Will this plan unite or divide the family

What’s the Plan?

Will this plan unite or divide the family when Mom and Dad are gone?

A recent survey by the National Bureau of Economic Research’s Family Business Alliance found that only 15% of family enterprises had anything in place that resembled a succession plan. What’s a family to do?  

How does a family business owner avoid reaching the golden years, having worked as hard as he or she did, with no plan for transition?  It starts with the three basic questions: where are we now, where are we going, and how do we get there.  

As owners, families need to chart out their plan for success and be willing to adapt as they go. The competitive advantages of a family business are many. The family culture is one distinct advantage, and a well-functioning family is grounded in trust. This includes trust between the generations, between family branches, and with non-family employees. Survival of an organization, and more specifically a family business, is dependent on this trust. 

First, the family needs a vision. What will success look like for the business?  What does success look like for the family?  Are family members willing to let go and let new people innovate to keep maximizing the use of the family’s resources? Part of this includes talking about who you are. Your identity and core values are bigger than the business and bigger than its success or failure.

Second, the family needs to work through how each family member wants to be involved (or not) in accomplishing that vision. Is anyone in the family interested in the business? Are the interested family members qualified for the roles they want? What other strengths do family members bring to the table to help maximize and manage the family’s resources?  

Finally, as you go out and pursue that vision, remember to be flexible. Part of what makes a business successful is executing a plan but staying flexible to adapt as you go. Be comfortable, as a family, operating at the nexus of the strategic strategy and the emerging strategy.

Success may be different for each family member. Define what success looks like for the entire family and begin charting a path to get there. Develop a plan, communicate the plan, and keep asking:

Will this plan unite or divide the family when Mom and Dad are gone?

Effective Planning For Succession

Moving an enterprise forward requires the right people, doing the right things, in the right place, at the right time. Like strategic thinking and planning, succession planning starts with where the family’s and staff’s abilities are now, considers where they need to be, and determines how the enterprise will help them get there.

Effective succession planning is a process that can make or break the future of an organization. A survey by The National Bureau of Economic Research found over 40% of Family Businesses have not adopted a Succession Plan. In a separate study of family-owned enterprises, it was found 78% have no transition team and 83% have no written transition plan. 

Implementing a transition team of key internal members and non-family advisors will have the ability to determine the Knowledge, Skills, and Abilities needed for the future. As we experience the continuance of today’s volatile business and social environments it is critical now, more than ever, to determine the model for the future leadership of the business. 

Succession planning cannot be limited to the rising generation of family members. It is essential to create a deep bench of leaders throughout the enterprise that support the family ownership, understand and endorse the family mission and values, and have the interpersonal skills to lead

There are a number of factors to consider in effectively planning for succession:

1.     Roles and Responsibilities.  Accurately determine what roles and responsibilities are essential for the organization, difficult to replace, and will need to be transitioned in 5 – 10 years.

2.     Knowledge, Skills, and Abilities.  Define the knowledge, skills, and abilities needed in those positions both now and in the future.

3.     Current Talent Pool. Examine the current talent pool of individuals in the family and the business to understand potential options for future leadership. 

4.     Development.  To be effective, development plans require thoughtful planning, diligence, and follow-through.

5.     Preparation.  Help the future leaders earn the respect of the family, the business, and outside stakeholders.

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Grooming the next leader in advance can help ensure the transition will be smooth, effective, and successful. By beginning this process now, it allows for the ability to identify and address critical business needs for the business moving forward. The early beginning of building a process and system can also ensure proactive continuity of senior leadership and it may minimize a potential of post-succession executive turnover. 

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After The Lockdown

Preparation can give a competitive advantage.

As we begin planning an exit from this lockdown, there needs to be a plan created without panic. As a family business leader, being either extremely optimistic or extremely pessimistic may put us at risk. There will be opportunity for those that develop a good foundation, have a good foundation, or are building a strong foundation for the business. Strong systems and processes with clearly articulated values and principles will help guide your team through these rough waters.

In a survey by Statistics Canada, private companies with Advisory Boards, particularly ones with non-family members, produced significantly better results after instituting the Advisory Board than before. The study found sales growth increased three-fold in the three years following the introduction of the advisory board compared to the three years prior to instituting the advisory board, and productivity rose an average of 5.9% compared with 3.2% in the previous three-year period.

