Tag Archives: webinar

Developing the New Leaders of your Family Enterprise

Recently the Family Business Consulting Group produced a new webinar program titled “Developing the New Leaders of your Family Enterprise”.  Below are responses to a few of the questions asked by the participants during the program.  The complete webinar is available for replay at this link. 

Developing the New Leaders of your Family Enterprise


Q.  What happens when the diversity of experience looks more like you can’t figure out what you are looking for? How do you avoid this?

A.  The key to avoiding this is to be explicit about your plan in advance. If key stakeholders (e.g., shareholders and senior managers) know that the plan is to have a diversity of experiences — and it would also be good to let them know why that diversity is being sought — then it is less likely that these experiences will appear to be aimless or uncertain.

Q. Doesn’t speed to trust also play a role in versatility? How does trust play a role in versatility?

A. Trust does, indeed, play a role in versatility… as do a number of other factors such as business acumen, time management, and communication skills. We’ve found, though, that focusing on the “What” (Strategic vs. Operational) and “How” (Forceful vs. Enabling) of leadership will give you the most “bang for your buck.”

Q. Interested in John Ward’s students “ learnings”

  • Sales are Vanity
  • Profits are Sanity
  • Cash is reality
  • Values are eternity

Q. How do you handle a situation where founder (patriarch) has stepped away and in later years seeks to become actively involved or promote projects initiatives that are aimed at leaving his “mark”? in the process he is altering the Next Generation working dynamic.

 A.   To the frustration of many successors, founders commonly “come back.” They claim there is unfinished     teaching and contribution. In fact, they are unhappy, perhaps very depressed, since letting go.

The best we can advise is to (1) see if you can channel his/her energy in a constructive way; (2) over, over communicated; (3) hopefully benefit from the support of an outside board (or, perhaps, from long-time professional advisors).

Q. How important is it to publish and share the mission, vision and values of the family?

A.   Family mission, family values, and the family’s ownership vision are the most important foundation and the backbone of the family constitution. We believe this is so as the family’s family commitment to each other is essential for long-term ownership continuity.

Q. Is Level 5 leadership a book or an article?

A.  “Level 5 Leadership” is an article from the Harvard Business Review by Jim Collins. It is an examination of one piece of his book called “Good to Great.”

Q. How do you deal with a founder who does not delegate and does not give away real power?  It makes it impossible to grow as a leader?

A.  A founder who does not delegate makes the situation difficult. There are many factors to consider, but the two that I would start with are (1) trying to figure out what is constraining the founder from delegating (sometimes, simply asking the founder, “What keeps you from delegating?” may be enough to loosen those constraints), and (2) painting a picture for the founder of the likely long term consequences of not delegating — often, the thing that constrains founders in situations like this is that they are so focused on today that they haven’t given much thought to tomorrow.


Effective Strategies for Avoiding and Managing Family Conflict Questions and Answers

On September 21, 2011 the Family Business Consulting Group held a live webinar titled Effective Strategies for Avoiding and Managing Family Conflict.  David Lansky was the presenter for this program along with Carol Ryan acting as the moderator.  Below are a few of the questions presented by the audience during the live program.  If you missed the program and would like to listen to the on-line replay you can download the program using this link.  http://eventcallregistration.com/reg/index.jsp?cid=600t11pk#od  Future FBCG webinar programs are listed at this link.  http://www.efamilybusiness.com/index.cfm?md=Content&sd=AudioConference&MatterID=40

Q. How do you break negative habits?

A. Often conflict can result from repetition of negative communication habits. Provided all parties agree that they want to change their negative habits, creating opportunities to practice new behaviors can be helpful. Sometimes agreeing on a signal (“pulling your ear lobe”) that indicates that the bad habit is being exercised can help increase awareness and create an opportunity to practice a new behavior.

Q. Does “divorce” count as a cut-off and thus make it more likely that other cutoffs will happen in succeeding generations?

A. This is a good question. I think the answer depends on how the divorce is managed in the family. Some divorces do not impose a cut off, communication continues between the parties and may be encouraged. However, when one or more parties to a divorce expect other family members to stop communicating with an exiting spouse, this can result in all of the destructive consequences that come from other types of cut off.

Q. How do you communicate to the other person so the other person will listen?

A.As I mentioned in the webinar, the very best way I know to get someone to listen to you is by listening to that person.

Q. What happens when someone says they are a failure because you don’t agree with them?

A. I would ignore the comment. He/she is entitled to that opinion. The real question is how will we resolve our disagreement?

