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EFB-KPMG 2020 Global Tax Monitor

Thursday, 03 December 2020

In this challenging year, KPMG have explored the situation of taxation on family businesses in 54 countries and territories in order to offer an


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Family Business Management Programme 2020

Wednesday, 04 March 2020

The Family Business National Centre of Excellence is inviting business founders, next generation managers and those with an interest in learning how


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Growing a family business - LEO Enterprise Week BOI Workbench Centre Fri 6th March 8am

Wednesday, 04 March 2020

Phil Cone of Acadeny Crests Ltd and Michael Finn NSG Ltd will be interviewed by JJ O'Connell of Family Business Ireland to discuss their growth


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3 Secrets of Successful Family Businesses
Sunday, 20 May 2018 20:57

Running a business is hard work. Aside from wearing different hats to keep the company afloat, an executive also has to manage the entire team. When it comes to managing a family business, however, another layer of difficulty arises.


When it comes to managing a family business, separating work and personal relationships can be admittedly tricky.

It's not impossible; there's just another layer of difficulty. In fact, successful family businesses are a fairly common thing with more than two-thirds of all the companies in the world being family owned. Not only does this indicate that managing a family business can be done, but that it has a huge impact on the success of the business as well as on the global economy.


What are the secrets of these family businesses? Here are three. 



Secret No. 1: Family businesses practice minimalism.


In a world that values innovation, it's tempting to ride along every trend that takes the industry by storm. But successful family businesses have a common habit of practicing minimalism in running their business – that is, being more mindful of what they invest in and whether or not it adds value to the company in the long run.

That's why you’ll rarely see a family business with such a hip and trendy office a la Google or Apple. Instead, they'd rather focus their capital on building lean frameworks and hiring core employees so that when a recession hits, they're less likely to do any layoffs or lose money from unnecessary acquisitions.



The opportunity cost to this philosophy is that family businesses have fewer chances of "winning the jackpot" during good economic times. Hence, a smaller growth rate in the short term for the chance of a higher return on investment in the long term. 



Secret No. 2: Family businesses don't prioritize profit maximization.

Family businesses anticipate that they will stick around longer than the average startup, so they have a tendency to have a defensive business strategy.



As mentioned, family businesses are wary of joining the trend bandwagon. Cryptocurrency is one such example of a trend that may be seen by others as highly rewarding but is ultimately risky for the rest of us. Hence, you won't see many family businesses participating in such a business model.

That said, just because family businesses don't focus on maximizing profits doesn't mean they don't earn a profit. There are investments that may lose money in the short term but that prove to be a solid business model in the long run. Family businesses tend to spot these deals and build on them. Instead of earning profit for the sake of it, most family businesses do it the other way around: focusing on their product, their customers, and their employees, which consequentially leads to a higher profit in the long term. 



Secret No. 3: Family businesses draw clear lines to avoid conflict.

Unlike non-family businesses, one weakness of family-owned businesses is that there is an increased risk of conflicts when the professional and personal worlds collide. But a common secret in overcoming conflict among successful family businesses is the clear definition of roles of every member of the family.

This is how Jayco, an RV company in the U.S., continues to be the largest family-owned company in the industry 50 years after it was established.



Derald Bontrager, CEO of Jayco and son of founder Lloyd Bontrager, says one of their rules is that they don't allow conversations about work during family gatherings. They leave business at the office. 




You don't have to be a family business to apply these secrets to your organization. If you're having trouble running your business, then you could learn a thing or two from how family-run organizations maintain their momentum and stay successful in the long run.









'My father left the entire farm to my brother. What can I do?'
Tuesday, 09 January 2018 22:51

"Not being fully included in a will can be a matter of losing your life's Work"



Q. I am a farmer's son and am now in my fifties. Having farmed our 150 acre farm for over 20 years alongside my brother (since my father retired) I was expecting that I would inherit at least half of the farm when the time came for my father to pass it on in his will.


Although it was never discussed openly by the family, I have always presumed that one day, at least part of the farm would be mine. I have never been paid for the work that I have done on the farm and the profits have kept my parents in their old age. I was shocked to learn that my father has left the entire farm to my brother and I will inherit a site.

Is there anything that I can do?


A. These circumstances are always difficult by virtue of the inevitable damage that they cause to family relationships. It is essential that when it comes to succession planning, much thought is given to the consequences of the distribution of assets for all of the affected parties before the will is made.