One tool to help guide the family business after the lockdown can be their Board or Advisory Board, or Advisors. Outside Advisors are a powerful tool to help business families build their legacies, grow ROI, increase innovation, form new networks, and develop key strategic initiatives. 

During times of uncertainty, expertise, support, and unbiased in-put when you’re facing big decisions becomes a necessity. Outside Advisors will provide counsel, advice, knowledge, skills, and abilities that typically go beyond the organization’s management team. Advisory Boards are an informal brain trust to help think through the investments, innovation, staffing needs, and plans. Non-family advisors must challenge the family’s assumptions, which often remain unquestioned in times of crisis. This can prevent decisions from being made as a result of the herd mentality. The non-family advisors can also provide the ‘safe space’ for the leaders to share their doubts, concerns, anger, anxiety, and insecurities.

An Advisory Board should always provide value to the family, the organization, and the leader of the family enterprises. Advisory Board members, who serve at the pleasure of the organization’s leadership, are selected for their experience, insight, wisdom, ability to ask the right questions, and ability to be a focused sounding board for the CEO. As a Family Business leader, this is essential to recover from a downturn.

Too often, growing, privately held companies get stuck and don’t take advantage of the invaluable resource Outside Advisors can be. An Advisory Board tailored to your business will help you lead for the future and build a healthy business.

Preparation will give a competitive advantage.

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Time To Plan

“For everything there is a season, and a time for every matter under heaven…”

                        Ecclesiastes 3:1

Family businesses are straddling rebuilding a successful business today while planning for a future that will require different skills. This is where strategic thinking and planning is essential. Virtual and digital disruption are at the heart of each family, family business, and privately held enterprise.

What makes planning in uncertain times so difficult for so many business families runs the gamut: the fear of the unknown; the business may be forced to close; cash flow is reduced or nonexistent; the business is struggling and leadership fears the ability to get it back on track; indecision in choosing or creating a plan; psychological and emotional connections that paralyze the family, leaders, and employees. 

The family needs a vision. What will success look like for the business on the other side of this crisis?  What does success look like for the family?  Your identity and core values are bigger than the business and bigger than its success or failure. Second, the family needs to work through how each family member, leader, or employee wants to or will be involved (or not) in accomplishing the plan. Are family members and employees qualified for the new roles that will be required?  What strengths do family members bring to the table to help maximize and manage the family’s and the business resources?  Finally, as you go out and execute the recovery plan, remember to be flexible.  Part of what will make the business successful is executing a plan but staying flexible to adapt as you go. Define what a successful plan looks like and begin charting a path to get there.

So how does the family business leadership turn values like loyalty, hard work, and vision into a plan for success? We see several strategic moves ahead to consider in building a plan for overcoming issues:

1.     Write down / codify your values and purpose into the plan. Draft a written plan of recovery, along with a timeline for execution. This is where your family business has a competitive edge, take it to the next step.

2.     Ensure family, leadership, and employees are deeply involved. They have a lot to offer the business grappling with rebuilding from the disruption. 

3.     Determine the skill sets needed for the future. Raising the ‘Digital IQ’ of the business is closely entwined with raising digital capabilities of existing workforce and determining future skill sets.  

4.     Implement a feedback mechanism. It is important to monitor the progress toward plan and adapt with proper intervention as needed.

5.     Form a team of professional advisors.  By bringing in independent advisors and board members with external expertise the leadership will also gain unbiased monitoring of the plan. 

It’s not too late to get started planning.  Doing nothing is not really an option.

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It Is Inevitable – Conflict In The Family

There is no such thing as a family business without conflict at some point. What is the cause of conflict in a family business?

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

Each family member brings his or her own thoughts, ideas, experiences, definitions, interpretations, and perceptions. In many situations, there is an assumption that others just know what we mean, and we move forward acting on our own definitions or interpretations. These families take the greatest hits when change is necessary, or a critical decision must be made.

Because every family is going to have conflict, what is a family to do?

-       Who you talk to is as important as what you say. Avoid Triangulation.

-       As a family and as a business, consciously work on developing a culture of conflict resolution. Individually focus on developing conflict resolution skills.

-       Work on the correct issue. Refrain from piling on with incorrect data or with issues from the past.

