Category Archives: Leadership

Getting Unstuck

Chris Eckrich
Chris Eckrich

In a family business, it is not unusual for a junior generation family employee to become stuck in a job where he is under-performing. When this happens, it can be difficult for family management leaders to talk openly with the younger family employee about the situation. Although folks working with the family employee are well aware of the situation, no corrective feedback is given.

This can be even more difficult if it is a sibling or cousin that is observed to be in a rut. Commonly, the junior generation family employee feels strongly that there are artificial limits placed on what he or she is allowed to do in the organization, perhaps because of age, experience, or unhealthy family dynamics that are playing against them. Often, nothing is said as speaking up may create tension and nobody wants to hurt loved ones.

This is not a healthy situation. For the company, the business is robbed of a family employee who could either excel and add much more value to the company, or exit and make room for a nonfamily employee who would be more successful in the position. For the junior generation family employee, being in a stuck position creates frustration as valuable life time is being spent doing something that is perceived as either not meaningful or lacking direction.

When this happens, the status quo can continue for months or even years if neither side speaks up. Once the pattern is entrenched, senior generation leaders may form judgments about the junior generation employee’s motivations and assume that they are lacking. The junior generation may form judgments about the senior generation’s typecasting and form judgments as well. Both sides begin to see each other as the problem and a decline in mutual respect sets in.  A better model is needed.

If you see yourself in this situation, don’t settle for the status quo. You and your organization are much too valuable to settle for this no-win scenario.

Here are some actions you might consider:

 

What the “stuck” family employee can do:

 

What the senior leader can do:

Quit complaining about things not being the way you want them to be.  It does nothing to help you. Quit labeling the junior employee as ineffective and commit yourself to helping him or her develop into a better person and employee.
Identify a resource that can coach you to clarify and state your desired goals and roles. Work with ownership to develop a comprehensive family employment policy that addresses an expected family work ethic and identifies career resources available.
Communicate your hopes to your supervisor or HR Director, asking what specific training or behavior changes you could make that would increase your chances of reaching your desired goals or roles. Speak with the younger generation employee about his or her desired goals and roles, listen to what is shared and write it down.  (If he or she has no future goals, request HR assistance or outside coaching as a way to help the person gain clarity.)
Create an action plan to develop the specific skills or experiences needed to reach your goals, even if it will take time (like furthering your education). Once goals are clearly stated, work with HR or appropriate supervisors to identify behavioral, educational and experiential requirements that will be needed for the person to advance.  (Request coaching for this person through HR or outside resources, if it is needed.)
Talk to senior family leaders about your hopes and what you intend to do to reach your goals, asking them for further input on what you can be doing to become more valuable to the organization. Determine what corporate resources are available to help the junior generation employee achieve his or her stated goals, and what strings are attached (e.g. the company will pay for courses in which a B or better is earned).
Use your coach or another person to serve as a support resource to help you stay on track. Clarify what role senior family leaders and immediate supervisors will have in providing guidance and feedback to the junior generation employee.
If you realize that your needs cannot be met inside the company, don’t be afraid to pursue your career outside of the family business.  You may end up developing a stronger skill set that will allow you to reach your goals in the family business at a later time. Affirm progress towards goals and expect setbacks, but don’t fall into the trap of labeling.  Be honest in providing feedback that will help the junior generation family employee get back on track.

Employee Appreciation

David Ransburg
David Ransburg

I grew up in a family business, a sprinkler manufacturing company in Peoria, Illinois. My father ran this business for nearly 40 years, and I had the privilege of working in this business myself. While not every decision my father made turned out to be right, he made many excellent decisions. One of the very best was instituting an annual event he called “Employee Appreciation Day.”

Briefly, Employee Appreciation Day consisted of all office workers spending one day in the company’s factory or warehouse, laboring alongside the regular employees of those areas. This event served a number of purposes. First and most generally, it brought employees together for a full day, thus breaking down some of the structural barriers inherent to these separate functional areas.

Second, this day of direct interaction provided more specific knowledge that was helpful to all employees. For example, working on the assembly line allowed sales people to better understand how the products worked and to better appreciate the care that went into the creation of each item. Manufacturing employees could share process improvement suggestions with managers they wouldn’t otherwise see.

Most importantly, Employee Appreciation Day (which included a pizza lunch for all employees) strengthened the company’s conscious culture of cohesiveness and collaboration — a culture that provided the company with a competitive advantage in the marketplace.

What strategies have you tried for strengthening the culture of your family business?

The Power of Questions

Barbara Dartt
Barbara Dartt

There will come a time during your family business succession journey when progress requires you to give up what you love to do and what you are very good at to make room for successors to learn, grow and flourish. This is some of the hardest work of succession.

Part of the trauma in this process is watching your bright, passionate and energetic successor – someone you have great confidence in – make decisions that you’ve made for 20 or 30 years. As you would expect, they make some missteps. They collect the wrong information. They take too much time. They move slowly on small decisions and too quickly on big, complex ones. They don’t treat people right. They screw up.

As the senior team member (some prefer “seasoned” team member), it’s often hard to know when to step in. How do you ensure they make some mistakes but none that are too big? How long do you let them bark up the wrong tree?

