How does one determine who is a member of the family?
Last May, the U.S. Census Bureau reported that in 2010 married couples represent 48% of U.S. households. The remaining households were comprised of single parents, live-in partners (same or opposite sex), divorced, separated or unattached individuals. Further confusing the picture are blended families that are a hybrid of more than one family of origin.
The U.S. Securities and Exchange Commission issued a guide defining who is considered a family member (Dodd-Frank Act), which stated in-laws were not considered family. Under this act, unmarried and same sex couples living together could be considered as family members.
With so many variables, how do we decide who is a family member? The answer can only come from the families themselves. There needs to be a willingness to discuss the issues around this question without insult and recrimination.
While this conversation may not lead to a consensus, it can generate an honest, powerful discussion on deciding who should be included in establishing policies for the business, as well as family and estate planning. Having this discussion also helps emphasize to the family the importance of working together on complex matters.
Shifting notions of what constitutes ‘family’ is yet another variable that can challenge the senior generation’s dream that the family will all work together and stay together. In our experience, if the senior family members are open to considering a sometimes broader definition of family, then the most important part of his/her dream… a supportive family and a successful family business…can be more likely to still come true.
As strong family business leaders juggle their many demands while balancing the needs of the business and the family, they also demonstrate these additional characteristics.
1. Mentor & Role Model: Nurtures, cultivates and develops family member talent as well as non–family talent.
2. Innovative: Leads and supports diversification efforts and drives towards preparing to reinvent portions of the business.
3. Tough Minded: Is willing to discipline and even fire family members when necessary.
4. Listener: Willing to listen to independent outside board members and advisors both in the business and outside of the business.
5. Succession Preparation: Plans ahead both for leadership succession and ownership succession of the business. Is willing to let go when the time is right.
While this list covers a lot of ground – there are many other attributes that make a successful leader. What would you say is missing from this list – what else do you think makes for a strong and effective family business leader?
What is the make-up of an effective family business leader? From my own observations and interactions with family business leaders for over 30 years, as well as listening to my FBCG colleagues who have worked with 2000 family businesses, I have recognized some traits that stand out in those leaders who demonstrate an uncanny ability to develop both the family enterprise and the family.
As you develop your own leadership skills, you may find it helpful to review these ten common characteristics of successful family business leaders.
1. Visionary: Looks towards long-term performance versus the short-term returns.
2. The Balancing Act: Understands how to constantly balance the attention needed for working in the business sphere and in the family sphere.
3. Birth right vs. Earned right: Articulates and demonstrates the importance of family members needing to earn their right into the family business versus making the entry a presumed birth right.
4. Family Voice: Supports the voice of family shareholders and other family members who are not working in the business, either through direct contact or through an entity such as a family council.
5. Non-Family Employees: Ensures that executives and employees, who are not members of the “descendent” family, actually feel as though they are part of the family and are appreciated as key parts of the family business.
Check the next blog for the final five characteristics & meanwhile, join the conversation….
What would you add as a key skill from your own experience? If you are a family business leader – what would you want to see your successor really manage to do well?