What If You Died Tonight? Part 2
I am challenging the family members to heed my call on the importance of preparing for a future event like death or disability.
Procrastination as they say is a thief of time and has no place in any organization.
Let me be straightforward. Are the issues below happening? If left unresolved, any one issue can trigger an avalanche of conflict among family members that can spillover to the next generation.
- Family members have limited communication skills and are unable to handle a future conflict especially when you are gone
- There is a brewing conflict
- There is an urgent need to establish harmony within the family
- The goals and values of the family are unclear
- There is no clarity on Roles and Responsibilities
- There is no accountability
- There is no Formal Succession Plan
- There is a huge gap between generations in terms of work attitude, mindset, and values
- Senior generation control is triggering tension
- Next Generation sense of entitlement is triggering more tension
Planning the family’s business future is a process and there are several stages that must be initiated.
Firstly, the patriarch or matriarch must address critical issues related to family involvement in the business.
Family members wear many hats all at the same time. How does a business leader distinguish between his or her role as president of the enterprise and his or her role as mother or father?
How can a parent distinguish between his/her unconditional love over his/her children and a parent/business leader exacting performance over them?
The same question goes for the younger generation. Do they expect special treatment because they wear son or daughter hats?
To address the dilemma, the family must develop a family constitution or a charter that highlights shared values and vision as the cornerstone of the family agreement.
A constitution can only be effective based on two areas: it should have specific policies governing family-business relationships and it is activated immediately right after signing lest it becomes a useless piece of document. Sadly, every month without fail, my firm in Asia, the Wong + Bernstein Family Business Unit has been approached by family members complaining why their family constitution prepared by other consultants remain ineffective.
Thirdly, a constitution reinforced by a shareholder’s agreement should be prepared. The latter is a legally and enforceable document that regulates shareholder behavior and act as a deterrent for erring family members/shareholders. Without a Shareholder’s agreement, the constitution is empty!
And lastly, the senior leaders must prepare a 5 to 10-year succession plan that can prepare the next generation members to assume leadership based on a future event.
Why are these interventions non-negotiable? Even the best family businesses that I have coached must work hard at governance and relationship building. It does not end with the signing of the agreement.
In many instances, next generation members appear confused and cannot reconcile why I would always advocate a shift in owner mentality to a professional manager mentality when for many years the parents have ingrained ruinous statements such as “someday this business that I built from scratch will be yours”.
An understanding of what the company’s mission is, what its short and long term goals are, and solid job descriptions can be a good starting point for businesses that are going through some form of “natural tension”.
When done right, the transition from parents to young children entering the business phase can be a wonderful opportunity to embed governance and define the boundaries of family and business. Good, open communications fostered by the parents can help build good relationships throughout the different phases.