Family Business Peer Groups

Addressing Critical Issues

Differing perspectives and needs among the senior generation, next generation, multiple family members and non-family executives can translate into challenges and opportunities which can be addressed through peer forum meetings.

While the concerns and interests of enterprising families are numerous, varied and complex, there are a few that tend to stand out. If some of these resonate with you, it might be time to contact The Peer Alliance and learn what your peers have experienced.

 

Succession of Ownership

There is the classic line from parent to offspring, “Someday, this will all be yours.” But, of course, the question is “When is ‘someday?'” For seniors, that day tends to get postponed because of an on-going need for control, driven, sometimes, by a fear of issues around trust. For some, more recently, there is a real or perceived financial need and for many others there are concerns around fairness and equality. For emerging leaders the question is, “when will the senior generation transition ownership and how do I address that with them?”
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Succession of Leadership

The challenges of addressing the future of ownership are often accompanied by its twin, the challenge around planning for the succession of leadership. Questions abound and remain unanswered: Who will be the next leader? How is the decision to be made? Will it be a family member or a non-family member? Should there be a leadership development plan? Many members of the senior generation are so closely connected to the enterprise that the mere thought of letting go of the leadership role can result in a fear of loss of identity.
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Taking Hold of the Family Enterprise

For many members of the younger generation, taking hold is a major dilemma. Some haven’t been given the opportunity to demonstrate what they can do and some need more experience and a few grey hairs. Others may simply be unable to take hold or may find that their passion lies elsewhere. At the same time, the senior generation needs to feel comfortable passing the reins. The question remains: “What needs to happen for the senior generation to ‘let go’ and the next generation to ‘take hold?'”
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Entry Criteria for Family Members

Oftentimes, creating entry criteria for family members can help avoid some of the issues related to the future of leadership. While these typically include the basics of educational requirements and career experience outside of the family enterprise, family members today are also looking at achieving clarity on expectations around the future of ownership and leadership. Some, for example, require employment as a condition of ownership.
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Roles & Responsibilities and Limits of Authority

Clarity on roles and responsibilities and clear limits of authority also help family enterprise members navigate along the way. Any family member working in the business can buy a box of paper clips, but when it comes to an acquisition, we’d typically expect all key stakeholders to have a voice. Somewhere in between is where clarity is needed. For so many family businesses, there’s a belief that we all do everything- whatever is needed at the moment. While that may work early on, as a business matures and professionalizes, greater clarity is required.
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Alignment of Principals

Somewhere along the way, family members often get engaged in somewhat restricted areas of responsibilities or silos such as sales or production or administration. That “silo mentality” can inhibit alignment of the principals who are so engrossed in their silos, they become defensive of their turf and even lose sight of the bigger picture.
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Differing Generational Perspectives

Differing generational perspectives can add a layer of unmatched complexity. Seniors want to know that their daughters and sons are working hard. Some define this based on their own standards and experience, like being in the office from 7:30am to 7:30pm every day. The younger generation, meanwhile, may be seeking a greater sense of balance between family and business and find immense value in driving their kids to school and being available for their sporting events. The advent of recent technology makes more flexible scheduling a real option, but does require that seniors adjust to a new paradigm- work/family balance is here to stay. Other generational challenges often include risk tolerance and growth vs. stabilization.
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Compensation

Sometimes compensation issues surface. Is pay based on “fair market value” or are all family members paid the same regardless of their positions in the organization? Is there clarity on what compensation is paid for the job performed and what is granted because one is a family member? Is the company checkbook viewed as the principals’ piggybank putting the future of the business at risk? And how are decisions made around compensation?
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Governance

The entire process of decision making and control is a challenge for enterprising families. An appropriate governance structure is the answer for many. Some prefer the more informal structure of a Board of Advisors, while others craft a formal Board of Directors. Either structure tends to provide a sense of accountability and support. Governance also plays an important role for enterprising families through a Family Council where family members can help clarify the differing roles of family, ownership, management and governance.
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Communication

For all too many families, there is an inability to communicate at an appropriate level. Poor listening skills lead to inaccurate assumptions and perceptions. Some issues and challenges lead to conversations that turn into arguments, while others in fear of conflict remain silent. The communication challenge facing enterprising families is to learn to disagree and not be disagreeable. Candid, respectful dialogue and solid listening skills will always be the most vital instruments of success as family members navigate their top concerns.
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