The definition of “family” and its members continues to evolve. Bruce Jenner’s transition to Caitlyn has created quite a buzz. It is estimated that 700,000 Americans, 0.2% of the population, are transgender. On June 26, 2015, the U.S. Supreme Court ruled that the U.S. Constitution guarantees the right for same-sex couples to marry in all 50 states.
Lesbian, gay, bisexual and transgender (LGBT) people are and will continue seeking committed, lifelong adult partnerships and many will raise children. These societal changes, whether you are in favor of them or against them, are a fact. It is also a fact that many multi-generational family businesses are composed of family members who live outside the traditional “Ozzie and Harriet” family world.
Some families try to hide these facts. However, more and more are displaying open acceptance of those living differently from themselves and welcoming family members into the business. Tim Cook, CEO of Apple, is showing the business community that a gay person can lead and grow what many consider the most innovative, highest-valued enterprise on the planet.
We serve family firms with LGBT family members who are contributing to the well-being of business. We also observe family members who have not felt welcomed and therefore have chosen other career options outside the family business. While family firms tend to be more conservative and slower to accept these societal changes, those that have been more welcoming have helped their own culture evolve while developing a more tolerant and understanding value in the workplace.
Every family contains some level of common background, political and religious persuasions, and perspectives on business and family life. One fourth-generation family business in the Midwest is identified with many shared interests, including Catholicism, Polish heritage, Loyola Family Business Institute, Democratic Party, Chicago White Sox and Pulaski Days!
However, there are some family members who have opted to diversify their views, lifestyles and career pursuits. The more common are family members’ interests, the more homogeneous is the group. The more diverse, the more heterogeneous is the group.
There is no right or wrong answer.
It is only natural that the larger the family grows, the more diverse it becomes. Spouses (in-laws) help to introduce diversity since they have often lived in different locations and been brought up in different family situations. While we find many family members still living in a rather homogeneous family group, many families are moving towards greater heterogeneity. This can be a healthy factor, but can also create tension that requires greater sensitivity, acceptance and creativity to take advantage of the greater diversity.
Acceptanceand understanding of those who choose to pursue other paths can determine whether or not a family business continues for multiple generations. Celebrating diversity and learning how to take advantage of the different skills and perspectives is more likely to produce a harmonious family.
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:
They are clear about the strategic direction of the family’s business and their family is committed to the strategy.
They have sufficiently transitioned responsibility for day-to-day operations to be able to spend adequate time focusing on strategic matters.
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.
They understand the underlying variables that drive their business model and they have access to and use metrics to ground their decisions.
They understand the final call on a decision is based on judgment and they have built confidence in and rely on their judgment.
They cast their net wide for input from their families, management teams and external resources.
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 New York Times columnist David Brooks focuses largely on parsing behavioral science and moral philosophy for practical use. His most recent books, “The Social Animal” and “The Road to Character” are worthy reads in this regard.
In a recent column, Brooks probes the role of “family” in society. He notes that individuals “emerge out of families…” and that “the family… is the essential social unit.”
He then turns to statistics that are familiar to all who work with family businesses, concerning the prevalence and performance of family businesses. He also notes the frequency of multigeneral family heritage in politics, and fields like music, sports and literature. (And he could have added science, law, or virtually all other fields.)
Probing why this should be the case, and without mentioning genetics, Brooks offers five reasons why “certain families are breeding grounds for achievement.” These include:
Identity formation by which growing up in a certain kind of family lets you think of yourself in those terms at a young age.
Practical knowledge learned by the example of one’s kin rather than in a classroom or a book.
Level of skills that are cultivated and accumulated across generations. (“It takes three generations to make a career.”)
Audacity in which you can dare seek high achievement because of role models in your family.
Time horizon in that families think and work for the long term, seeking to pass a legacy to those not yet born.
Some people think that being born into the “right” family confers unfair advantages, says Brooks. “Families are unequal.” And while that makes it harder for others to compete, the result is to make “society as a whole more accomplished.”
His conclusion: “We wouldn’t want to live in a society in which family influence didn’t happen.”
All those who see their family enterprises as precious to their owners, employees, customers and communities, and mightily strive to maintain and grow all dimensions of their family’s legacy, can thank David Brooks for his recognition of the reality and importance of what families who work together accomplish.
The Everlane clothing catalog arrived in our mailbox last week — not because my husband or I are customers, but because it’s a favorite of my 28-year-old son, Benjamin. Its offerings are very limited: beautifully made, affordable, pure cotton or cashmere clothing. They carry a small number of items such as t-shirts, hoodies, sweaters and skinny pants that are largely available only in black, white and grey. (And in sizes much too small for me to order for myself.)
However, the headline on page one jumped out and grabbed me:
This very young, web-based, nontraditional company is obsessed with the same question that keeps 100-year-old private firms up at night. “How can we honor the need for both tradition and change?”
