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Information and Communication: The Challenge of Data Overload

Drew Mendoza
Drew Mendoza

A keynote speaker I heard twenty years ago, who promoted himself as a ‘futurist’, made the point: “don’t worry about the trash, we’ll find a way to deal with all the trash as better recycling technologies arise.  The thing you’ve got to worry about is the data.  We’re all going to be drowning in information.” 

Turns out he was spot-on.

In enterprising families, attention to information flow seems to be on the rise.  So too are family meetings, family councils and boards of directors are becoming more disciplined and more thoughtfully and strategically comprised.  *

The challenge for leaders of families and family firms is building the processes by which family members are educated and enlightened so that they can understand the data they’re receiving and apply it to metrics which indicate the degree to which the family and its enterprise(s) are reaching its goals.  Doing so results in more fully aligned shareholder groups and, as any CEO with multiple family shareholders will tell you, an aligned shareholder group makes the CEO’s job much easier.  In my experience, these are the same families that are more likely to achieve their business goals.

We’d love to hear from you – what steps are you taking to keep family shareholders both aligned and informed?

*For a great read on family enterprise boards read Building A Successful Family Business Board: A Guide for Leaders, Directors and Families

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Long-term Views: Embracing a Long-Term Perspective on Balance

Drew Mendoza
Drew Mendoza

We observe that one differentiating quality of multi-generational enterprising families is their tendency to take a longer term view than non-family controlled companies.  They tend to grow more incrementally.  They are often more patient in their expectations of return on capital.  And, they are often more patient with people and are rewarded with loyal employees among other benefits.

In my almost 25 year career studying and serving enterprising families, an interesting thing that has rubbed off is recognizing that while work-life balance is important, I’ve come to embrace it with a long term perspective.  Most folk I meet who profess to value work-life balance measure their sense of balance on a daily or perhaps weekly basis.  I’ve come to believe that the longer the window I use – years, rather than weeks or even months — the less stressed I am by today’s emergency.  I’m more patient with myself and those around me including my family members.

Readers from enterprising families – what’s been your experience?

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The road to ruin is paved with good intention – What it takes to be the company’s next leader – Part 3 of 3

Drew Mendoza

 

In our line of work, it is common for one family member to describe another family member in less than glowing fashion.  We hear a lot, no make that A LOT, of descriptions by one member of another that suggest or proclaim themes, hidden agendas or perceived personality flaws.  

And in every case, the descriptions are true and valid from the speaker’s point of view and based on their own personal perception. 

In family business the stakes not only include family relationships but they also  include money.  Significant amounts of it relative to the overall net worth of every member of the family.  And we humans predictably and understandably become worried, anxious and / or frightened at the possibility of our own financial ruin, and that it could be caused by another member of the family.  In the saddest and worst case scenarios actions like, time with grandchildren being withheld as punishment against grandparents, siblings no longer speaking to each other, and estrangements and cutoffs occur.  We have all read tragic sagas in the newspapers of family members going to court, or worse family implosions that cause the demise not only of the business, but the family. 

And yet, in most cases, these same family members who seemingly judge, criticize, battle with, or do not trust one another – when assessed by independent, objective and trained professionals – are determined to be, not only normal, but, in their heart of hearts, well intentioned.  Sure, they can sometimes appear to be mean spirited, arrogant, or self-serving.  But, beneath that facade, usually lies someone who is well intentioned, and loves their family, despite the not-so-great ways they manifest their own fears and worries. 

Current leaders, next generation leaders and family leaders may sometimes not appear to their cousins or siblings as being well intentioned. And, it is just as common that these leaders view those same cousins and siblings as being less-than-well intentioned too. 

The empirical research is clear:  the genesis of family enterprise failures most often are caused by strife among two or more people who, really, in their heart of hearts, have the very best of intentions. 

So what is the answer? It seems like it might be complicated, but the simple solution is to always keep the lines of communication open, take the time to understand what another might perceive. If you shut down the communication there is no hope, but choosing the often difficult path of trying and trying once again, it is at least possible that families could eventually understand and uncover the good intentions of their family.