-       Handle the right problem with the right person. 

-       Establish appropriate boundaries. Establish a balance between work life and family life.

-       Be an example with your own communication. Practice good communication. Be quick to listen and slow to speak. 

-       Seek help. As a member of the family enterprise, find a coach to support you and your family in developing healthy communication habits and breaking the communication triangulation and cycle of conflict.

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Only by addressing conflict directly will the cycle end. Families and their enterprises cannot thrive where communication habits undermine trust and credibility.  Conflict is inevitable, but how you handle it is not.  

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Now More Than Ever

In a business family, boundaries, though often mental structures or commitments, are as real as tangible fences. Boundaries establish one thing in relationship to another. They are a line between where one ends and the other begins. Boundaries draw lines regarding what is acceptable and what is unacceptable within the family and the enterprise.  Boundaries help family members balance personal and professional obligations; maintain family bonds; and develop emotionally and psychologically throughout their lives. 

In this era of social distancing, boundaries are being defined as six feet. This is important for us to maintain the physical health of our families, our staff, our customers, clients, and society. This distancing while critical, can also lead to a feeling of isolation, loneliness, and depression. It is critical for leaders of the family and leaders of the business to recognize the needs of each individual.

For each leader, it is important to pay attention to what is appropriate, inhibit what is not relative and destructive, and be conscious of what everyone needs to know or do. In these times, is critical for the leader to be creative and attentive to helping family members, employees and staff connect.

Maintaining the family-ness that comes from nurturing shared identity can also be one of a family business’s strongest competitive advantages.  In other words, connecting and sharing stories not only brings understanding and identity to family and family business, it is also one of the best ways to nurturing one of your strongest competitive advantages.

There are many ways to work at staying connected. Phone calls. Emails. Text messages. Conference calls. Zoom Meetings. Video conferences. Skype. We need to be in constant communication to help everyone feel connected. Now more than ever, over communicate.

As a leader, create the environment, experiences, and opportunities where your family and business can attend to each other, innovate for the business, create new ways of doing things, and look to the future.

We Are In A Crisis What Does It Take To Lead A Family Business

 Leading a successful family business through unprecedented times requires a clear understanding of positive family relationships and a clear understanding of business relationships (known as employees, management, vendors, and customers).

During these uncertain times, positive family relationships do not occur by accident or by just thinking positive thoughts. Some debate whether positive relationships are the result of focusing on ‘quality’ vs. ‘quantity’ of time spent. We all now have a quantity of time. To keep positive relationships requires intentionality. How do you do that?

1. Commit to the focus needed to guide the family and business. It is easy to become distracted or distraught.
2. Keep the balance between your individual needs, the family needs and the business needs. You need to do self-care so you can care for the family and the business.
3. Commit to enjoy activities together as a family.
4. Maintain the balance between personal and interpersonal privacy.
5. Remember, you won’t have all the answers.
6. Use this time to learn as a family how to have the difficult conversations and still love each other.
7. Communicate, communicate, communicate. Be open, be honest, be truthful with your family, your employees, and your business. If you are not able to be face-to-face, use the phone, Skype, Zoom, SMS.
8. Commit to providing grace, love, and support.
9. Leadership can be lonely. Utilize the support networks you have, your family council, your Advisory Board, your Board of Directors, your management team, your friends, and your advisors.
10. Eat well, sleep well, exercise, lean in on your faith.

It is in these times family business leaders are called upon to provide strong leadership with a sense of hope. Cast the vision.

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We Are Living In Uncertain And Challenging Times

If you are like me, you have been inundated with emails on how to deal with COVID-19. 

At times, in times like these, we all need someone to think out loud with, just vent to, have someone ask reflective questions, or seek a different unbiased thought. 

We want to be able to support you if one of those needs are yours.  
This is a way we believe we can support our community in these trying times.

Feel free to email, Skype, or call, these conversations are all on us and between us.

Let us know 
Steve

Steven K. Moyer
SKM Associates LLC

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Succession Planning Too Often Forgotten

A critical issue for family enterprises transitioning from one generation to the next is preparing the rising generation of leaders, including both family and non-family leaders. As the search for talent remains a top challenge for many employers, the need for building committed and capable leaders from within is more important than ever. 