The answer they come up with is the exact same as many of my clients: “Know your story.”
Be as clear as possible about the underlying purpose, value and vision of your endeavor. Make sure that any innovation is unequivocally aligned with your fundamental guiding principles. Bold, fresh actions never before taken by an organization can be perfectly in line with the historical vision. And Everlane appears to be a wonderful example.
How can you apply this insight to your own tradition/change challenges?
Taking Time to Reflect Makes People More Productive “Trainees at a business-process-outsourcing company in India increased their performance by an average of 22.8% over the course of a month by spending the last 15 minutes of each day reflecting on and writing about lessons they had learned, Francesca Gino of Harvard Business School and Bradley Staats of the University of North Carolina write on HBR.org. Reflection prompts people to be more aware of their progress and gives them confidence to accomplish tasks and goals, the researchers say.”
My colleague, Deb Houden, recently shared this nugget with our group, knowing that we often engage our clients in thoughtful reflection as part of our consulting process.
For example, as a facilitator I regularly end meetings by asking participants to reflect on the time we spent together. Typical reflection questions might include the following:
“As you leave our meeting, what will you take with you and how will you apply it?”
“When you think about our meeting, what stands out?”
“Take a minute to reflect on the time we just spent together: Write down one word or phrase that captures a valuable nugget or insight. We’ll go around the table and briefly share before closing.”
Reflection doesn’t happen only at the end of meetings. If energy droops in the middle of the morning or late in the afternoon, you can take a short diversion from the planned agenda. Go around the table with a reflection question to focus and energize the proceedings, for example:
“What’s one of your unique skills or talents? How can you bring more of that to this meeting?”
“Think about leaving this room at the end of our meeting. What is the most important thing for us to accomplish? What action can you take — immediately — to help make it happen?”
It can be uncomfortable to ask a group to stop for reflection. I often have to weather some rolled eyeballs or other resistance. However, the discomfort is worth it! Meetings are invariably more productive, focused and enjoyable after even a very brief reflection break.
Have courage. Take the risk. Take steps to balance out the bias towards energetic forward motion. Use reflection as a tool to slow things down in order to ultimately be even more effective.
If you are already trying this approach, let us know how it’s going!
Is it possible to build personal strength without first going through personal struggle?
Sometimes as parents we are tempted to cushion our children from the pain of disappointment and failure as they mature. Too often as family business leaders we believe that we are helping family members by giving them a position that they have not earned when in reality the opposite is true. By helping too much we hinder growth. By enabling we create entitlement.
My teenage son Will loves video games. In his free time, he sits in front of our TV, thumbs a blur on the controller, eyes fixed to the screen, chattering away into his headset as he and his friends strategize how to counter the latest wave of alien invaders. My favorite game growing up was one played not on a screen but in a field: baseball. Despite my hope that this interest would somehow be passed down to Will, his interest in Little League was short-lived and unfulfilling. He tried some other sports and activities and has become a good tennis player. He has found a passion for nutrition and weight-training. But video games are his first love, and his mom and I have given him the space to pursue this interest.
As Will’s gaming skills and interests have grown, so has the price of his hobby. Earlier this year, he set his sights on a high-powered gaming computer that was “on sale” and asked if we would order it online for him. “You know how it works,” I told him. Once each of our kids is old enough to understand, I explain to them our approach to large purchases: If we agree that the purchase makes sense, the child is expected to work to earn half the money.
It’s the same principle I learned from my mother. Whenever I wanted a new baseball bat or bike or expensive toy, my mother made me earn half the money to pay for it. That not only made me think about how much I really wanted the item — not surprisingly, a lot of things dropped off my “must-have” list when it was clear I had to help pay — but also created space for me to earn the item through hard work, rather than having it handed to me.
“But this is a lot more expensive than anything else I’ve wanted,” Will said when I reminded him of the policy. “I’ll have to earn $800 and I don’t have a job!” I told him I understood that earning the money would be difficult, but reminded him of a few pending expenses in the household that were higher priority – Anna needed braces and Sarah needs her wisdom teeth pulled. “And,” I reminded him, “your half is going to be more than $800. Don’t forget tax and shipping charges.” He let out a sigh of frustration but accepted the reality and agreed to the deal. Over the next few weeks, I observed him working and saving diligently, putting aside the money he gained from extra chores, babysitting and selling other gaming equipment he didn’t need.
One day Will came to me excitedly and said, “Dad, the computer sale is ending this week. I need $1600 now!” I reminded him of our deal – that we would order the computer once he put $842 (don’t forget tax and shipping charges!) in my hand or my bank account. He looked disappointed. “I only have $500 saved,” he said. “But my Xbox is for sale and I’m sure someone will buy it. Could you just order it and I can owe you the rest?”
