Tag Archives: decision making

How is as Important as What in Decision Making

Deb Houden
Deb Houden

Three siblings sat in a room discussing the details of a new shareholders agreement they wanted to create. Through a recent lawsuit with two other siblings, their current shareholder agreement, which had been put together by their father, had been helpful in defining settlement terms, but they knew it wasn’t comprehensive. The three siblings had gotten over the shock and hurt of the lawsuit, the dust had settled, and they were ready to proceed with a new shareholder agreement, but old habits had started to reemerge. They were stuck in a positional standoff. Eventually, after a year of building trust, they got to the point of having an honest and open discussion with each other regarding what they each wanted out of the shareholders agreement. They were (rightly) very proud of how far they had come.

They were also contemplating succession and their children were now employed in the business. One of the senior generation siblings suggested that since the three of them had come so far, it might be important for the next generation to sit in on the facilitated discussions regarding the shareholders agreement. They wanted the children to see that they could have tough discussions without being positional, judgmental, and/or defensive.

The meeting didn’t get very far through the parts of the agreement. There were a lot of side questions, a lot of meandering, but always came back on topic. Eventually, the three siblings went off on their own to discuss a few of the points on the shareholder’s agreement. After the siblings left, the next gen were asked what they thought of the meeting. A couple of them were confused about the lack of progress on the different points. Why was there so much discussion and meandering? Another was grateful to start hearing some of the terms that were used. He didn’t understand all of the different aspects of the agreement, so he was intrigued. And finally, the last one said he was happy to understand why they were making decisions about certain things instead of being handed a document and told “that’s how it is.”

The three siblings came back in the room and one of the next gen asked if they got anything done. One sibling answered that they got a lot done – they uncovered more questions. Two of the next gen were confused. They again said it seemed like the older generation siblings weren’t accomplishing anything. But the eldest sibling was excited. He told the next gen they accomplished so much more than just the points of the agreement. They gained trust and understanding and were enjoying the new found teamwork around the important document. They had come so far in their communication and were now enjoying solving tough problems together.

It was such an important illustration of how much the process matters when making decisions among family members. The next generation began to understand how to work together as future shareholders. It is incredibly important to teach the next generation many things, but most importantly, how to be a good partner. Next time you’re having an important discussion among the shareholders, keep these following points in mind:

  • Understand the process of making decisions is as important, and sometimes more, than the end product.
  • Exemplify what good communication and decision making can be for the next generation – they’re watching you.
  • Don’t hide difficult situations and conversations from the next generation.
  • Understand that the next generation wants to know WHY you made the decision you did.
  • Introduce terms that may be foreign, confusing, or misunderstood.
  • Don’t be afraid to veer off-topic for the sake of understanding. Just remember to come back to topic again.

Good decision making is so much more than good decisions.

Managing the Whirlwind Mindfully

Wendy Sage-Hayward
Wendy        Sage-Hayward

Leading in a family business is layered with complexity due to the integration of the family in the business environment. This complexity is highly rewarding but also stressful and challenging at times especially for family business leaders. When trying to balance the demands and needs of the family and the business it can feel like managing in a whirlwind. New research on the brain helps us better understand how we can deal more effectively with the daily whirlwind of the family business.

Typically we perceive a stressful event using one of two automatic brain responses:

  • Adrenalin based reactions – saving ourselves from danger by fighting with, running away from, protecting or camouflaging ourselves… ….fight, flight and freeze OR
  • Problem-solving processes – where we attempt to fix or resolve a perceived problem with higher level thinking. This is where we respond wisely and appropriately, rather than adding to the stress by engaging in automatic uncontrolled reactions. Neuroscientists call this a mindful reaction.

Mindfulness is “paying attention on purpose, in the present moment, non-judgementally….” (Jon Kabat-Zinn). Mindfulness is a mental discipline which involves focusing our attention. It is not a method of distracting ourselves or tuning out. In fact, it is about tuning in. Research by Jochen Reb previously at The University of Cambridge shows us that leaders perform better when they are mindful. They make better decisions, are in a more positive mood, and effect change more successfully in their businesses. The anxious, stressed or depressed state of mind is a distracted state (i.e., mindless rather than mindful) and has a negative impact upon a leader’s performance.

Many research findings suggest that the regular practice of meditation increases our mindful abilities and has many positive impacts on our physical, emotional and mental well-being including “neuroprotective effects” which result in reduced mental decline associated with normal aging (Pagnoni and Cekic).

