Category Archives: Career Development

Coaching the Next Generation

Carol Ryan
Carol Ryan

Below are a few of the questions that were posed during our Coaching the Next Generation webinar.  If you missed the webinar you are still in luck.  The replay of this program is available at http://eventcallregistration.com/reg/index.jsp?cid=600t11pk

Question 1:

How would the speakers apply coaching for the senior family member who is thinking about passing the business to the next generation but is not sure what they would do if they don’t come to work each day for the next 30-40 years?

Answer:

In applying coaching to senior family members who may retire, it is critical that they have something else of meaning upon which to focus. Moreover, it is critical that they are recognised for the valuable contribution they have made to the business so they feel  valued. Ask them what they want to leave behind, how they would like to be remembered, ask them to share their lessons learned and perhaps operate as a mentor to younger generations.  Provide some training on mentoring so that both parties understand what is expected of them. And do draft clear guidelines around their continued interaction with the business. What will they continue to contribute, what will they stop doing? And document this.  Provide support to senior family members in helping them to build their “third career”. Support them in finding non-executive directorships elsewhere, contribute to charity work, start a new business. You could perhaps establish a Development Advisory Group comprised of family and non-family members who take responsibility for retiring family executives.  There is a course offered by Harvard for married couples who are facing retirement. Together, partners can learn how to live meaningfully together in their latter years and build a life of equal meaning.  Perhaps this is an opportunity to pursue new learning opportunities? http://www.hilr.harvard.edu/who/

http://www.guardian.co.uk/education/2010/jan/12/advanced-courses-retirement-harvard

Question 2:

In our family none of the five children or spouses have expressed any interest at all in the family business. They will undoubtedly reap some benefits from the business. But it is a shame for them to view it as just a “cash cow” with no contribution expected on their part.  It is wonderful for everything to be unconditional but let’s face it the business world is largely made up of trade-offs. Isn’t a sense of “giving back” necessary in order to avoid a sense of entitlement?

Answer:

 The business world is invariably made up of “trade-offs”. How easily can we sit with the fact that many benefit from the family business, exert enormous influence on the children, reap the benefits but have no interest at all in the family business? I think the answer lies in accepting that whilst one may not have an interest in the family business, there is no doubt that mothers in particular, play a pivotal role in raising responsible children. I am working with a family at the moment who is actively engaged in bringing mothers, daughters in law, sons in law, into the fold.  It is NEVER too late. Perhaps they have not been asked to get involved and don’t know how they could make a meaningful contribution. This starts with asking: their views on the family business, why or why they don’t want to be involved and finding them a role of meaning where they can make a contribution. This may take the form of contributing to the development of a family protocol, leading a social committee for the family, involving them in sharing their own family of origin stories, playing a role in educating the next generation.  I am sure they have many skills to bring and often play the Chief Emotional Officer role in a family. Perhaps one might begin by asking them how they have experienced the family into which they married, how the family might integrate outsiders more effectively in the future? Values and behaviours the family should seek to develop in order to do so?  Offer this opportunity to them, but do make it voluntary. You cannot force someone to contribute where they may not want to. Play with those who want to play.

I recommend viewing ownership as a job. That means you need to qualify for ownership through the duties involved (such as informing yourself of how the business is doing, reading annual reports, reading the financial statements, understanding the family’s dividend policy and reinvestment philosophy, understanding family values, going to the AGMs and other family meetings, being an ambassador for the company in the community among other things) and certainly, there are benefits (such as dividends, reputation, social status and so forth). Sadly, uninterested and uninvolved owners who view the business as no more than a “cash cow” can be a source of potential future conflicts due to misaligned expectations, so finding out how they can be interested and involved is a very important undertaking. However, all of this doesn’t just happen by itself. So-called responsible ownership is an attitude that the family needs to embrace, foster and work on, and is the result of hard labour by committed family members whose aim it is to have a united family ownership base that can really contribute and add value to the business through their values and vision. That is a key task of family governance work. Very importantly, this kind of work can be fun! Using your imagination and the resources in the family and business, building commitment and understanding through education can be very rewarding. Work with family business facilitators who can help you achieve this.

To read about a family business that went through building commitment, see Scott Family Enterprises parts A-C (Kellogg Case written by Canh Tran & John Ward). To read more about Responsible Ownership, see “How to be an effective shareholder” by Craig Aronoff & John Ward. We’ve done research at London Business School about how to foster “Emotional Ownership” in the next generation, you can find a copy on http://www.ifb.org.uk/media/24482/emotional%20ownership%20report%20final2.pdf

Question 3:

 Do family business members have a responsibility to make a “stamp” on the business. Can you comment please?

