s eye, facts turn into beliefs and beliefs drive our behaviors. There is a tendency to make assumptions that are negative, cumulative and unspoken. This often results in a negative outcome of interactions with other family business stakeholders because the behavior, stemming from the assumptions, is not appropriate for the situation. At the extreme, the search for reinforcing evidence of being “right” can become the priority which can contribute to a downward spiral in trust.

For example, if a sibling partner assumes that sharing their viewpoint about their niece’s behavior and performance will be met with defensiveness by their sibling father, it is more likely that an important discussion will be delayed indefinitely. The negative outcome in this situation is that the niece is not provided with timely feedback that is important to her development as a manager and future owner.

What if the sibling partner’s assumption was changed and shared? For example, open the discussion with: “I am assuming all of us are interested in Tonia’s development as a manager and future owner, have her best interest at heart, and believe that timely feedback is important for her development and the future of our family business.” Stated agreement on the underlying assumptions helps all parties align on the purpose of what will still be a difficult conversation, yet an important one that will actually take place.

As you prepare for that next interaction with another family business stakeholder consider…

Asking yourself:

  • “What assumptions am I making that if fully disclosed, would more clearly communicate my intentions?”
  • “What assumptions am I making that if modified, might open up other possible outcomes?”

Asking the other person:

  •  “Can you help me understand what led you to that solution?”
  • “Is it possible to try another approach? If so, what might be an alternate outcome?”

Working effectively with other family business stakeholders is always going to involve the making of assumptions. Being transparent with what your assumptions are and being curious about others’ will contribute to more effective communication in your family enterprise.

Accountability: How to respond when behaviors or results don’t measure up

Mike Fassler
Mike Fassler

Accountability in a family business requires personal commitment to agreed upon behaviors and results. When you commit, you automatically make yourself vulnerable because your behaviors and/or results might not measure up. That’s why it takes courage to make commitments – you have to take some risk. How you respond when there is a gap between your commitment and what actually happens determines how others are likely to respond to the shortfall and whether or not you will have a positive influence on accountability in your family business.

So, let’s say you’ve made a commitment and you’ve fallen short. How should you respond?  By voluntarily acknowledging the shortfall, you create a safe environment within which to have what are usually difficult conversations. You are not leaving another family member or non-family executive to wonder whether you are aware of the shortfall, and how to best start a conversation with you. They don’t have to — your initiative has started the conversation and your display of vulnerability created the safe environment.

Voluntary acknowledgement takes pressure off relationships. Your recognition puts others at ease and better enables them to provide input as to changes or actions to help mitigate the impact of the shortfall. Provided your family business stakeholders have shared intentions, and are pulling together in a shared direction, voluntary acknowledgement will more likely lead to support, rather than challenge.

During this conversation that you have brought to light, ask for input and ideas. Was the commitment too large? Is there additional training or skill building you need to improve upon next time? Is there someone that might shadow you on your next attempt to provide more input along the way? Asking for feedback frees others to bring resources to bear, and this will support you in future commitments.

Voluntary acknowledgement is a powerful influence on keeping accountability alive and well in your family business and a way of mounting support during difficult periods.

Consider what’s standing in the way of you trying this out.

Conciliatory Gestures – Helping Make It Safe to Reach Agreement

Mike Fassler
Mike Fassler

Families that work together successfully while maintaining positive family relationships have figured out how to have difficult conversations and reach agreement on challenging matters.  Conciliatory gestures, doing something or saying something that expresses a concession or a willingness to make a concession, can play an important role in this success.  Conciliatory gestures help create a safe environment for multiple parties to make concessions as they work toward agreement.

Examples of conciliatory gestures include apologizing for what was said or for how you behaved; acknowledging your contribution to the challenging situation which demonstrates a willingness to be accountable, and positive expressions about the other’s contribution.  These gestures demonstrate vulnerability and a desire to find common ground.  This in turn can elicit a conciliatory gesture on the part of others as the expressions send a message that fairness will be represented in the ultimate decision.

In order for this to be effective, all parties must share a fundamental belief that they all have the greater good of the family and the business in mind balanced with respect and consideration for individual interests.  Absent this mindset, conciliatory gestures may be viewed as less than authentic and therefore manipulative.

Give it a try.  The next time you are engaged in a discussion that is emotionally charged and where opinions vary, try out the use of a few conciliatory gestures.  Set the example for the group engaged in the discussion as it may be contagious and could lead to a break through to agreement.

Accountability in Your Family Business – Achievable Reality or Elusive Dream?

Mike Fassler
Mike Fassler

I have often had the opportunity to serve family businesses where accountability is alive and well and the resulting culture of accountability provides a competitive advantage.  Likewise I have seen plenty of family businesses where the lack of accountability is a perpetual topic of discussion, there are little or inconsistent consequences when people fail to deliver, and accountability seems like an elusive dream.  Often family businesses that lack a culture of accountability also have contentious relationships which are a drain on both family and business energy and resources.

So what are some of the distinguishing factors for those family businesses where a culture of accountability is a reality?

Shared Values – Shared values are the foundational building block to accountability as they inform what attitudes and behaviors are expected and provide broad guidelines for family member interaction with one another and with the business.

Shared Vision – A shared vision provides a clear understanding of where both the family and the business are going and how one supports the other.  A shared vision provides the context within which results can be gauged and is the connection to a purpose larger than any one individual.  It is this connection that creates the incentive to contribute to the overall good.

Freedom of Choice – Accountability is built through freedom of choice to contribute on the part of the individual.  Absent a voluntary choice to contribute, there are too many ways to blame others for behavior and results that don’t measure up.  The motivation to be accountable is derived from the satisfaction of choosing to contribute.

Certainly articulating goals, roles, policy, procedures, consequences, etc. to provide additional clarity on expectations can be helpful to developing a culture of accountability.  However, no amount of structure will substitute for shared values, a shared vision, and freedom of choice when it comes to making accountability an achievable reality in your family business.

Power without Knowledge – An Unnecessary Burden

Mike Fassler
Mike Fassler

In my work with sibling or cousin shareholder groups, I often encounter unprepared, or “sudden” shareholders.  These individuals come into ownership of their family’s business as a result of a gift or the death of a parent with little to no preparation for the role of owner.  As these shareholder groups come together to align for the future, a challenge they face is that some of the shareholders who now have decision-making powers have not been equipped with the knowledge on how to effectively manage this responsibility.

Often the “sudden” shareholder becomes dazed and confused about what being a shareholder means.  Questions like: “What are my responsibilities?”; “How much time do I have to commit?”; “Do I have to do real work if I am a shareholder?” “What if I really don’t want to be an owner – what are my options?”  arise in their minds.  They don’t really understand what ownership of the family business means to them or the broader family.

This situation can bog down the governance process and lead to ineffective decisions as the shareholder group seeks a threshold level of knowledge to “get up to speed.”  In addition to the time each individual shareholder may need to wrap their mind around their rights and responsibilities, the group of shareholders also has to learn to collaborate as a team of owners – something that doesn’t just happen by virtue of kinship! The governance process tends to slow to the pace of the family shareholder with the least knowledge.

A critical component of multi-generational family business continuity is a cohesive shareholder group.  The better prepared the family is for transition of ownership from one generation to the next the smoother the transition will go.  A key part is preparation of all potential next generation shareholders through a deliberate next generation shareholder development effort.  By learning about being an effective shareholder well in advance of a triggering event, the family and the business will be better equipped for continuity and will not run into the unnecessary burden of power without knowledge.