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 June 2014

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Philipp Sieger

Non-Family Employees in Family Firms:  How to Make Them Act Entrepreneurially? 

A main factor for the long-term success of family firms is entrepreneurial non-family employees. But a perennial and still unanswered question is: how can family firms make their non-family employees behave entrepreneurially, meaning that they recognize and explore entrepreneurial opportunities, that they develop and implement new ideas? That they think and act as if it would be "their" company?


One might intuitively think of making those employees actual co-owners of the family firm through employee stock ownership plans or of other financial incentives. Those approaches, however, have important disadvantages.

  (Read more from Philipp Sieger and add comments.)

Salo Grabinsky

A Peculiar New Generation

Salo Grabinsky

There have been numerous studies  by specialists dissecting the post World War II "baby boomers," and the successive new comers in the second half of last century. From the hippies, Vietnam War protesters, generation X, Y and all the other  letters -- so I have  nothing else to add on that subject.


However starting with  the new Millennium and at least in my practice in Mexico and Latin America plus a few U.S. Hispanic-owned family businesses,  my own family and numerous young sons and daughters of my friends, I have been  confused with their thinking, attitudes towards everything and in certain cases shocked with their long term plans (or lack of them).


Many of us   come from parents and grandparents who being modest or even poor, experienced the booming postwar years, started their small businesses or had good jobs in the public or private sectors, were hard workers and graduated in college by means of the help of public financial aid, subsidies or low tuitions. We inherited their values, but not their  wealth, and kept on growing the businesses or having professional careers.


If we skip a few decades and enter  the XXI century we encounter a completely changed environment in many countries, at least in the middle and upper classes.

  (Read more from Salo Grabinsky and add comments.)



The famous American philosopher and baseball player, Yogi Berra, once said "The future ain't what it used to be."


The same could be said for families-in-business in the 21st century. Success in today's world of business requires continuous entrepreneurship.  And the Baby Boomer senior generation doesn't see how the Millennial Generation is going to survive in this more demanding world.


While Yogi may have been right -- the authors for this edition of the Family Business Wiki Newsletter have some answers and ideas.  Kim Schneider Malek describes the characteristics of "entrepreneurial, innovative, and creative" family enterprises; Philipp Sieger provides ideas regarding how to to help non-family employees to act in an entrepreneurial manner;  and Salo Grabinsky has some guidance for Baby Boomers regarding the Millennial Generation.  


There are certain challenges which arise for family businesses in every era -- and Grant Goodvin addresses a dilemma which dates back to Biblical times:  equal versus equitable inheritance.  Finally, Deb Houden helps family business members and their consultants to remember to "get back to center" in the midst of stressful situations.


Maybe "the future ain't what it used to be," but the future of family enterprise in the 21st century -- with Millennials leading the way -- looks like it's going to be great!

Kim Schneider Malek 

Unique Entrepreneurial, Innovative, and Creative Characteristics Found in Continuity-Oriented Enterprising Families 


Entrepreneurship, innovation, and creativity! 


Colleges, universities, trade associations, speakers, authors, media, coaches, advisors, and peer groups such as Entrepreneurs Organization, Vistage, and Young Presidents Organization all endorse the positive impact of entrepreneurial, innovative, and creative values and practices.   Competitive advantage in today's market place relies on it.


For many years, multigenerational business owners resisted considering their businesses, let alone their ownership families, entrepreneurial because there was an assumption that meant start-up and boot-strapping, not thriving and flourishing for long-term continuity.  Today, however, we are witnessing more and more multigenerational enterprises planning the future with an entrepreneurial, innovative, and creative orientation.  For them it means regeneration and hope. 


Since beginning in this field in the mid-1990s, I have created an informal, but informative, list of values, characteristics, and  habits that I frequently observe in those highly successful, and strongly unified families who effectively adapt, change, and become resilient when the external environment (and life's realities) presents inevitable challenges.  Their quest for high performance continuity typically includes some of the following:

  1. Defining themselves as an enterprising family and agreeing on what that means to them.  Typically, this includes s being a family with common goals and needing to collectively make decisions in a timely manner on how to apply all types of family capital resources in an innovative way that yields enterprising outcomes (measured in terms of profitability, wealth generation, potential, and purpose for people) while remaining voluntarily unified and harmonious in terms of family relationships.
 (Read more from Kim Schneider Malek and add comments.)
Grant Goodvin 

Confronting the Fair and Equal Dilemma for Families in Business 


Grant Goodvin

One of the challenges facing the senior generation (generally the parents) for families in business is how to be fair to younger generations (generally the children and their spouses) in distribution of the estate.  Families in business typically own various assets, ranging from highly liquid personal accounts to real estate and family business stock.  The equal division of personal accounts can generally be accomplished without dissension in the family.  However, even an equal distribution can be viewed as unfair if one of the younger generation members has been exclusively responsible for the day to day care of the senior generation.  Real estate can be sold and divided equally but the fairness issue may arise if one of the younger generation is currently making use of the real estate.


The division of family business stock creates other challenges that require additional planning.  I want to address the challenge to senior generations to deal fairly with younger generations.  Let's start with an undeniable truth:  An equal division of family business stock can be viewed as unfair.  This seems counter-intuitive.  However, it is likely that not all of the younger generation works in the family business.  An equal division of family business stock imposes a process on the younger generation that may or may not work.


First, the parents want their children to know they are loved equally.  This desire can translate into a mistaken view that the family business stock must be divided equally.  This view differs from the way the family has operated in the past.  For example, parents want to be fair even though they can never raise their children equally.  Expenses such as gifts, education, health and clothing are never equal among the children.  These expenses are never equal even between the parents.  Specific needs are taken into account to determine what will be spent.  (Read more from Grant Goodvin and add comments.)

Deb Houden 

Getting Back to Center 


We work with our clients to help them with change, with whatever the change may be. It could be succession, it could be wealth planning, it could be cultivating leadership -- whatever it is, it is change. When change is introduced, regardless of what that modification may be, emotions are heightened. The intensity can skew positive (excitement) or negative (dread), but either way, the automatic tendency for people in such situations is to become reactive to other family members and to other situations in a way they might not when they are not under stress. When stress levels go up, as they do with any transition (with highly productive as well as highly stressful periods) the need to practice self-awareness is all important. As advisors, we need to help the people we work with, as well as our selves, to get back to our own center: as an advisor, there is as much need to help settle family members in the system as there is with helping to go through whatever change you were hired to help with in the first place.

I was recently reminded of how easily we can become reactive. My husband and I took a trip to England and Wales. It was a delightful trip. As we were driving on the left side of the road, with a right-handed steering wheel, on a two-lane roadway, I became what I would describe as reactive (my husband might choose different words). I was anxious for most of the drive. My husband had been doing quite well with the driving situation, actually, but I couldn't settle myself down enough to enjoy the scenery. In fact, every time we came to a roundabout where we needed to "give way" to the driver on the right, I would tense up.
  (Read more from Deb Houden and add comments.)

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