Answer:

 Of course they do. They own the business and must take their responsibilities as seriously as their rights. However, the secret lies in defining responsible ownership together with the family as a whole. What are the behaviours a responsible owner should demonstrate, how can their success/performance be measured and managed? How does this sense of responsibility become engrained in future generations?  And equally importantly, what are the boundaries of making one’s stamp but perhaps interfering with the day to day running of the business is a Board is in place to provide this role?  Putting one’s stamp on the business is important…but the nature of this “stamp” must be clearly articulated and managed through a Family Council. Consistency in “stamp-making” is critically important so as not to confuse or undermine the business. Finally, I would add, find out what each member’s unique stamp could be? What are their skills and capabilities, what can we expect from them. We often don’t know what their unique stamp can be as we take for granted we know our family members and their unique experiences. I’m working with a family now who has worked together for years. They want to work on more key business projects together. Despite their careers in many sectors, no one has asked them about their background, experiences and aspirations. This must be done before a positive “stamp” can be made.  Be structured about this and co-define together what responsible ownership really is.

One fundamental way owning family members make a “stamp” on the business is mainly through articulating family values and an associated family vision that act as guiding principles for the board in their formulation and execution of strategy. I think the key question to ask yourself here is – why is this company better off owned by this family? Then – why do we want to continue co-owning this enterprise? The answer to the latter question can vary very widely – people may look at the financial rewards, the social togetherness in the family, provision of jobs, giving back to the community etc. Whatever the answer is, the owners from a given generation will shape their contribution as they see fit, bearing in mind the traditions of the original founders but also being aware of how to change as times are changing. As one family business worded it in their vision: “Making change our tradition”. So really the reason why family owners have the responsibility to create their own stamp is to perpetuate the existence of the enterprise. If, indeed, that is what the family wants.

Question 4:

Where or how do you find coaches?

Answer:

 There are many good coaching organisations in the world. You want to ensure that your coaches are sufficiently experienced. Look for organisations with global reach, ongoing professional development, those who offer a choice of coach. You can try:

www.familiasco.com

www.praesta.com (not that focused on families)

http://www.instituteofcoaching.org

Business Schools should also be able to recommend good coaches.

Another way to find a coach is to ask those who may have used them. (both within the family business realm and outside it…eg. Corporate America!) Personal recommendations are best so do ask a friend!

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Five Reasons People Don’t Perform

Norb Schwarz

Perhaps the most difficult job I had as a manager was to complete timely and constructive employee evaluations. As I struggled with the process, it struck me that there were five primary reasons people did not perform satisfactorily in any job. 

  1. They did not know what to do. This is a shortcoming of communication within the company.
  2. They did not know how to do it. This tends to focus on shortcomings in the training area.
  3. They did not have the resources necessary to do the job. This is a matter of allocating the proper resources within the company.
  4. They did not want to do the job. This is simply a matter of appropriate motivation. And,
  5. They couldn’t do the job if their lives depended on it.

Nearly all of my employees who were not performing satisfactorily were in the first four areas. Management shares responsibility with the employee in the performance of the first four shortcomings. It will require a joint effort of management and employee to bring performance up to satisfactory standards. If an employee fell into the fifth category, the handwriting was on the wall. The employee had to be let go for the benefit of both the employee and the company. 

Once I began to see the performance management process in the light of a joint responsibility, it was much easier for me to utilize the process as a productive tool for the growth of both the company and the employee.

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Commencement Advice

With graduation comes the prospect of joining the family business. For those who do, we offer ten tips:

  1. Negotiate what you need, upfront.
    The best time to discuss your concerns and hopes is before you take your job in the family business. This is the time to define a career path and compensation philosophy. This is the time to seek a career development coach or a board member mentor. This is the time to clarify continuing education wishes and support.
  2. Keep a slight distance from other employees.
    Family business successors commonly have a high need to be liked. Guard against pursuing close friendships at work. Be friendly, surely, but seek no confidants.
  3. Protect your family. Other will test you.
    They will try to get you to gossip about your family and family life. Avoid those conversations.
  4. Protect company channels.
    Respect your boss. Everyone’s watching what to see if you do – especially those who someday might be your boss or your subordinate. Only skip the channel if the best interests of the company are truly at risk.
  5. Never use the “family card.”
    Don’t seek special consideration because you’re a member of the owning family. If ever special circumstances cause you to be an exception (i.e., you’re invited to a board meeting), work hard to work harder in return.
  6. Champion family values.
    If the business’s values are clear, everyone will wonder if you will walk-the-talk. Work a little longer. Arrive on time. Be prepared. Dress a little better. Keep your personal life away from the office.
  7. Unite with siblings.
    The foundation of a successful sibling partnership requires mutual trust – keeping each other informed; assuring fairness to each other; supporting each other.
  8. Write the company’s history, culture, strategy.
    Attempting to articulate the history, culture and strategy, and asking family members for feedback, is the fastest way to learn the essence of the business. It’s also a gift to the company.
  9. Ask lots and lots of questions.
    Asking questions is not only the best way to learn, but doing so shows an important humility and open-mindedness. Very often young successors feel the need to demonstrate their knowledge and offer opinion leadership to prove themselves.
  10. Join some peers.
    Being a family member in a family business is a very unique feeling and offers very special challenges. Sharing your experiences with trusted peers from other business families is of great value.