Most people are aware that once they enter a contract or agreement, the terms and conditions of that contract will generally be enforceable.

For a contract to be enforceable it normally requires that there be a promise, for example to do or sell something, in return for some form of consideration or payment by the other party.




There are, however, limited circumstances in which a contract or agreement, which is not written, can be enforceable even when there is no consideration or payment involved. It is a remedy used by the courts to prevent a person from going back on their word in circumstances where another person has acted or relied on that word to their detriment.

It is not enough that a person has made a promise or representation, the other party must actually have acted to their detriment in some way as a result of the promise. For example, if a father promises his son that he will leave him the family farm in his will and as a result the same son works without pay on the farm and improves the farm then, if his father does not in fact leave him the farm, he could bring an action before the court seeking to enforce his father's promise.




In asking the court to recognise that you have an interest in a piece of property in these circumstances, you will need to pass three tests:


1. That a clear promise or representation was made to you in respect of the property. This could be a promise, for example, by a land owner to a nephew that "those three fields will be yours when I'm gone". This clear promise must have led to an expectation or belief on your part that you would receive the land.

If you can present evidence, for example a witness, to the promise, you would be in a stronger position to make the claim.


2. You must have acted to your detriment on the basis of this promise. This could involve the spending of money on the property or the passing up of a career off farm or the working on a farm for free for years or the payment of bills or mortgage on behalf of your uncle or the suffering of some other detriment as a result of the promise.


It used to be the case that you would need to have shown the expenditure of money on the lands but as case law has evolved, this is no longer an absolute requirement.


3. You must show that the ­detrimental acts performed by you were performed in reliance on the belief or expectation. This means that the actions which were taken to your ­detriment were done because of the promise made, and otherwise would not have been done.




The relief which would be sought from the court is called proprietary estoppel and is an equitable relief/remedy. Equitable remedies are concerned with "equity" or fairness.

Therefore, they are based upon righting a wrong where the conduct complained of is deemed by the court to be "unconscionable".



The court has wide discretion as to how it will give effect to the "equity" which has arisen. This can range from ordering a transfer of the land to the person who claims the equitable interest to a simple negative right preventing the person from being ejected from the land by the registered legal owner.

It is essential to bear in mind that these type of cases are considered on a case-to-case basis by the courts and the outcome is often difficult to predict. There is considerable risk with high legal costs; however, for some it is a matter of losing their life's work.



The importance of estate planning cannot be overlooked in the context of preventing family disputes and possibly this type of claim after the lifetime of the land owner.




This article is intended as a general guide and you should seek legal advice in relation to individual circumstances.




Problem Solver: How do I get my father to let go after handing over reins?
Tuesday, 09 January 2018 22:41

Fergal Quinn gives his advice below to a successor on the common struggle of a famiy business Handover.



Q. I am 33 and have been given the reins of the business by my father... in theory. He remains involved in the business and overrides many of the decisions I make. I badly need some advice.


A. When we filmed the 'Retail Therapy' TV programme, the story line was very similar to this. A family business that the parents were encouraging one of their children to take over, but the parents were struggling to let go. From your father's perspective, this has been a lifetime and he may be finding it quite difficult to let go.


I doubt if he is deliberately going out of his way to interfere. It is probably more a habitual thing, or even an effort to protect you.

You must however, deal with this and deal with it quickly as it will undermine your authority and perhaps dampen your enthusiasm and energy.


My experience of family businesses has been that very often things that should be spoken about are not for fear of upsetting someone in the family. Think about what you want to say in a constructive manner.

Consider getting your father out of the business for a day, perhaps while traveling around Dublin or some other centre of retailing, to have a look at competitors. Use this opportunity to have a frank and open discussion about roles and responsibilities and say how you actually feel when these situations arise.


Your father, I am sure, will be sympathetic - however that won't help the situation unless you can bring about some change. Perhaps it's time he cut back his hours so he is not physically present all of the time. Taking extended holidays would be another way to naturally allow you to take an enhanced role.


I doubt you will meet any major resistance, and you could well find that his motivation is driven by a desire to ensure that you succeed.


You now have to convince him that success will come through him taking a back seat and allowing you to drive the business forward.

I have no doubt that you will want to enlist his advice and help going forward and it might be a good idea to hold a monthly management meeting with your dad so you can keep him updated on what is happening in the business and also use him as a sounding board where some big decisions need to be made.