Q. With regard to destructive entitlement what if the injustice is merely perceived – not a true injustice?

A. It is ALWAYS a matter of perceived injustice, since what is “real” to one party may be trivial to another. As a beginning, I would take the perception very seriously and spend a lot of time listening and seeking to understand the other party’s perceptions.

Q. How do you recommend resolving this conflict across generations of siblings and next generation – One sibling creates conflict and fights to force fairness for her kids, speaks for them, creates special opportunities for them.  When the next gen kids haven’t earned what the parent is fighting for like their next gen cousins who did it on their own and who then become resentful.  The other siblings try to avoid the conflict by ignoring it. Is there a way to handle this without a third party facilitator?

A. Excellent question and a very difficult situation. There are elements here of over-protectiveness and triangulation. I would guess the overprotective party thinks that she is the victim herself of injustice, resulting in destructive entitlement. Can this be resolved without a third party? It would be very difficult.  I would expect a third party to bring an objective trusted perspective that is not perceived as interfering with parental rights.

Q. Is there a way to successfully transfer an asset (business) to two family members who will share power or is this a recipe for disaster?

A. It is certainly possible provided the parties agree before hand on how power will be shared: Who has authority over which issues? How will decisions be made? What if we are deadlocked? If these things are not addressed before hand the chances of disaster are vastly increased.

Q.  Were you suggesting that one listens better (or less effectively)-or more earnestly in the eyes of the talker – if you take pen and paper and write down what the person is saying while they are talking?

A.  Writing things down helps listening in two ways: it focuses you on what the other party is saying and occupies your mind so that you don’t immediately react to what you are hearing!

Q. Thoughts on dealing with the “always ‘toxic'” family member?

A. Be realistic, stop arguing, and consider whether a graceful exit is possible. “Toxic” family members will sometimes stop being toxic if they think they may be encouraged to exit. They will almost certainly stop  being toxic if they are no longer part of a shared enterprise.  The family council (or other family representatives) need to decide  whether they have a mandate to deal with the toxicity. Are they empowered by the family at large to manage the behavior of individual family members? If not,  the only strategy remaining may be to ignore them and give them as little attention as possible during family meetings. “

Q.How do you determine when a conflict is a public/family business conflict  or a personal interfamily member conflict?

A. Great question! Some conflicts do need to be ignored by the family at large, others require attention. When a conflict is spilling over into the larger family and interfering with family functions, it probably merits broad family attention. I have found that family councils, exec committees, etc., can usefully explore whether it is within their mandate to address the conflict or not.

Q.  What suggestions do you have when you have a sibling that unilaterally makes decisions and several of the other siblings are very angry and want him removed. He has been the one running the business  so he thinks that he has to make the decisions and refuses to listen.

A.  You all should sit down with a third party and explore the roots of the conflict. All options for a  solution should be on the table, including separation.

Q.  Would these issues be easier to handle if the enterprise is looked at as a business family and not a family business

A. Interesting question. Viewing yourselves as a business family might bring a greater emphasis on the shared goal of being together in harmony.   However, if the underlying dynamics do not change, conflict will probably continue.


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?


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/


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?


 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?


 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?


 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.praesta.com (not that focused on families)


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!


Sibling Revelry Questions Answered

Carol Ryan
Carol Ryan

Below are a few of the questions that were posed during our Sibling Reverly 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

Q. What about those of us who are not in the sibling generation?

 A. If you are not a member of a sibling generation then much of what we talked about in the webinar is still relevant. For example, if you are a parent, you can think about how you raise your children and the effects this could have on them in the future if they are in a position of making decisions together. Even later generation businesses (cousin owners and beyond) may be affected by sibling bonds as there are plenty of situations where a family branch has to come to a consensus about how they might respond to a situation or decision and the ability to collaborate as a family unit could be very valuable.

Q. How about adopted children as siblings in family business operations?

A. Families will define ‘family’ in different ways – the ways in which families treat adopted children is often related to the age at which the children were adopted. In our experience most children who were adopted at birth or as very young children are treated the same as ‘blood’ descended children in the family. There may often be distinctions when a child is adopted into the family in adulthood – or as part of a second marriage. In this case I have seen those family members sometimes treated differently than blood descendents – from having no access to opportunities to work in the business nor ownership, to having the chance to make a career in business but not have ownership, to having access to it all. I know of a family where an owner adopted the adult children of her new husband and included them in her estate so they will inherit ownership just like any other member of the generation. In terms of working opportunities – whatever requirements are put to all family members should certainly also apply to children who have been adopted into the family.