Today, I had the honor of watching Scott, one senior generation member (who would NOT appreciate that title), hit the ball out of the park while guiding a successor.

Scott is the CEO and the oldest of a four-sibling ownership team. He is fast paced, smart and loves to engage in stimulating conversation. Scott, while effective at his job, does like folks to know how smart he is and does not suffer fools lightly. He can easily dominate a conversation. And over the 18 years he and his brothers have worked together, his brothers have taught themselves to defer to him. And why not? Scott is almost always right. His guidance has brought the business a lot of success.

However, Scott (and his brothers) have recognized that his natural style – which has been a strength of the business for a long time – will not position it for long-term success.

The successor in the business is Derek, Scott’s youngest brother by 15 years. Derek presented a feasibility study today to the Board that he and Scott developed about an acquisition target. Scott has traditionally done the majority of this kind of work and been the one to present and lead discussions.

Derek had worked very hard to be ready for the presentation. He’d done his homework, gotten Scott’s input and worked with an outside consultant on both the content of his report and his presentation style.

I have watched Scott in similar situations before. When he already understands the content of a report, Scott has a hard time staying patient. He fidgets. He sometimes adds a point but then takes the conversation off topic. Scott’s become aware of these tendencies and their effect on other’s confidence.

Today, Scott was a superstar – just like Derek was. He was relaxed. He listened well. When he thought Derek missed something, he asked a great question. The tone was truly curious. He deferred to Derek’s knowledge and really asked his opinion on the topic – it wasn’t a rhetorical question that he already knew the answer to. (Well, it didn’t sound rhetorical.)

Questions can be transformative and sometimes very hard for experts to ask effectively. Questions can make the asker vulnerable – someone might think you don’t know something when you ask a question. For the CEO who’s been charged to know everything for a very long time, vulnerability can be an extremely hard place to put yourself.

The next time you’re tempted to add your perspective, hold off until you can do it in the form of a question. A real question – not one designed to point out what you know. And get the tone right. Tone probably contributes 90% of the effectiveness of a question.

When you get it right, watch the successor bloom with confidence and initiative. What an honor to watch Scott and Derek become a case study in how the hardest work of succession can pay off.

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 and CEO, or CEO and COO.  On the family side, one person can serve as both the Family Council Chair and 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 and 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.

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.

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?

Avoiding the “to-do list” mentality

Kristi Daeda
Kristi Daeda

One of the great benefits of the ever-increasing dialogue around family business challenges is that many families have a much clearer picture of the things that are required to sustain the business into future generations. Readers of our books and articles will see that our experience with business-owning families has shown certain things to be very helpful in balancing the needs of family and business, including independent boards, family councils, family policies, family meetings, and family education.

And so, it can be tempting to dive in and start putting those things in place. Take the example of instituting a family council. It can seem fairly simple – selecting people to serve on the council, organizing meetings, creating agendas, etc. A successful family council, though, requires the family itself to change, giving up old ways of communicating and making decisions in favor of this new structure. This kind of change takes time and may feel like two steps forward, one step back for a while until the family adapts.

This is why the process of how these important structures are created is as important as the structure itself. A board of directors will be most effective when the board has the trust and respect of the family. A family council will work best when the family understands its purpose and respects the council members who represent them. The process of creating these structures includes what they are and how they’re formed, plus education, agreement, and engagement.

As we enter a New Year we may look to set goals that will move our families towards better continuity planning. Keeping the focus on both where you need to go and how you’re going to get there is important to smoothing out the bumps in the road on the way to change.

Understanding the complex role of board chair

Drew Mendoza
Drew Mendoza

I’m a fan of good corporate governance particularly in family enterprises with the complexity or size that warrants having a (well) functioning board of directors. How complex and what the thresholds are for having a board of directors that has bench depth, structure and independence depends on a wide array of factors and are the focus of articles, books and blog postings throughout the family enterprise world. But, for today, I want to plant this seed in your thinking.

I believe the global community of family enterprises is awakening to and realizing the value and importance of good corporate governance and, more importantly, excellent management of those boards by qualified chairpersons.

Being the chairman of a family firm board is not like being the CEO. The CEO focuses on growth, profitability, strategy implementation, and the processes and structures that keep the business moving toward its strategic imperatives. The chairman leads the business’ governance function, not the day-to-day management of the company.

 Yet, most family firm chairs are the men and women who were the company’s previous CEO. Do they know their company’s operations? You bet, thoroughly and deeply. But, do they have the skills necessary to be the chairman? Can they manage the board in ways which reflect shareholder expectations and ensure the CEO is receiving clear direction? Do they know what data the board needs and in what format to do its job? Can the chair develop accountability measures for both the board and management without alienating family managers and family shareholders? Is the chair ready and able to listen to director input and facilitate difficult conversations without resorting to the meeting management style s/he used when they were the CEO? Is the chair able to identify the needs for creating or dissolving board committees?

We believe the role of the chair is very different from the role and responsibilities of the CEO. And, we believe that the chair is not just another director. The chair has special responsibilities that add value to the company and help align shareholder expectations.