With our 'Retail Therapy' programme family, we had a fantastic outcome, with the parents deciding to take some time out of the business and their daughter blossoming in her management skills with her new-found freedom.

Q. We operate a business in a competitive sector and we are in the middle of formulating a strategy in the business to help secure our future. Our focus will be 'to be the best in our sector', and I just wanted your opinion on this broad direction.


A. Far too often businesses don't stand back and take stock of where they are at, and then formulate a strategy. Well done on taking the initiative!


I meet many companies who have a strategy of 'being the best' and I am not entirely sure that it is the best focus for their business. It implies that you become obsessive about your competitors and spend all your time watching what they are doing in order to outdo them. Watching your competitors carefully is an important part of the business, but trying to better them probably is not a strong enough strategic positioning.


Strategy is more about being unique in everything you do and trying to create a unique consumer proposition regardless of what others are doing in the marketplace. That shifts the focus entirely onto your own business and puts the customer centre stage in the strategy formation.


When I was leading the team in Superquinn we put a huge amount of effort in trying to be unique and offer the customer something really special. We took most of our direction from customers by listening carefully to what they had to say. We found reacting to feedback helped to make the shopping experience unique, which allowed us to stand out in food retail circles.






7 Reasons for Enduring Power of Attorney
Tuesday, 09 January 2018 00:00

An Enduring Power of Attorney is a document in which you appoint who should look after your personal and your financial affairs in the event that you are unlucky enough, through accident or illness, to lose your mental capacity.It is only ever intended to become effective IF you lose your mental capacity at some future point in time.


7 Reasons Why You Should Make An Enduring Power of Attorney

1. You decide who is to look after your personal needs, if required

2. You can also have your assets or business affairs taken care of in a structured way

3. You give yourself peace of mind , knowing these arrangements are in place

4. You can ensure there is no undue financial strain imposed on family due to your illness or disability

5. While a Will covers things after death , this document governs the period from mental disability to death

6. It does not activate until something profound happens to you

7. You can change it or revoke it at any time up to it’s activation, if you wish


Kindly submitted by Neil Butler of NEIL J. BUTLER & CO. SOLICITORS, Friar St. Thurles.
Please call Neil or Siobhan now on 0504-24173 to find out more Or e-mail on This e-mail address is being protected from spambots. You need JavaScript enabled to view it 

Six simple steps for succession in family businesses
Tuesday, 09 January 2018 00:00

If you work in the family business sector, chances are you run into the same statistics over and over again:


The data is not pretty — although, as some critical thinkers have pointed out, survival statistics like these have to be put into context from time to time.


What is important to know is that the data does not imply that there is a 90% chance your business will fail before your grandchildren come of age. It is up to you whether you create a successful multigenerational family business. In other words, this is not a numbers game; it is a planning game.


The reason so few family businesses survive to the third generation is they lack planning and communication. Companies fail when they let family conflict and emotion drive change, rather than relying on proven strategies. Your business does not have to be like that. It can, and should, survive a long, long time.


Every family business is different, but the characteristics of good succession planning are universal. Here are six simple steps that your business should incorporate.




Step 1: Treat succession planning like it is urgent

A family business ignoring its succession plan is akin to a 30-year-old worker ignoring his retirement plan. Both events (succession and retirement) seem like they are a long way off, but the reality is that ignoring the early years can lead to major problems down the road.


Why do so many family businesses ignore or put off succession planning? I have noticed several reasons.


First, many people underestimate how extensive succession planning is. A proactive succession planning process allows organisations to reduce the impact of an owner or major team member, help buffer the company from dramatic changes in business circumstances, as well as prepare targeted individuals for future advancement.


One reason so many enterprises ignore succession planning is that it can be uncomfortable. Family conflicts occur even in the healthiest businesses, and the succession process is full of potential pitfalls and mental roadblocks unless you know what you are doing. As such, you will likely need someone to guide you through the complexities. Someone whose expertise and impartiality help build trust and smooth conflict between members.




Step 2: Plan for a process, not an event

Too many families treat succession like it is a long-off, lofty goal. They think “someday, the children will have to take over,” or “ideally, the business will operate smoothly enough for my son/daughter to grab the wheel”.


Such a mindset is unfortunate because it treats succession as an event, not a process. However, as Family Business Australia points out, the major influences on succession all require a lot of planning and preparation. Specifically, FBA shows that transitioning business owners are concerned about:


  • Generating adequate financial returns;
  • Having sufficient trust in potential successors; and
  • Receiving enough interest from potential successors to take over the business.