Q. What do you do when the founder won’t let go?

A. This is a very common challenge. The best advice we can offer to siblings is for you to start to make the decisions that are actually empowered to make. The first one is to have an honest conversation with the founder. Ask him or her if they have any desire to retire, and if so when (some will honestly tell you no, some will say yes and mean it, and some will say yes but everything in their behavior suggests this is not likely to happen any time soon, or in a timely manner…). If they express a willingness to retire but you have your doubts you can certainly ask them about that they perceive as a reasonable timetable. Then you have to determine two things: do you believe them & do you have the patience to wait?

If you think it will be a long journey, if at all before your generation gets any real authority, then you have to ask yourself if you are willing to wait. If you find your patience is very strained by the process of waiting, you need to seriously consider getting out. Do not become a hostage of this situation if it is wearing you down – it will only damage your family relationships and will likely not do much good for the business either (especially if you become bitter, hostile, etc…). When you have a founder who is unwilling to let go it is sometimes much easier if you have siblings who understand your pain. In addition, if you have siblings then you make some joint decisions as siblings that demonstrate to the founder that you are able to work together. If you are not empowered to make decisions about the business – you could make decisions around how you would make decisions in the future when you do take over. For example, draft a policy on how perks will get treated in the business; determine if you would like to have a board and how board directors would be selected, etc… The exercise of working together will be a way for you to feel like you are moving the ball forward on things where you have a voice & as I mentioned, demonstrate to all stakeholders that the siblings can make complicated decisions together. This can go a long way to reducing the founder’s stress that everything will fall apart when they leave, and if their anxiety is reduced on that front, who knows what changes they may be ready to seriously consider…

Q. What is the best way to get siblings to begin sophisticated mode of communications?

A. The best way to ensure the siblings are able to really listen to one another. It is amazing to me how much can be accomplished if individuals will really give each other a fair hearing and seek to understand an issue or concern from their point of view.

If there is limited harmony between the siblings this may initially need to be facilitated conversations to help create the ‘safe space’ where everyone trusts that they can really speak their mind and be heard by others. When we work with families we almost always interact with each family member individually initially, to help us better appreciate the diversity of views or concerns, and to build an alliance and comfort with us, so that we can be trusted by all to create a ‘safe space’ where hard discussions can be had.

Q. How do you create an atmosphere of trust when the feeling is that only one sibling is the confidant of the founder?

A. If can definitely be a challenge when there is a ‘first among equals’ dynamic in a sibling group. If one sibling has far more access to information than the others this can breed distrust and jealousy. One important point for all families to bear in mind is that even if a member of the sibling team is the ‘most’ qualified to lead the business because they have the most experience or best knowledge – that person will not succeed if they do not also have strong ties to the family. Therefore, the sibling who is in that ‘favored’ spot has a challenge that they have to invest in their relationships with their siblings – and while they do not want to violate any confidences of other family members, it may be important for them to use the ‘special status’ they have with the founder to explain to that person that they have to share more broadly with the family or run the risk of creating mistrust between siblings.

Q. How do you get around entitlement – i.e. I’m an owner so I’m entitled to a place on the Board I’m entitled to make executive decisions?

A. As I believe we said on the webinar – entitlement is about the most toxic attitude you can find in a family business. Once a person believes that they ‘get’ to do things just because they are in the family the risk is that will compromise both family and business relationships. It is important to make clear to family members that if you have strong non-family executives, meddling family members who offer input on management decisions & expect their views to hold sway, are a serious risk for turnover. The best and the brightest employees will not tolerate this for long. Likewise, if you go to the trouble of putting together a serious and professional board, there is nothing that will kill its effectiveness faster than populating it with unqualified family members who are unwilling to work at developing skills & competence to add value – but rather feel their last name is necessary & sufficient.

Having said that – there are plenty of family businesses who want family on their board and do not have family who are as well qualified as outsiders. We would typically advocate for having some voice of the family on the board, but would suggest that this person should have as strong business experience as possible, or get some training around the governance role, etc. so that they are positioned to add value – not be a distraction. No one enjoys feeling useless, board members appreciate having some grounding so that they feel they can follow the conversation more effectively.

The bottom line is if a family member just feels entitled to warm a chair and are unwilling to put in any effort to learn how to do a good job, this is a huge risk (to the business and family – as all competent people will be angered by the presence of such an attitude) and should not be tolerated in any family.


Succession Webinar Questions Answered

Tools of the Trade: Two Experts Talk About Family Business Succession

Q. How important are buy-sell agreements and clearly established valuation methods for family shareholders? What are typical valuation methods?

