| Building Consensus in a Family Business | | | | Because many of the inter- generational and |
| Family Business Expert suggests... | | | | intra-generational issues can be "confrontational," it is |
| First, build a strategic plan for the family | | | | generally a wise investment to retain a "facilitator" |
| One of the most difficult problems confronting family | | | | trained and experienced in dealing with family |
| businesses is building a consensus about how the | | | | business dynamics. |
| business should be operated, now and into the | | | | This facilitator can assist the family in organizing and |
| future. | | | | prioritizing real or perceived differences among |
| In a non family business, the answer is rather simple | | | | various family members. In fact, dealing with these |
| and obvious: Develop and implement a strategic plan. | | | | issues can actually become the "agenda" for family |
| In a family business, the process is dramatically more | | | | retreats. |
| complicated and filled with situations that can | | | | Objective Understanding of the Business |
| devastate both the family and the business. | | | | Concurrent to recognizing the inter- and |
| A Strategic Plan for the Family | | | | intra-generational family issues, to develop consensus |
| Many family business owners do not understand that | | | | in an FOB, it is equally essential to gain an objective |
| before a family business can develop a successful | | | | understanding of the business. From an Operations |
| strategic plan for the business, there must first be a | | | | Management perspective the most difficult problem is |
| strategic plan for the family. | | | | clearly identifying the crucial operational characteristics |
| For example, ensuring the senior generation's financial | | | | of the business. To be successful, this process should |
| security, independent of the business, generally is a | | | | be independently constructed and must be based on |
| fundamental requirement of the family's strategic | | | | operational information, not financial information. |
| plan. Meeting this goal then becomes a critical | | | | The Importance of Objective Measurement |
| objective for the strategic plan of the business. | | | | Unfortunately, in most family businesses the |
| In other words, the economic engine (the business) is | | | | operational characteristics of the business are never |
| being asked to reach a specific financial goal of the | | | | accurately or objectively described. Key decisions are |
| family, as opposed to reaching a business objective | | | | based not on hard facts but on various |
| such as ROI, or other ratios or measures of | | | | "interpretations" of sometimes unrelated |
| profitability. | | | | circumstances. This is not an unusual phenomenon: |
| First Step Toward Consensus | | | | Family businesses tend to rely on well-intentioned |
| One of the first steps in developing a successful | | | | people, memory, and varying degrees of managerial |
| process for building consensus is to clearly understand | | | | expertise to reach their business goals and |
| the different perspectives "between" generations | | | | objectives, rather than creating a sound operating |
| (inter-generational issues) and "among" generations | | | | system. |
| (intra-generational issues). | | | | As an illustration, I often ask family business CEOs to |
| Inter-generational issues are generally easier to | | | | question their senior managers about how much |
| determine, and they are usually related to life stages. | | | | work is accomplished daily in their individual areas of |
| For example: | | | | responsibility. If these key managers merely are able |
| Parent Offspring | | | | to report results, without knowing and measuring the |
| Conservative Aggressive | | | | labor hours involved, a serious managerial discrepancy |
| Risk adverse Risk taking | | | | exists. |
| Security conscious Development conscious | | | | Designing a process for correcting this problem |
| Strategy: status quo Strategy: change/growth | | | | generally can be accomplished within a few days, |
| Controlling Wanting control | | | | depending on the complexity of the operation. |
| Managing the Past Managing the Future | | | | Validating the operational characteristics of the |
| Intra-generational issues | | | | business should be a high priority issue, one that |
| Intra-generational issues are less likely to be identified | | | | commands immediate attention. |
| and discussed. As a result, these issues tend to | | | | A Three-Legged Stool |
| "fester" over long periods of time, and they | | | | Building consensus in a family business can be |
| frequently present themselves in an explosive and | | | | compared to the proverbial three-legged stool. There |
| destructive manner. | | | | is the Senior Generation, the Succeeding Generation, |
| Some of these Intra-generational issues include | | | | and the Business. Each "leg" has different needs and |
| differences in compensation, perks, status, individual | | | | issues, and each requires different kinds of expertise |
| personal values and public recognition factors | | | | to ensure that those needs are met and the issues |
| (visibility). Other problem areas are educational | | | | resolved. |
| differences, varying levels of personal and | | | | Unless equal importance and attention is given to |
| professional sophistication, differing opinions of | | | | each group in a family business, optimum stability will |
| "valuecontribution," and, most importantly, spouse | | | | never be realized. Unfortunately for many family |
| issues. | | | | businesses, building a harmonious consensus will |
| The Role of Facilitators | | | | always remain a dream and never become a reality. |