Happy commencement! You are about to embark on what most find to be a great privilege and opportunity.

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Should we encourage family employment?

Jennifer Pendergast
Jennifer Pendergast

In a recent study of large successful family businesses, I noticed an interesting trend.  Families businesses that have spent generations discouraging family members from entering the business are now developing programs to pull them back into the fold.  They have learned that in their efforts to ensure that only the most qualified members of the family entered the business, they have discouraged family interest in the business.  

While businesses only become old and successful by having strong management, family businesses also need to maintain owners’ interest and engagement in the business in order to survive as a family owned entity.  So, many of our study participants are putting in place orientation programs for next generation family members to help them learn about the business and increase the chance that the most qualified will elect to join.  Regardless of whether the family members join, the business benefits from well-educated owners who appreciate the business and may one day take on important responsibilities on the board of directors or family council.

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The Difference Between a Coach and a Mentor? Is There One?

I’m often approached by family members who need a coach.   They may have a mentor who is sometimes, a family member. So why is that not enough? This lies in the fundamental difference between the mentor and the coach. A mentor can pass on knowledge, provide advice and in some cases, “tell you what to do”. They are directive. A coach, however, is meant to unlock the answers that we all have inside, if only we knew it. Their role is to ask the right questions, reframe what you may perceive as a lack of choice and help you to see that we all have within us the capacity to choose. For example, we can:

  • change the system (often difficult)
  • change the person or part of the system that is causing us distress
  • change our reaction to that system

The latter is always within our capability so to do.

Often times, a coach will help you to become “unstuck” and to envisage a future that is different. They might ask, if things were different:

  • what would you feel?
  • what would you hear?
  • what would you see?

A mentor may also be part of the family business, such as a non-family executive. Sometimes they may be too close to be perceived as objective. Perhaps the mentor themselves feels compromised on confidential issues. Perhaps they have their own agendas which must also be respected. But coaches are neutral and you can be assured of their confidentiality in discussions. They help to build your self-esteem by having YOU find the answers. But rest assured that coaches are not therapists. They may use counseling techniques but some issues do belong in therapy. A good coach should understand these boundaries, be able to articulate them and make recommendations for additional help should you need it. Most importantly, a good coach should be willing to work alongside any other mentor/therapist you might work with. All for the good of YOU.

 For more insight into how coaches can assist in the family firm, please look out for our webinar on July 27, 2011.  For additional information click here.

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Define Your Job

JoAnne Norton
Jo Anne Norton

In the April Family Business Advisor (See April FBA) I wrote about the critical questions famous psychiatrist Dr. Murray Bowen suggested answering to “define a self:” Who are you? What do you believe? What do you want to do? Then on this blog I wrote about how families could also use the answers to these questions to help build their brands for their businesses. There is yet another important use of these questions for family owners: defining your job.

Bowen used to urge people: “Define your job until you can do it.” For those of us who work in family businesses either as family members or as non-family executives, our job descriptions can be nebulous to say the least. Many times we aren’t sure who or how many people we are actually reporting to. Sometimes they are not even clear about exactly what it is they want us to do.

Faced with this dilemma myself as a non-family executive for a large fourth-generation family business, I knew I needed to heed Bowen’s advice and “define a self.” So with the help of a coach, I thought of all of the things 65 family shareholders might think I should do in my role. Next I formatted these tasks into a survey, and I asked the adult family shareholders how important each item was to them on a scale of 1 to 7 with 7 being of the utmost importance. I asked about everything from taking notes at Family Council meetings to being a role model for the fourth generation. I sent the survey to the shareholders who were more than happy to tell me what they thought I should be doing! I made a list of the top 20 things they identified as being the most important, and I created an evaluation for myself that I sent to them annually with a note asking them: “How am I doing?” just like Ed Koch, the former mayor of New York used to do.

Not surprisingly I improved every year because I was getting the crucial feedback I needed to be able to define my job until I could do it and do it well. Have you answered for yourself yet: Who am I? What do I believe? What am I going to do?  The more clarity you have around the answers to these questions, the more successful you and your family business will be.

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The value of experience

Norb Schwarz

I recently came across the following statement in a family participation policy regarding the requirement of outside employment for family members wanting to join the business. Please let me know of any other items you might include from your experience.

Outside work experience is required for the following reasons:

A. It’s good for the company:

  • We have a wider and more varied experience base (ideas and contacts).
  • It promotes a culture of meritocracy over entitlement.