I admit that it was tempting to give in to his request. The clash of family socialism and breadwinner capitalism clashed inside me in a major way. He had worked hard to save more money than ever before. But my wife and I realized that giving in would fail to uphold the principle we wanted him to learn, and would limit the space he needed to grow fully. Obviously Will was disappointed, but he kept working toward his goal.
Within two weeks, Will sold his Xbox and reached his goal. We were thrilled to see that the price of the computer was still $1,600 and ordered it straight away. When it arrived it was everything he’d hoped for and he beamed with joy as he opened the box.
My wife and I told Will how proud of him we were for earning that computer. He had become very resourceful as he pursued his goal of buying the computer: He had worked and saved and sacrificed his time and other valuables. He had become much more confident in his ability to figure out a way to make things happen. And he gained a greater appreciation of the value of money.
Through the struggle comes the growth. As leaders we need to keep this principle in mind as we offer jobs and financial benefits to family and non-family employees. We need to provide them adequate time and space to struggle. Time to filter through the emotions of disappointment and space to figure out what they really want and how to earn it. Without it how can they ever hope to develop their own strength?
Will, a young member of the third generation of owners of a highly profitable family business, told me his family business had recently been sold. His family members had been so wrapped up in dealing with the financial elements of the transaction there had been no discussion and very little thought given to the future of the family.
Will invited me to meet with his family, and I began by asking thought-provoking questions. “Are your family members going to split up the proceeds from the sale and all go your separate ways, or do you all want to leave a lasting legacy? Do you still have common goals? Are there wishes you share for the future? Dreams you want to dare together? And what about the logistics? Will each family branch want their own wealth advisor, or could there be an advantage of keeping your money together? Will you want to use a family office? Establish a family philanthropy? Provide wealth education for the next generation together? Will you want to meet with your immediate family — as well as aunts, uncles, and cousins — regularly to have fun and to come together for the common good? How will you make decisions together in the future?”
Will and his family had not thought about most of these issues before. At our meeting, there was a lot of discussion, some tears, and thankfully a great deal of laughter as they discussed the answers to these important questions. Plans were made and committees were created to explore the family’s new vision.
After the meeting, Will shook my hand and looked into my eyes. “I had no idea our family would still need a family business advisor after we sold the business. This isn’t the end of our family business, it’s Act II for our family.” More importantly, he said he was fired up about finally working with his family to create a vision, mission and values and having the opportunity to truly make the world a better place.
Good governance makes worthy goals easier and more enjoyable for families who want to work together successfully whether they are in or out of the family business.
After giving a presentation on laying the foundation for family-business governance, an energetic young man came bounding towards me from the back of the room as I was stepping off the stage. Taking my hand in both of his, he smiled as he said: “Where were you when we needed you?” I laughed, and responded: “I don’t know; where were you when you needed me?”
The young man’s name was Will, and he said his family had always meant to do all the things I had just spoken about: have regular family meetings, create a vision, decide on a mission, explore their values, but they had just never gotten around to it. Their family business had been all consuming. Then one day about a year ago, a large competitor had made his father, his uncle and all of his siblings and cousins an offer they couldn’t refuse. So now there was no need to have those crucial conversations that can be so energizing, enlightening, and exciting when family business owners discuss vision, mission, and values. Since there would be no more decisions to make or conflicts to resolve, there would be no need for family governance. “That ship has sailed,” he sighed.
Actually, that ship hasn’t even left the dock yet.
Many families who have earned or inherited significant wealth together often want to continue their affiliation. In some cases it’s because, even after the primary business has been sold, they continue to hold real estate or other investments together. In other situations, family members have developed great trust and admiration for each other, and they believe it is advantageous to keep their family and their wealth together. Sometimes they accomplish this by establishing a family office, and at other times a strong matriarch or patriarch might take the lead. For whatever reason, many families choose to work together to leave a lasting legacy and to ensure their wealth lasts for many more generations.
Families who want to successfully work together need the same things family businesses do: a clear vision, an inspirational mission, and shared values. They need policies and procedures and well-defined expectations. At The Family Business Consulting Group, we are experts in family governance regardless of whether there is still a family business or not. Will and I discussed this concept, and we set up a time to discuss the direction his family was going because families who sell their businesses still need good governance.
Business families are increasingly composed of global citizens. It is not unusual for cousins who share ownership in a business or who share other financial assets to have grown up in different countries, to have been educated in different school systems, and even to have different religions.
How then to promote alignment around policies, plans and strategies when such globalization may introduce significant geographic dispersion and cultural diversity?
Develop an intentional plan to ensure that different family members spend enough time together to understand and strive toward a common family culture.
Increase the frequency of family meetings.
Encourage cross cultural and cross demographic sharing of personal and business experiences.