Incorporating mindfulness practices into the daily routine of family business leaders promises to bring about more thoughtful, positive and constructive leadership to both the family and the business. Mindful practices are simple and yet have a powerful influence on our family and business relationships. Here are two simple ways to practice mindfulness:

  • Attend to something easy like your breathing for one full minute. When your mind drifts away, bring it back to your breathing. The repeated returning to a focal point trains your attention.
  • Take a few minutes and focus on each part of your body starting at your toes and moving slowly up to your head. This is called body scanning.

The benefits gained by family business leaders from engaging in these virtually effortless, yet influential daily practices are quite remarkable:

–   boosting teamwork, cooperation and well-being amongst family and non-family employees

–   reducing unconstructive thoughts and emotions which waste valuable mental energy

–   renewing energy and creating a clear focus to address decisions and tasks at hand in the business

–   arriving home with a positive mood after the day’s whirlwind of activities

Mindfulness deserves our attention!

Decisions, Decisions….

Stephanie Brun de Pontet
Stephanie Brun de Pontet

As we watch decision-makers around the world struggle with the difficult choices and trade-offs of how to respond to the crisis in Syria – I am reminded again that leadership is very, very hard.

When you lead a business, a family or any organization you often have to make decisions without all the facts you want to have, knowing there will be some ‘winners’ and ‘losers’ as a consequence of your choice, and as a result, there will always be some who disagree with your decision.

In a family business, leaders may particularly struggle to make the hard choices because they worry about unintended consequences and the collateral damage in some of their closest relationships.  The overlap of family and business can make it very hard to remain objective, when objectivity is so very important.

If you aspire to leadership roles in your family’s business, make sure you are up to the task of making the hard choices.  Remember that when important issues are involved, there are very few ‘black and white’ answers – and it is tough to be the one who has to make the call.

GROUPTHINK: Leads to poor decision-making.

Kent Rhodes
Kent Rhodes

I’ve been talking about how people make sense of the world and sometimes, as a result, align themselves with other people holding similar views. While this is simply a natural aspect of human relationships, in family businesses, this dynamic can either serve the family and its enterprise in some lasting and meaningful ways or can create rifts between family groups when views are driven by groupthink. This is important in family businesses because groupthink can occur within families as each family member defers to what they think another family member wants.

Bob was the founder of his family’s successful nursery and gardening business. His two sons had grown up in the business and now managed all operations involved in the enterprise. Bob didn’t talk much about retiring and loved coming to work everyday, but he had been increasingly thinking about retiring and the plan he had made with Sally, his wife, included that he would have stepped away from the day to day business to travel, spend more time with the grandchildren and friends. But that plan was five years past due.

Based on a couple of off-handed remarks the boys had made about around the lines of “we couldn’t do this without you, Dad”, Bob had developed the idea that his sons would not be happy if he wasn’t in the office. The boys, on the other hand, were concerned about helping their dad feel valued and needed. Even though they had the entire organization well under their control and they actually wanted him to enjoy a well deserved retirement.

Hence, no one actually examined the assumptions each were making about the other or bothered to be honest about their thinking because they were deferring to what they each thought to be the other’s wishes. Bob and his sons have been participants in groupthink.

Groupthink occurs when individuals make decisions by going along with what they think others want to do without sharing differences of opinion, vetting other options, or exploring alternative outcomes. It creates a group mindset that is based on a limited view of important issues combined with a low commitment to bring in as much available information as possible. This leads to poor decision-making and can breed an environment ripe for misunderstanding and conflict.

In a family business, the fact that differences are not talked about opens the door to misunderstanding of individual goals and wishes and can escalate conflict between people by leaving individual assumptions about those differences in those individual goals and wishes unchallenged and left to become “well-known-facts”.

Are you Providing Decision Making Opportunities to the Next Generation?

Kelly LeCouvie
Kelly LeCouvie

Junior generation family members sometimes tell us that they believe no decision-making authority will come to them before senior generation family members either exit the business or die. And in some cases, they’re right. That is somewhat discouraging, and also a deterrent for next generation engagement.

We have found that decisions are difficult for the next generation to manage when their “transition” goes from making no decisions to making all decisions.