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What it takes to be the company’s next leader – Part 2 of 3

Drew Mendoza

Ascending to the CEO role of a family enterprise is not usually a walk in the park.  However, leadership has its benefits and, I have yet to meet a successful second or later generation leader of any family enterprise who, after totaling up all the battle wounds and joys of the job, didn’t look back on it as having been a worthwhile career decision.  Of course the key word here is successful.

These successful leaders tend to have had a common experience:  their rise to the CEO role was well thought out, well executed and a planned event.  In addition, these successful successors tend to be passionate about wanting to lead, and conduct themselves in honorable ways that built trust among the other family shareholders and company stakeholders.

And these future leaders benefited from the presence of an appropriate governance body that played a critical role overseeing full transition of executive responsibility from one generation’s CEO to the next.

The ‘alternate reality’ we see in cases where there is no appropriate governance body is that the transfer of responsibility and authority seems to often stall, stumble or worse.  Stresses from these mishaps ooze out into the family and, well, things can become pretty messy.

What have you seen?  How often does the big-dog gracefully relinquish the CEO role without placing oversight of the process in the hands of an appropriate board of directors?

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“Show me the money” What it takes to be the company’s next leader – Part 1 of 3

This is the first of three postings focusing on observed realities of business leadership. 

The ‘Show me the money’ line comes from the 1996 movie Jerry Maguire and is said by a pro-football player to his agent, played by Tom Cruise.   

Frequently, I hear prospective next generation leaders express their frustration that the senior generation leader either isn’t “letting go” or the elder leader seems to keep putting road blocks in the way of the next generations ascension to the top job.  Just as often, after we’ve engaged with the family, we find out that ‘Show me the money’ is an oft-unstated motivator for the senior generation to hold on.

The most commonly heard advice from experts to next generation folk vying for the top job is:

  • work outside the family firm for a few years
  • get the appropriate education
  • after entering the firm, best that you not report to a family member
  • have annual performance reviews
  • be clear on shareholder vision and corporate strategy
  • have transparent compensation plans for family in the business

Here’s one more:  acknowledge, in writing to the senior generation leader these points:

  • how much of his or her capital have they invested in the enterprise since they took the reigns;
  • how much time, in years, has he / she spent building the business;
  • how will you guarantee the senior (and her/his spouse) financial security until their death;
  • evidence of profitability and revenue you have brought to the business
  • the ROI you forecast for your fellow family shareholders during your leadership

Should proof of business acumen and accomplishment trump the rationale that leadership change be based on it’s time for my turn at the wheel?

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Falling in love at work

Drew Mendoza
Drew Mendoza

What rules, if any, should address what happens if you and / or other members of your family who own stock in the family business fall in love with an employee?

We’ve seen cases where that employee becomes an in-law and ascends to the highest offices of the company and then:

  • The couple divorces and the now divorced key non-family executive leaves a gaping hole in the management team after leaving the business;
  • The couple divorces and the now divorced key non-family executive remains in place and life goes on;
  • The couple never divorces and is a strong and positive influence on the business and the family.

Can having a written policy really trump the tidal pull of love?  How can you legislate feelings?  What are the risks inherent to this situation? 

While there may not be a simple answer to these questions – we find the very best multi-generational business families are proactive.  They do what they can to anticipate likely eventualities – while realizing they do not have a crystal ball. 

Ideally families would have a policy around ‘relationships in the business’ in place before the next generation is 16.  The best policies we find are those crafted and adopted by the family council – with broad involvement of family members, and a thoughtful preamble that explains the policy’s rationale.  In cases where the family is too small for such a governance body, it falls to mom and dad to put the policy in place; again, before the next generation hits their mid-teens.

Whether or not the family permits or prohibits any kind of office romance depends on the family – and possibly the business culture.  However, failure to think about these issues can lead a family to feel ‘blindsided’ when confronted with an actual relationship, which would then exacerbate the risk to the business and the family.

 What is your family’s policy on love in the workplace?

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