You also need time to figure out the legal and tax issues associated with succession and, if it is the right time for the founder, retirement. This means estate planning and equity transfers.





Step 3: Rally around your family values

Strong family businesses create a sense of shared values — the kinds of values that survive beyond one owner. As you sit down to prepare a succession plan, take note of the moral and governing philosophies that guide your enterprise.


Your family values are more than a slogan. During times of conflict or struggle, your leadership and family employees will rally around your family values, using them as a guidepost for making tough decisions. Do family unity and collective agreement matter more than generating extra revenue? Should younger family members be forced to work outside the business before they can assume control?


Think about your succession plan as an opportunity to create a compass that your family gets to carry from generation to generation.




Step 4: Hold meetings and discuss succession

A really good succession planning process boils down to involving and communicating with your family members no matter which generation they belong to or their immediate contributions to the firm.


Keep in mind — and this is very important — that it is not the role of the present leadership to micromanage the meeting process. You want every influential member of the firm and family to be able to speak openly and offer their opinion.


It is uncomfortable and unproductive whenever the current patriarch or matriarch runs an entire meeting only to find out later that many people wanted to offer constructive thoughts, except they did not feel comfortable doing so.


If you have an expert trusted adviser (or better still, a family business adviser) I strongly suggest you ask them to facilitate these meetings. Remember, for most members of the business, this will be the first time going through a succession. It is valuable to have an expert guide you and help build trust / settle conflict between members.





Step 5: Educate your family

I believe education is the foundation of a successful transition. Without training and learning, people struggle to contextualise what they need to do in the succession process.


Your family must be educated enough to perform the following tasks:


  • Handle conflict, whether for family or business reasons;
  • Accept positions of responsibility in the company;
  • Act as advocates for the business no matter their present responsibilities; and
  • See the family business as a living legacy, with an interconnected past and future.





Step 6: Develop a written family constitution

The best way to cement your succession plan is to construct it in conjunction with a written family constitution.

The constitution serves two functions:


  1. It acts as a governing document that promotes ongoing family business continuity. This means establishing an initial plan as well as identifying fall-back plans and means of settling conflicts or making difficult decisions; and
  2. It defines and emphasises family values. You must make clear your family values in concrete terms so that everyone — family, non-family employees and directors, and customers — knows what you believe and how you conduct your business.




David Harland is the managing director of FINH and works exclusively with multigenerational family businesses. He holds both national and international accreditation in the field of family advising and family wealth.







Success and succession: Five characteristics of a good family business
Wednesday, 20 September 2017 20:06

Chances are high that seven out of 10 of the businesses you know are family owned. As defined by audit firm PricewaterhouseCoopers (PwC), a family-owned business is one where the majority of votes are held by the person who established the firm, or their direct descendants, with at least one family member involved in the company's management.


And if the company is listed, the persons who set up or bought the firm, or their family, hold at least 25 per cent of the right to vote through their share capital, with at least one family member on the board.



Patient capital

An estimated 70 to 80 per cent of businesses in Kenya, and around the world, are family owned. These businesses contribute more than 60 per cent of the jobs in Kenya, according to Peter Muga, a family business expert at the Institute for Family Business (IFFB). However, despite their potential, if not well-structured, family-owned businesses are more likely to fold than non-family-owned ones. Yet, family businesses are important, not just for individuals who want to start a company and have to rely on their relatives to raise capital or manage the firm, but also for the economy. "Unshackled from the quarter-to- quarter pressures of their listed peers, family firms can invest for the long term, and allow good ideas the time they need to prove themselves," PwC says in its latest family business survey, The 'Missing Middle':

Bridging the Strategy Gap in Family Firms. "It's a classic example of 'patient capital' and an invaluable counterbalance to the short-termism of many public companies." However, despite some family businesses showing extraordinary longevity, the average life-span in the sector is three generations, PwC's report, which interviewed senior executives in 50 countries, notes. "Typically, only 12 per cent make it that far, and the number getting past four generations falls to as low as 3 per cent." Shreya Shah, a manager at PwC Kenya, defines a family business as a commercial organisation in which decision making is influenced by multiple generations of a family that's related by blood or marriage. She notes that in such set-ups, balancing between roles within the family, ownership and business is complex and may involve conflicting values, goals and actions.