Today’s blog is inspired by and written in support of FBCG’s newly announced event, The Chair Forum. We invite family firm chairs to continue the conversation by joining us to share experiences, generate ideas and hone their skills at productive corporate governance. Click here to learn more>>

The natural fit of emotional intelligence in family business (Part 2 of 2)

Kent Rhodes
Kent Rhodes

In my last blog post, I shared how Emotional Intelligence (EI) has become a core piece of the discussion about effective business leadership in recent years. I describe it as “the ability to monitor and understand the impact of emotions – from one’s self and others – on one’s own behavior and others’ behavior, all in a way that guides wise decision making.”

As a part of building this discussion, I am highlighting some recent research conducted by one of my graduate students at Pepperdine University, Emily Spivey, and how important it is for family businesses to be able to build in these insights as a part of good continuity planning for subsequent generations.

Emily was curious about the role emotional intelligence plays in how successful entrepreneurs build an organization from the ground up. The results of her work revealed Seven EI Qualities Important in for Entrepreneurial Success:

  1. Reading the room. Described by one study participant as the ability to understand “interpersonal dynamics that are taking place in a group or social context,” or by another as “understanding what people are experiencing at any given moment,” the importance of “reading a room” was identified as a characteristic of an emotionally intelligent leader necessary to effectively build an organization.
  2. Decision making. EI plays a role in the entrepreneur’s ability to make decisions, often quickly, creatively, and decisively, usually in the midst of uncertainty or under pressure. It even included their ability to accurately anticipate the responses and reactions of people around them and to adjust decisions as necessary.
  3. Hard leadership. EI plays a role in being able to lead in a crisis, including leading through brokenness, conflict or stress. In relationship to the uncertain and often chaotic nature of starting up an organization, study respondents talked about not only having the capacity to lead through hardship going on with other people, but the necessity of leading through their own personal challenges or conflicts as they came up. Managing and tolerating stress was also mentioned multiple times as key to effective leadership in the context of “hard leadership.”
  4. Risk taking. Another theme identified was the ability to express entrepreneurial leadership and take risks themselves, while simultaneously inspiring others to take risks as well. This role seems to be particularly important in terms of gaining financial stability by securing investors, loans, and financial security.
  5. Leadership in self and others. EI plays a role in being able to build leadership skills in others while simultaneously sustaining one’s own effective leadership over the long term. According to the entrepreneurs in the study, effective leadership includes both empowering and cultivating leadership in those around you and also having the self-perception to know your own leadership limitations or signs of burnout, and to course correct when mistakes were identified.
  6. Interaction. EI plays a role in being able to interact with others in a way that builds the confidence of people in their various roles and develops other leaders. The study respondents emphasized the importance of strong interpersonal relationships in starting the new venture.
  7. Trust. EI plays a role in trusting and building trust. This role of EI was discussed as an expression of emotionally intelligent leadership and also as an outcome. Emotionally effective leaders both trust themselves, and also inspire and build trust in others.

The natural fit of emotional intelligence in family business (Part 1 of 2)

Kent Rhodes
Kent Rhodes

I’ve always been fascinated with the internal workings of leadership in family businesses and how founders of a successful family enterprise seem to have so much in common around their understanding of people. One of the roles I play in my life is that of a research advisor to graduate students at Pepperdine University. This means I see first hand how smart students explore and test interesting questions and how their discoveries can be applied to all kinds of organizations, especially to family businesses.

One of those recent studies by graduate student Emily Spivey explored the role that Emotional Intelligence (EI) plays in how effective entrepreneurs grow an organization from the ground up. I got excited about the results and implications for how EI and “entrepreneurialism” might be built and passed along as a part of effective continuity planning in the family firm. This is the first of two blog posts in which I’ll share the study along with the seven ways emotional intelligence can be perpetuated in family firms for future generations.

In recent years, emotional intelligence has become a core piece of the discussion about effective leadership in business. Essentially, it the ability to monitor and understand the impact of emotions – from one’s self and others – on one’s own behavior and others’ behavior, all in a way that guides wise decision making.

It will come as no surprise to anyone affiliated with a successful family business that this study verified previous research results (Barczak, Iassk, and Mulki, 2010; Cross and Travaglione, 2003, etc.) that there are clear links to the health, survivability, and overall effectiveness of entrepreneurial ventures to the personal qualities and leadership capabilities of the founder. It also bore out the notion that effective entrepreneurs naturally create an environment or culture of trust which fosters everyone collaborating more naturally, developing creative solutions, and achieving better overall results (more about that in the next post).

Interestingly enough, when asked about their understanding of emotional intelligence during the study, respondents were vague about their ideas. They tended to associate EI with “soft skills” and yet as they described their day-to-day work, the importance of using those skills became clearer. As a result, the group identified seven qualities that are important in their own leadership effectiveness when building an organization from the ground up.

They include:

  • Reading the Room
  • Decision Making
  • Hard Leadership
  • Risk Taking
  • Leadership of Self and Others
  • Interaction with Others
  • Trust Building

In my next post, I’ll share how these seven qualities apply to family businesses and the continuity of building “entrepreneurialism” in subsequent generations.