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William Worthington
Faith in Family Firms |
When you lower the boom of 'faith' into the Venn of firm and family, how significant is the influence?
For generations, management theory has ignored the impact of faith in the workplace and in how CEOs render decisions in their day to day operations. At best, the topic is swept under the carpet with headings like culture, religiosity, ethics, or values. Worse, in some circles, it is decried as anti-science and unworthy of study. Pre-tenured researchers who encroach on such topics run the risk of academic heresy in a manner ironically similar to Galileo Galilei questioning the Church's view of an Earth centric universe. Such blatant dismissal of a relevant question borders on scholarly malpractice. Then again, the few organizations who have asked this question seem pre-primed with foregone conclusions that align with their social agenda. In the pursuit of understanding, can we not ask these questions in a scientific manner to seek clarity on their impact at the firm, industry, or even country level? (Read more from William Worthington and add comments.) |
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Jeremy Cheng
Venture Philanthropy: Good Enough for Chinese Family Firms? |
Let's begin with a short story of my friend's client, who runs a very successful manufacturing business in Hong Kong and China. In his sixties, he keeps the habit to read every report passing through his tray. He hopes that his first son in his early forties can take up the business one day, but it appears that the son does not quite live up to his expectation. Deferring to his father, the son follows the path designated by his father and accepts the fate. Even with good overseas qualifications and his director title in the company, the son often finds it hard to express himself in front of the family and his staff. Seeing little personal space, the third generation members opt for a career outside the family business. (Read more from Jeremy Cheng and add comments.) |
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Greetings!
When families work together successfully over multiple generations, there's something almost magical which occurs. It's certainly not just about the money. In the best multigenerational family enterprises there seems to be a focus on helping others to succeed: aunts and uncles helping nieces and nephews; grandparents helping grandchildren; and everyone engaged in helping the community through philanthropy. In this month's Thought Leader Blog, Karen Neal indicates that the real question at the point of a generational transition is "Do we want to keep the family together?" Do we want to create not only a business legacy and a financial legacy, but also a family legacy and a philanthropic legacy? Bill Worthington asks "What role does faith play in family fims?" -- and suggests that our discussions about "legacy" are founded on our most deeply held beliefs. Lloyd Steier touches on the challenges of loyalty when he asks "How do you fire the advisor who sang at your father's funeral?" Jeremy Cheng suggests that venture philanthropy -- providing both financial support and non-financial support to social organizations -- can be used by family enterprises as a tool to facilitate "letting go" by the senior generation and "taking charge" by the next generation. Giving and helping. Loyalty and trust. Growing up and letting go. As the authors of this month's newsletter suggest, these are not just characteristics which arise from multigenerational family enterprises -- they are characteristics which create multigenerational family enterprises. |
 | Thought Leader Blog: Karen Neal | |
5 Ways Families Can Take the Enterprise View
 A large percentage of business owning families I've worked with have found themselves struggling with how to define and manage the enterprise at the point of a generational transition. This critical juncture of family leadership succession forces the family to ask the question: Do we still want to share the ownership and management of the business and other financial assets together? Which really means: Do we want to keep the family together?
In the work I do, I see more and more families taking the enterprise view in an effort to smooth the transitions and inevitable inflection points that will occur, and keep the family together.
When a family is engaged in all aspects of the enterprise: the family legacy, the business legacy, the philanthropic legacy, and the financial legacy, there is a much greater chance of wealth sustainability across generations. While studies have shown that the wealth alone will not keep the family together, taking a broader enterprise view can create the necessary glue. (Read more from Karen Neal and add comments.) |
| Lloyd Steier | |
How Do You Fire the Advisor Who Sang at Your Father's Funeral?
 For family firms, executive succession is commonly viewed as a key determinant of survival and success. Arguably it is the most popular topic in family business. In contrast, there is another important dimension of succession that is less talked about and consequently little understood: succession of professional advisors.
Similar to firm CEO succession there comes a time when advisors -- and/or the organizations they represent -- must also confront the issue of succession. For family firms this type of succession is particularly challenging because there are often many deep and lasting relationships that exist beyond simple business transactions. For me this challenge was poignantly illustrated by a friend over lunch. She was the third generation family member of a venerated well-known firm. Our conversation predictably drifted to her family business affairs and some of its inherent challenges. One concern she expressed related to an advisor who had provided many good years of service to the firm. He was getting up in years and, she suspected, not always providing the level of services that the firm required. At one point she leaned over, a clear look of distress on her face, and asked: "But Lloyd, how do you fire the accountant who sang at your father's funeral?" This question succinctly illustrates a situation and a challenge common to many family firms. It also highlights the essentials of a longer story. Whilst building his business, the father amassed a series of trusted network ties outside the business. They provided good service. Although this good service continued long after Dad's departure there came a time when some of them became less valuable. There was no mechanism to facilitate an exit or at least a diminished role. The situation was particularly difficult to deal with because it included both business and emotional dimensions. Loyalties ran deep. The dynamic was little understood and thus no one had the wherewithal to confront the issue of succession. (Read more from Lloyd Steier and add comments.) |
| James Lea | |
Decisions, Decisions
 This is the great age of kicking the can down the road as an alternative to digging in and making tough or complex decisions. Of course, the tactic wasn't invented by the current crop of Washington politicians. Can-kicking has been practiced in family businesses for a long time. Instead of making difficult succession decisions, for example, some senior owner/executives have been known to pass along company ownership in their wills and let the heirs work out the management details later.
I usually advise against trying to run a family company by committee, but there are times when making major decisions should be the work of partners, not a solo arbiter. Depending on the nature of the decision and who will be affected by it, the partners might be spouses, parents and children, siblings, the entire immediate family or an assembly of shareholder cousins. In many cases, the more people who have voices - but not necessarily votes - in the process, the more people who are invested in the decision's successful implementation. Families in business are routinely confronted with a variety of decisions. There are immediate choices (hiring to fill a CFO position that opened up unexpectedly), decisions with long-term strategic business implications (opening a second store location before a competitor moves into that market), and decisions that either create or resolve family tensions surrounding the business (distributing a handsome dividend or applying profits to reducing debt and upgrading equipment). (Read more from James Lea and add comments.) |
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