Succession planning, however, should not be confused with replacement planning. Replacement planning is a form of risk management. Replacement planning answers the question of who will fill an immediate, unexpected void. Succession planning, on the other hand, is a proactive approach to ensure continuity of enterprise leadership that is committed to cultivating talent from within.

Succession planning cannot be limited to the rising generation of family members. It is essential to create a pipeline of leaders throughout the enterprise that support the family ownership, understand and endorse the family mission and values, and have the interpersonal skills to lead.

The senior generation must drive this development. Succession planning is a critical driver of strategic planning. It is not just about building the enterprise bench of people ready for new responsibilities. It is also an opportunity to nurture a culture that is committed to the values and vision of the family. The strategic development of talent creates a win-win environment for the enterprise and the workforce. It is an environment where there truly is long term opportunity for employees, and employees see a path of personal growth, development, and advancement.

Good succession planning is a process. There should be clearly defined roles regarding who is responsible and accountable for the process. What’s more, the senior generation needs to demonstrate in both word and deed support for the process and accountability for expected outcomes. 

Moving an enterprise forward requires the right people, doing the right things, in the right place, at the right time. Like strategic thinking and planning, succession planning starts with where the staff’s abilities are now, considers where they need to be, and determines how the enterprise will help them get there.

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Good Governance Leads To Better Family Business Outcomes

Family governance structures alone won’t make a business successful, but a business won’t grow and be successful long term without the right governance structures.  Long-term success takes the same commitment to innovation and excellence that made the enterprise successful in the first place.  Good governance structures can set up the business and the family to continue that legacy of success.

Governance structures run the gamut.  Some are complex and extensive.  Some are simple and straightforward.  Appropriate governance structures for any family business must focus on the particularities of the family and the business at issue.  There is no one size fits all solution. In general, corporate governance is the system of rules, practices, and processes by which a company is directed and controlled.  For family businesses, governance should help formalize issues such as ownership, leadership structures, control, conflict resolution, and communication. For many families, the process of developing family governance can be as valuable and educational as the final product. 

The review and development of good governance for a business family should be a normal part of the life and rhythms of the business. Developing these guidelines can at times pull leaders away from daily business operations and can also surface tension between family members. That is normal, and it is a healthy part of the process of developing good governance. As family businesses work to develop their own governance, they need to determine what will work best for their family. The most appropriate governance structures for an organization must be tailored to the particular organization, industry, and family.

There are pieces, however, that are strong foundational components in almost any organization:

·      Family Vision, and Philosophy – An invaluable starting place for many organizations and families is to take the time to write down the values, vision, and philosophy of the family and the organization.

·      Buy-Sell Agreement – Drafting a clear buy-sell agreement that lays out how the business will transfer among family members and among generations is vital as families grow and new generations come into the business.

·      Succession Plan – Developing a strong bench of candidates for future leadership is important for any organization’s continued success.  

·      Family Council – Family councils, sometimes called shareholder assemblies, can be an important mechanism for family members and shareholders to guide the organization. 

·       Family Meetings – Annual family meetings provide countless opportunities to update family members on the state of the business and plans for the future; to let family members ask questions and be heard; to keep family members who are not employed in the business engaged; and to recognize accomplishments of family members outside of the business.  

Whether your business is in the first generation or the fifth, Good Governance Leads To Better Family Business Outcomes.  

Contact us at for more information and to help your family build your legacy

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In 2020 The More Things Change

How rapidly is your world changing?  As they say, the only thing constant is change.  Change is inevitable. How are you managing the change?  

Family and work are often places of structure for people, and when that constant is shaken, when things change, there is natural anxiety.  When things do change, communication is important in maintaining trust. If change is happening, it is best to communicate as much as you can as soon as you can.

How do people react when confronted by change?  Many times, people respond to change initially by denying it, then by ignoring it, and finally by resisting it or kicking it down the road.  This is when leaders must be astute and help people understand why the change is critical, how the change will impact them, what value the change brings for the future, and how each individual can support the change.  Individual resistance to change is one of the primary reasons that change initiatives fail at all levels.

Managing change successfully is also critical for survival and growth of any system, especially business families.  Change in the business can originate internally or externally.  Both types of change require a significant level of knowledge, skills, and abilities by leaders to effectively deal with the change management process.  Change management is particularly important for those who feel the greatest effects of the change, as they are the ones who often resist it the most.