As a result, to be successful, family businesses must find a way to balance between the personal and the professional. This makes succession planning one of the most critical factors in attaining the company's long-term vision. As PwC's report notes: "The transition from one generation to the next is the fault-line in this business model. There's no point in having detailed plans for business continuity, if the single most significant risk to this is not addressed." With the proposed deal between two family firms, Nakumatt and Tuskys, occupying debate, Hustle looks at some of the characteristicsthat would help these sorts of businesses thrive for generations to come.



1. A clear goal and vision

The bedrock of any family business is the goal or value that is put in place by its founder. That goal has to be passed down from generation to generation, and adhered to by everyone. For example, Joram Kamau, the founder of Tuskys Supermarket, wanted his retail store to be guided by strong Christian values. Such values included not selling any alcohol or tobacco products. This value has continued to guide the retail chain years after Mr Kamau's demise. Paul Ouma, the course director of the family business programme at Strathmore Business School, says that as much as a founder might have had a vision, it must be understood and shared by everyone if it's to outlive him or her. Everyone has to toe the line.



2. A succession plan

We've already mentioned how important succession planning is for a family business' continuity, yet in the PwC survey, it was found that 45 per cent of family businesses interviewed had no succession plan in place for most senior roles. Failure to groom successors has resulted in the death of many family businesses once the founder dies. Micheal Mugasa, the leader of private company services at PwC Kenya, sees a problem in reconciling the worldviews of the founder generation and the next generation as far as succession planning goes. He notes that a survey his firm had conducted earlier, it was found that this next generation (NextGen) is "ambitious and talented and can help to drive the business forward. However, their ambitions do not always jive with the owner or founder generation, which can lead to conflict." The NextGen tends to do well in areas like digital strategy, or leveraging technology to inspire innovation. On the other hand, explains Michael, the owner generation tends to rely on experience and a more cautious approach. "Having an effective succession plan in place is one way of creating an environment in which the NextGen can thrive and effectively contribute to the business," he says.



3. Professional management

A good family business should not only have a clear succession plan, it should also be professionally run. There is the tendency to make operations of a family business a family affair. And while there is nothing wrong with having relatives in the company, sometimes those selected are simply unprofessional or unable to do the work required. A good family business puts in place proper operational structures, processes and systems that are efficient and well documented, and regularly reviewed for improvement, says Shreya. Fortunately, according to PwC's survey, 43 per cent of respondents are prioritising professionalism in their family businesses over the next five years. This is taking different forms in different firms, "including mechanisms such as shareholders' agreements, family councils and incapacity arrangements".



4. Proper governance structures

Good governance is important for every business, whether its family owned or otherwise. "Good governance includes transparency and a consistent framework to ensure business continuity. For family businesses in particular, governance often includes a focus on appropriate conflict resolution, policies (including recruitment and career progression) and succession planning," says Shreya. Subjecting a business to professional non-family governance does not require that one relinquishes the business. Unfortunately, most family businesses fear that this is the case, and refuse to seek professional help. Instead, they surround themselves with 'yes-men' – people who tell them the comfortable lie rather than the uncomfortable truth. IFFB's Peter acknowledges that it's not always easy to tell a family member a difficult truth, especially if that person is the business' founder. "It is very human to develop a certain level of emotional attachment to something you have started," he says, adding that this is one of the biggest strengths of family businesses, as founders end up working for the company with unrivalled passion. Unfortunately, most family businesses shun outside help, fearing that outsiders may not be able to truly understand and honour the family's vision for the business. But failure to allow for professional management and governance can lead to the premature death of a business.

This death is even faster for family businesses that operate in industries that are not subject to strict regulation, such as transport, retail or hospitality, says Strathmore's Paul. Here, unlike in sectors like banking or in listed companies, no one can tell a business owner that they cannot be the owner and CEO at the same time because it amounts to a conflict of interest. There are several businesses that have been hurt by a failure to put in place strong governance structures. The result has been the shutting down of such famous family businesses as Akamba Bus and Bookpoint bookshops. "Nakumatt, for example, became so big that for all practical reasons it needed other stakeholders. Once you become a multinational, you can't sit around a table over lunch and prudently make a decision for the business," Paul adds.