Why not provide the next generation with opportunities to make decisions (either related to the business or the family) before you make your exit? You might not want to start with key strategic decisions, or life-altering decisions on behalf of the family, but there are many options. Here are some examples:

  • Planning the next family meeting (location, social time, draft agenda);
  • Making a hiring decision without your stamp of approval;
  • Designing a family website or newsletter;
  • Selecting his own mentor in the business;
  • Choosing recipients of philanthropic donations;
  • Setting up a pilot project for a new product or service;
  • Identifying development workshops/conferences that are most appropriate for her generation;
  • Make some investment decisions with other members of the junior generation with a fixed sum of money;

There are many opportunities to build confidence and establish credibility among the next generation through increased decision-making. What decisions can you identify in your family that might engage them, while developing decision-making competence?

The “Why?” Exercise

Dana Telford
Dana Telford

I refer to a favorite consulting tool as the “Why?” Exercise – a process that utilizes repetition of the question “why?” to discover the guiding principles behind decisions. I’ve found that when working through the question, some clients realize they may be abandoning long-held values for other perceived short-term gains in status, power, wealth or comfort.

Some years ago a client (Jeff) and his wife (Rhonda) were given the opportunity to go on a service mission to a developing country in Latin America – something they had both hoped for and worked toward for many years.  When faced with the question “what to do with the family business?” they felt it was time to completely dedicate their lives to charitable service, to include gifting their assets to their church rather than passing them to their 8 children.

As I talked them through the Why? Exercise regarding this decision, a fascinating complication came up.  I learned that early in his career Jeff had been employed by his church to manage charitable gifts.  When pressed, he confessed that he did not believe that the well-intentioned folks in the charitable gifts department could fully appreciate the blood, sweat and tears he had invested into amassing the wealth.  He knew that their job was to graciously accept the gifts, assess value, provide tax documentation, meticulously dismantle the empire, sell the pieces to the highest bidders, and collect the funds for the benefit of the church.  With careful thought he realized that the thought of his businesses and assets going through this process left him feeling empty.

The alternative – to give and sell assets to their children – also caused them concern due to long-standing sibling rivalries and an overall quest for peace in the family as they prepared to leave the USA for two years.  Based on my time spent with their children and in-laws, I felt that they were talented and diligent and capable of working together, and I told them as much.  I also voiced my opinion that they would have a much higher chance of appreciating the Legacy and protecting it for another generation.

After further Why? questioning and discussion, Jeff and Rhonda realized that keeping the assets in their family was a more authentic reflection of the guiding principles they had followed as they raised their family and built their businesses – faith, family, hard work, education and service.

Jeff and Rhonda’s dilemma over the future of their business is only one example of the myriad emotional decisions that you face as a business owner. No matter what your own motivation is for building, nurturing and growing your business, keeping your “why” centered in your view through the decision making process will help you ensure that the business continues to grow in keeping with your  values and in a way you can be proud of.

Adjusting ‘On The Fly’ For Unexpected Situations

Jennifer Pendergast
Jennifer Pendergast

Earlier this week, I shared some thoughts on creating a flexible system to deal with the unexpected situations that naturally occur in family business transitions.  While planning is very important to ensure successful transitions, the best plans will inevitably need to be adjusted ‘on the fly’ when circumstances change.  So, how can families create decision-making systems that can deal with the unexpected?  There are two elements to a flexible system – one is structural and the other emotional. 

From a structural standpoint, the most flexible system is one that creates a place for making decisions and rules or policies that govern decision-making.  The place for making decisions may be a regular family meeting, a family council meeting or a board meeting.  The key to defining the place is to assign responsibilities for decisions to the appropriate parties and ensure that everyone understands who has responsibility for what type of decision. 

The rules or policies that govern decision-making include the process for reaching agreement, which may be majority rule, by consensus or some other mechanism.  The key is that the process is understood and followed.  Other rules include defining who has a vote, what we will do if we can’t reach agreement, how long a decision will be binding, how often we will revisit it, and the process for overturning a decision. Many families capture these rules in a decision-making policy. 

With the place and rules for decision making defined, a family system still has one ingredient necessary to address unexpected situations.  That ‘magic ingredient’ is trust.  No matter how strong the structure and rules are, if family members do not trust each other, they are not likely to abide by the rules or the decisions made using those rules.  Trust is not arrived at by following a simple formula.  It requires working together, building an appreciation for individual differences, respecting the opinions of others and a willingness to compromise and to forgive.  Both ingredients in a flexible system require family commitment.  So, while we can’t predict what circumstances we may face in family transitions, we can predict which families will weather them best – those who have put the hard work into developing the systems and trust required to work effectively together.