How are you communicating change?  If you don’t provide a way for people to get information, rumor mills will fill the void. 

How transparent is the change you are leading?  One key to providing good communications, especially during times of change, is to provide a way for individuals to ask questions and provide feedback.

Leading through change requires casting a vision for a better future.  What change is presenting your family enterprise with new opportunities?

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Hope Your Holidays are Happy

       

                                                                     
      Merry Christmas 

              from SKM Associates! 

Everyone at SKM Associates wishes you the happiest of holidays! As we reflect on the "reason for the season," our prayer is you'll be encouraged and blessed as you follow the call on your life. Thank you for letting SKM Associates be a part of your journey. 

It's the season for spending time with people we love, sharing hugs and smiles, and sending special wishes to all of those who mean the most to us.

May your family realize the love of this season and continue through next year.

             God Bless and have a wonderful New Year.

Grace and peace,

The Roles We Play In The Family Enterprise

Enterprising families have many competitive advantages: strength of relationships, cultural fit of family members, shared values, strong commitment of those involved, strong work ethic of family members, patient capital, and flexibility in hard times. 

At times, however, family relationships and the needs of the enterprise can come into conflict. The personal relationships of families in business bring an added level of complexity. It is during those times that the business leadership and the family leadership must understand what is to be accomplished, why, and who is fulfilling what role. Different stakeholders may want to accomplish different things, either from an enterprise perspective or from a family perspective. In navigating these situations, individuals play different roles at different times: parent, child, cousin, founder, owner, president, shareholder, employee, board member. 

It is important to understand which role is being played, by whom, in which context. The contexts vary, ranging from developing the rising generation, to governance decisions, to business strategy, to estate planning, to leadership, to business management, to hiring family, to promoting family. The list goes on. The ability to know through which lens one is approaching an issue requires sensitivity to the perspectives of different roles being played by different individuals. 

Many business families try to navigate these complexities on their own.  Many times that works, but there are also times when support from a neutral third party with expertise in organizational and interpersonal dynamics can be invaluable. Someone to provide unbiased feedback and to approach the issues objectively. Someone to help lay a framework for stakeholders to have positive and healthy communication.

In an enterprising family, it is critical to define who is playing what role.  To maintain business prosperity and family harmony, assistance from an impartial third party can be invaluable.  Tough times don’t need to be divisive for the family or the business.  With properly defined roles, keeping it in the family should be fun and rewarding.

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Build Trust To Lead

What does trust mean to you? 

Trust does not get built in a vacuum, and it takes work to build trust over time. Some say it is a feeling that cannot be defined. You know it when you feel it, but you have trouble defining the feeling. In a family business, trust should be defined as a “feeling that another person, or a group of people, or the system is performing in your best interests.” Test this definition by thinking of someone you trust completely. Do you feel that this person has your best interests as top priority?

As a leader in a business family, there are intentional steps that you can work on to help build trust in your family and your business.

Trust them. Give your family, your team members, and others the benefit of the doubt. Create a high level of trust by trusting them first.

“Trust men and they will be true to you; treat them greatly, and they will show themselves great.” Ralph Waldo Emerson

Do what you say you will do. When you promise what you can’t (or don’t) deliver, people lose trust in both you and your ability. Instead, deliver on what you say you will do in the small things each day. What’s more, when you make a mistake, admit it, own it, and correct it.

Use trust elevating communication techniques. Genuinely listen and seek to understand before being understood. Speak respectfully about all, to all. Speak about people as though they were present.

Confront reality. Tackle the tough issues head on, don’t ignore them and hope they will go away. Lead courageously even if the new is uncomfortable.

Put others first. To be trusted, you need to focus first on the needs of others. Strive for the best in others, develop their strengths, and support them in reaching their goals.

Own your part. Decide now that you will take the necessary steps to become a trusted leader in your family business. Don’t rationalize or blame others: your behavior will show how much you are to be trusted.

Demonstrate integrity. Be honest. Put others ahead of yourself. Don’t cut corners or act unethically.

“Good teams become great ones when the members trust each other enough to surrender the ‘me’ for the ‘we.’”Phil Jackson

Be the family business leader that builds trust.