B.  It’s good for the family member:

  • Opportunity to make mistakes elsewhere (that aren’t remembered forever).
  • Opportunity to prove oneself and gain self-confidence where a person’s last name doesn’t count.
  • Helps avoid self-doubt later down the road (could I have made it on the outside?).
  • Opportunity to find a mentor from outside the family or business.
  • Opportunity to gain different perspectives and experience and be able to start contributing earlier in one’s career.
  • Acceptance by non-family members will be easier (credibility issue).
  • Opportunity to develop honest expectations for oneself.
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Patriarch’s New Year’s Resolution

Norb Schwarz

Lack of accountability is often a major cause of succession challenges within family businesses.  Why not make the establishment of effective accountability the top priority on your New Year’s resolution list?

In cases where transitions are running into trouble, lack of effective accountability is frequently the cause.  This can manifest itself in many ways.  For example, parents are often the ones who administer and deliver the performance management feedback for the next generation.  Unsurprisingly, this frequently causes conflict among and between generations.  Why?  Because family issues and emotions often end up overshadowing the performance management process.  In some cases, a process is not even present. 

A related example is compensation, which is frequently managed on a basis other than merit.  We have seen clients where they have policies based on a concept of “equality”, others on the basis of gender or years of service.  Such policies are often the causes rather than the cures of conflict. So, I encourage the senior generation to consider the following resolution for family accountability in the coming year:

  1. The owners, in collaboration with the Board of Directors, shall establish a written comprehensive participation policy for family in the business.
    1. What are the prerequisites to joining the company (education, experience, etc.)?
    2. What is expected in terms of on-going performance for family working in the business?
  2. Ownership shall develop an agreed upon Vision for the future of the business and owner expectations for the business.  These will be updated and communicated to the Board of Directors in writing annually.
  3. Wherever possible family in the business shall report to non-family managers for performance management purposes.
  4. Family members shall be formally reviewed a minimum of semi-annually with the following guidelines:
    1. Wherever possible performance shall be measured on quantifiable and agreed upon written performance management objectives.
    2. An annual blueprint for personal and professional growth and improvement shall be established for each family member in the business.
    3. At each performance management review, each family member working in the business shall be given at least three areas in need of improvement and action plans to improve within those areas.
    4. Adherence to business culture and underlying family values shall be a regular topic within the evaluation process of each family member working in the business.
  5. Family member compensation shall be in accordance with established company compensation policy for the position occupied and performance within that position.  Wherever possible such compensation shall be based upon position responsibilities and performance-based goals previously agreed to.
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A Legacy of Christmas Past

Norb Schwarz

Family business legacies frequently offer life long benefits beyond the business.

At Christmas time each year I am reminded of the many learning experiences my brother and I had working in our small family business. My father had a fruit and vegetable stand in Milwaukee, and during the Christmas season he sold Christmas trees and wreaths to support his seasonal business. My brother and I worked the Christmas tree lot with him every year. Doing this we learned some valuable negotiation and sales skills. We had all sizes and shapes of Christmas trees, and none of them were marked with prices.  Our father gave us general pricing guidelines depending on the size and fullness of each tree. The objective was never to have a prospect leave the lot without a tree. However, when a customer came on the lot, it was up to us to get the best price for each tree sold. The sale process included getting a general idea of what size tree the customer was looking for and above all how motivated he or she was to purchase. Once we got the preliminary information on tree size, we would walk the prospect around the lot and occasionally pick up a possible sale tree, shake the snow off the branches, and make our best case for a sale. Larger trees were a problem because the snow removal process usually meant snow falling down on our heads and down our backs. After our first year on the lot we lost very few customers, and we seldom sold a tree below price target guidelines.

Our greatest opportunity for both learning and profit came on Christmas Eve however. Our pay for working the Christmas tree lot each year was for my brother and me to take title to all the trees left unsold on Christmas Eve. On Christmas day the trees would be worthless, and our customers knew it. So the bargaining was difficult and became more intense as we approached 6 PM when we closed the lot. On occasion we would have to let a reluctant prospect know that we preferred to use the branches as ground cover than sell the tree for an unfair price. We seldom had more than a few trees left, and we always had enough income to more than compensate us for our work those few weeks prior to Christmas. We didn’t know it at the time, but we were learning entrepreneurship in an OJT (on the job training) environment.

Looking back on our work at my father’s Christmas tree lot, I am reminded of how our father used the experience to teach my brother and I some valuable life lessons. In addition to establishing a strong work ethic by working long hours in the cold and snow with an unknown future payoff, we learned negotiation and financial skills that helped us in our future professions in the legal and financial communities. While our family business may not have made it to the second generation, the values and experiences learned during those years are a legacy my brother and I have treasured throughout our lives.

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