Demographics and Family Governance:  The Vanishing Middle

Many of us spend a lot of our time designing and advocating family governance:  boards of directors, family councils, family offices, family assemblies, foundations, and ad hoc committees to decide what to have for dinner.  There is no doubt that responsible ownership requires the right architecture and process of governance.  But these designs are not theoretical exercises, and all of our structures and plans have one thing in common -- they need bodies to do the work.  People -- family members -- are the ones who will attend the meetings, join the conference calls, review the materials and agendas, take their turn at leadership, do the site visits, attend the conferences and informational sessions, and answer the phone when somebody has a crisis or just needs to get something off her chest.
 
There are a few lucky families that are large enough that finding the volunteers to fill all the governance roles is easy.  Some of them even have to solve the problem of selection and representation.  But many others have a limited pool of candidates, and the work seems to expand faster than the family can grow.  For them the problem is recruitment, and the family labor pool is a critical issue.  (Read more from Kelin Gersick and add comments.)

The Strategies of Successful Legacy Families

In this video interview, Lee Hausner describes the strategies of successful "legacy families" -- families who have remained healthy and productive for many generations following the initial creation of family wealth.

Successful legacy families consistently make "deposits" into four "accounts":  the human, intellectual, financial, and social accounts.  The "human account" includes skills such as:  communication, dealing with conflict, and training the next generation.  The "intellectual account" includes governance, education, career planning, and mentoring.   The "financial account" includes making, managing and investing money, and teaching the next generation about wealth.  The "social account" includes philanthropic activities.

When families apply systematic strategies and structures to make these "deposits", they are more likely to have healthy, loving and stable families for generations.  (Click here to see the video.)

The Code of the Reflective Listener

"Send reinforcements, we're going to advance!"

How more clearly, could the General have worded his message to the Troops? Alas, by the time it went from the Officers through the long chain of command to the Diggers and reached the four thousandth five hundred and first person, at the end of the line, it came out as:  "Send three and fourpence, we're going to a dance!"

The following simple sentence can be punctuated in several different ways, and the meaning changes quite dramatically: "What do you think I'll hand over the Business immediately."

The Founding Director & Benevolent Dictator might punctuate it as follows, when communicating with his Family:  "What! Do you think I'll hand over the Business, immediately ?"  The implication here, being that he's not prepared to do so, not at present, anyhow.

An aspiring, enthusiastic heir apparent, might punctuate those words in this way:  "What do you think? I'll hand over the Business, immediately!"  The message here is that he's being asked for confirmation, that he's ready to take over the Business, now that the Owner has determined to pass it on to him.

A casual Observer, with no vested interests might present the words in this manner:  "What do you think I'll hand over? The Business? Immediately?"  The Observer hears two people in discussion, about whether something might be handed over immediately or not.

Because the sentence is spoken, and not written, the punctuation is not visible to any of the three parties, and therefore, the meaning can and is very often open to interpretation. It's for this reason that the intended recipient needs to carefully use their eyes and ears to obtain the context of the message. All of the Tone, Volume, Body Language and gestures assist the Listener and the casual Observer to obtain a better understanding of the context and intended meaning of the sentence.  (Read more from Angelo Coco and add comments.)

Family Business Entrepreneurs and Boards

Many family business entrepreneurs have no need for boards. To them a board is a group which gets in the way and tells them what to do. They don't like being told what to do. That is why they are entrepreneurs.

An entrepreneur is typically the one with the most power. They tend to make the most important family, ownership and management decisions. One of the most critical things they do is resolve or "balance" the often-competing interests of the family, owners and management. When they are balancing these competing interests, they are performing a board function. Usually, the entrepreneur does this balancing unconsciously. They typically don't see balancing as a board function. In fact, they don't differentiate their family, ownership, management and board roles at all. They just do what they do. It's all one big role to them.

This system works well. And it certainly works well for the entrepreneur. However, there are three times to consider changing this system. These are the times of transition.

The first time is when an entrepreneur wants to change their role. When this occurs, they are in transition. And when they are in transition, everything is in transition. During this transition, the entrepreneur decides how they want to be involved and how they want others involved.  (Read more from Cary Tutelman and add comments.)