Tuesday, October 26, 2010

Conflict in Family Business

Many times I am asked what is the cause or source of conflict in a Family Business.

Though I do not believe there is one answer to that question for every situation or family business, I do believe based on my experience, the source of much conflict is ‘misaligned expectations’.

So what do I mean by ‘misaligned expectations’?

Each family member brings his or her own thoughts, ideas, experiences, definitions, interpretations, and perceptions to discussions, decisions, planning, and communication. These may not always be in alignment or the same as other family members. In many situations there is an assumption (we all know what it means when we assume) that others just know what we mean and we move forward acting on our own definitions or interpretations. Many family members are remarkably out of touch with each other. They fail to realize that they are not operating in isolation. These families take the greatest hits when change is necessary or a critical decision must be made. A failure to accept or hear questions posed for understanding often lead to a defensive posture. When that occurs the ability to move forward is definitely hindered and finger pointing or hostilities develop.

In these type situations it is important that family members seek first to hear and truly listen for understanding rather than thinking about what you want to say. Ask for clarification. Focus on the meaning of what is being said. Together commit to what and how you will move forward. For a family that may require revisiting and reviewing the vision the family has developed for the future and the values that will guide them in the journey.

All family members must understand and own the vision. The vision must be crafted with simplicity but with potency. The message and the means must be communicated frequently through all family members and stakeholders.

Deploying the vision means more than helping people know what the common cause is, it also means helping them get a clear idea of their own contributions to the success of the family cause. This involves helping them interpret the grand vision into a focus for action at their levels.

Countless families have great intentions and inspiring visions for themselves, but they don’t take the critical step of translating their intentions into concrete systems. Even worse, they often implement characteristics, strategies and tactics that are misaligned with their positive intentions, which in turn creates confusion and cynicism.

Don’t let ‘misaligned expectations’ derail building your family legacy.

Tuesday, October 19, 2010

Collaboration is the key to a successful transition of the Family Business

Transition of the family business does not need to be a fight.

Succession of a Family Business from the senior generation to the next generation must be planned for as a collaborative transition, not an event according to Steve McClure, a principal and consultant with the Family Business Consulting Group.

Traditionally business families pass the business to the next generation by ‘cold turkey’, or ‘delay and delay and delay’, or ‘here gone here gone’ which often ends up in two generations fighting for control. After 15 – 20 years the family members, employees, and customers are frustrated and the business suffers. McClure stated the model of leadership for the next generation will not work if it is modeled after the ‘way Dad did it’. As the business founder, he or she was the undisputed boss; with the next generation there may be siblings or cousins that need to learn to new processes and where there will not be one undisputed boss.

One way of determining a new model for leadership of the family business is to see what has worked for other families in similar generations and family structure. The transition must be approached as a long-term balancing act with the gradual transfer of power, roles, and responsibility. This long time frame does not mean there will not be issues, but the next generation will be able to tap the resources of the senior generation.

The secret of collaboration, according to McClure, is to determine what contribution each generation can make to build the family business and legacy. By collaborating on a period of continual adjustment and working together, the family can also focus on the fundamentals of running the business. A very positive tool for this transition is ‘invited accountability’ by way of an independent Board of Directors to help maintain role changes for family members.

According to McClure, the transition of the family business should be a time that yields gratitude and respect of the senior generation.

The Network of Family Businesses would like to thank Steve for presenting the on-line seminar titled:Two Generations Working Together to Transition the Family Business.

Friday, October 15, 2010

Developing Leaders for Family Owned Business Requires Intentionality

In a previous blog (August 8, 2010) I cited a study where it was found that approximately half of the companies surveyed plan to increase their leadership training budgets in 2011. This increase is due to the recognition of the cost effectiveness of building leadership from within as opposed to only hiring the key talent.

To continue my thinking on this critical topic, Family Owned Businesses must also intentionally help the next generation grow and develop. The potential talent pool already knows and understands the family culture. The investment is truly building the legacy and looking to the long-term as the next generation is nurtured.

Previously I recommended that each Family Owned Business leader continue to develop themselves; to carefully select learning projects tailored to the individual in the next generation; and the utilization of 360 Degree Feedback.

Here is a continuation of ideas to nurture the growth and development of the next generation:

4. Build exposure to other leaders: Broaden the opportunity of the next generation to network with seasoned leaders of other Family Owned Businesses. This often may be the opportunity through involvement in trade associations, Family Business Forums, or the local Chamber of Commerce. Either way, it must be intentional.

5. Exposure to the Strategic Agenda: Invite the next generation to sit in on the planning discussions for the next business cycle. Do it now, before they will be expected to make the decisions. Show them your thought process. I know one business family that has rotating seats on their Board of Directors for the next generation.

6. External Coaching: Sometimes our children hear things differently, more clearly, and more receptively from an ‘outsider’. The Coach must understand the issues and concerns of a Business Family, be committed to the success of the next generation and the legacy of the business, and have the ability to both push and pull the next generation along in their learning process.

I will continue to suggest additional ways to develop the next generation in future blogs, but would be interested in hearing your thoughts on these additional ideas.

What has or is your Family intentionally doing to develop the next generation?

Let me know, I would be delighted to include it in the future.

Friday, October 8, 2010

Gaining an understanding of Family Business in Bolivia

I recently had the opportunity to travel to Santa Cruz Bolivia to present several lectures at the Universidad Evangelica Boliviana. The President of the University, Dr. Timoteo Sanchez is a long-time dear friend of our family. The privilege to speak to many of the business students in this developing country was an exciting opportunity. One of the requirements for graduation is each Business Administration student must develop a practical and applicable business plan, and because of that most of the students are already involved in a micro-business. I found these students to be engaging, eager, and open to learning. It is my hope and prayer that we can continue to support these students as they move toward graduation and the business world.

In Bolivia and in Santa Cruz in particular there is not an emphasis on the trans-generational transfer of a family business or just the Business Family. The economics of this developing country of 10 million people are extremely difficult for families and businesses. Most of the micro-businesses and SME’s are focused on survival and finding enough sales to survive. Our desire is to provide additional education for Santa Cruz families in business as they build their business, economic culture, and families.

Another exciting part of this visit was the opportunity to meet with several business people, government representatives and trade representatives. These discussions were the direct result of Timoteo’s relationships as President of the University. While all these individuals are very concerned with the political process occuring in Bolivia, they are also very optimistic about the opportunities Bolivia has for the growth of business and Business Families.

If you have an interest in supporting the UEB or in learning more about the Business Families in Santa Cruz, please email me at: steve@netfamilybusiness.com

Tuesday, October 5, 2010

Critical Issues for Managing Succession in the Family Business

Stephen L. McClure Ph.D. is a principal of The Family Business Consulting Group, a multi-national firm based in Atlanta. Steve specializes in family communications and decision-making, succession planning and implementation, and governance & management in family firms. Steve states in a White Paper posted with The Network of Family Businesses that the tensions and conflict in families between the senior generation and the next generation need not be destructive and should be considered normal.

McClure’s White Paper states many family firms have found that they can survive much better as a family and utilize the resources of both generations if they focus on how two generations can collaborate together as opposed to one waiting for the other to leave. It is important for both generations to do the hard work of finding things to collaborate on as they move forward. What worked up to this point in time, will not work in the future.

The White Paper can be found at www.netfamilybusiness.com and an On-Line Educational Seminar on these issues and more is scheduled with McClure for October 19th at 11:00 AM EST. The On-Line Seminar is being sponsored and hosted by The Network of Family Businesses.