A. A buy sell agreement is a succession planning tool that; (i) protects existing shareholders against transfers of ownership to nonfamily members or parties they do not want as “partners;” (ii) provides for a well thought out method of transferring management and ownership of the business to the next generation; (iii) addresses when and how an existing owner may be able to sell their ownership interest; (iv) provides a means of valuing the business in the event of an ownership transfer; and (v) determines how payments will be made to a transferring owner in order to protect the ongoing viability of the business.

Common valuation methods are; (i) annual determination of value by the owners; (ii) a formula approach; or (iii) determination of fair market value by independent appraisal.  Additional information on business valuations can be found at www.MandAlawyer.com by clicking on the tab on the left side of the home page titled “Business Valuations.”

Q. What are your recommendations for pre/post nuptial agreements for family members working in the business who do not have ownership but may be having ownership in the future?

A. Many families use pre and/or post nuptial agreements to protect assets that were acquired before marriage and to keep shares within the family.  The effectiveness of such agreements is dependent upon state laws so discuss this with an attorney before making such a requirement.  If you do want to require agreements of this type before someone is allowed to become an owner make it should be discussed and planned well in advance of engagements.

Q. Do you advise to sell to a family at a discount price?

A. Generally, minority owners are the ones that face a possible discount on the sale of their stock.  Whether or not there is a discount applied may depend on whether the event triggering the sale is voluntary or mandatory.  If the minority owner just “wants” to get out versus a buyout due to death or disability, it is more likely that there would be a discount.  Discounts tend to give majority owners an unfair valuation advantage and are generally avoided in buy sell agreements.

Q. What range of discounts do you typically see for minority interest and lack of control? 

A. Discounts are generally due to lack of marketability and lack of control.  These discounts also overlap.  Lack of marketability discounts range from 20% to 45% for privately held ownership interests and minority ownership discounts also range from 20% to 45%.  Different appraisers apply these discounts in different ways and in different combinations, but rarely would the total discount exceed 40%.

Q. Where are good places to find advisers to help with providing ideas for liquidity for the outgoing generations? We have found that local banks don’t provide the level of experience or expertise required.

A. For information on selecting advisors see www.MandAlawyer.com and click on “M and A Professionals” on the left side of the home page.  The right professional “team” is the key with the right leadership.

Q. What’s your experience with what family members are involved? Spouses and partners are the people I struggle with – how involved should they be?   

A. It is important to clearly define family for the purposes of ownership.  If spouses are allowed to own some provision may need to be made for the business to purchase their shares in the event of a divorce.  Life-partners are treated much the same as spouses in most states and therefore, would need to be considered the same as spouses.  There is no simple answer but there needs to be open discussion within the family and good documentation of decisions for future reference.  Since spouses and in some cases life-partners are influential in raising children who will be the next generation their cooperation and participation in the family business continuity plan is often critical.

Q. Can you review the valuation process you described with the two owners and two envelopes bids?

A. The simplest form of the “shoot out” is when two partners (A and B)  provide bids for the company in sealed envelopes. The envelopes are opened at a meeting of the parties and the highest bidder has the right to buy out the other owner.  If the A is the highest bidder and does not buy out B’s interest, then the B, the lower bidder, has the right to purchase A’s ownership interest at the price bid by B.  In a multiparty shoot out the rights would go from the highest bidder, in order, down to the lowest bidder.

Q. How is stock valuation different than an appraisal?

A. They are the same.  Stock values should be set based upon an appraised value.  Share prices increase when valuations increase.

Q. What are the unique concerns for succession of a C corp? My retirement fund is currently 90% company stock.

 A. The fact that a “C” corporation is not a pass through tax entity (C corporations are taxed at the corporate level and the shareholders are also taxed on dividends from the C corporation) requires additional tax planning to make sure the buy sell agreement, current ownership structure and future business operations are all structured in a manner that minimizes the double tax.

Q.  Is there any published stuff out there on typical valuation methods for private companies for those with minority interest?

A. Google “discounts on minority interests” and you will find volumes of material.  One of the leading writers on this issue is Lance Hall with FMV Opinions.  Applicable information can be referenced through FMV’s web site at www.fmv.com.

Q. What are the steps to help a family transition to a family business office if they have not considered it before?

A. Generally, a family office is useful when a family reaches a size and net worth that can support central functions such as investment planning, tax planning, philanthropy and even clerical services.  If the separate needs of the family are placing an inappropriate burden upon the staff of the business it might be wise to consider a family office.

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