5. Diversification

plan Paul says one of the best ways for a family business to grow is through diversification, which is also a good way to manage family squabbles – an Achilles' heel for many businesses. However, few family-owned businesses are thinking about their growth in these terms. According to the PwC survey, while more than half of the respondents plan to launch new entrepreneurial ventures, "one in three family firms is still operating in only one sector and in only their home market. This can expose the family firm to risk, as the whole enterprise stands or falls on one dimension". Paul says one of the family businesses that has managed the process of growth through diversification well is Simba Corp, which is now better capitalised having gone into different industries. The family sold its stake at East Africa Building Societies to Nigerian investors and got more capital, which it used get into motor vehicles. It has also moved into hospitality, with a majority stake in Kempinski Hotel, and gone into mining through Acacia Mining.






How CEOs Can Work with an Active Board
Wednesday, 20 September 2017 19:47

At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of intensifying shareholder intolerance of mediocre or poor corporate performance, the ceremonial boards of the past are being replaced by active boards that are more demanding of managers and more intrusive in their affairs.


This change can be daunting and frustrating for CEOs. However, based on our experience of advising CEOs, operating as CEOs, and sitting on boards, we have found that executives can be effective in the new environment by revamping their interactions with their boards. It consists of four approaches.



Work with board members individually as well as in the group — and selectively seek their help.

It’s remarkable how many CEOs focus mainly on formal boardroom relationships. Yet by investing the time in regular one-to-one informal interactions, a CEO will help address the new active board members’ sense of duty to get close to the business. Through a personal dialogue, the CEO can better enlist them in important initiatives and address issues before they become crises. In addition, by creating a personal bond with the individual directors, the CEO lessens the odds that they will undermine or blindside him.


It is especially important to create a bond with the lead director and/or the chair. As boards have become more active, the lead director and board chair hold the keys to setting productive agendas and managing issues with the total board or individual members. One of us served on an active board that included members who frequently threatened to derail agendas and process with counterproductive questions. The CEO quietly recruited the lead director and chair to restore order, which they did. As boards have become more active, the lead director and board chair hold the keys to setting productive agendas and managing issues with the total board or individual members.


CEOs should consider recruiting one board member as an informal advisor. This must be done with great care and an ear for political nuances. For example, as one CEO we know discovered, a prospective board advisor actually had his eye on the CEO role for himself — hardly the right confidant! By using already-scheduled one-on-ones to assess board members for this advisory role, the CEO can better identify an appropriate advisory board member. This board member can be of great value as a sounding board and a guide to working effectively with the rest of the board.



Communicate less formally, more intensively, more often.

Many CEOs and their teams still deliver traditional 80-slide PowerPoint summary presentations at board meetings. But given that today’s boards increasingly want a substantive dialogue, we advise replacing the presentation with a thoughtful, verbal review and Q&A around critical updates, challenges, and opportunities. (Further background can be provided in brief pre-reading material.)


This will show that the CEO is  using his or her face-to-face time with the board for serious discussion. It will focus board activism on topics where the CEO will benefit from directors’ insight and counsel. And by taking the lead in inviting the board to engage on business-critical matters, the CEO can better manage the process and avoid one of the biggest downsides of the active board: disruptive interference by board members in business operations.


It may seem obvious that CEOs should communicate with board members regularly and substantively between board meetings. But in reality, CEOs often communicate mainly when there is a problem. Many also have difficulty regularly addressing a balanced mix of important topics.


One very effective approach to this issue is regular CEO letters to the board. The management of this letter should be delegated to a top lieutenant such as the head of communications or the COO. A monthly rhythm has proven effective with many boards. To assure balanced, relevant content, the letter should routinely address a fixed set of regular topics (e.g., business-environment trends, business updates, people/talent news, and early warnings of potential upside and downside



Expose Level 3 and 4 managers to the board.

While boards in the past were typically focused on CEO succession planning and the talent among the CEO’s direct reports, active boards are also very interested in the levels below. They rightly see these executives as the future leaders and the operational leaders of today who should be driving performance. Active board members will therefore seek to get to know them.


Some CEOs feel this is overly intrusive or worry that the lower-level executives are not ready for board exposure. But, in fact, it’s positive to have board members engaging with deeper levels of talent. They learn more about the business and the next generation of the company’s leaders. Board members can also give the CEO valuable feedback about the people they meet and their view of the company’s overall bench strength. And for the executives, the right kind of exposure to board members is a great development opportunity.


The CEO should take the lead with the board in driving the engagement process, which will allow him or her to have greater influence over it. She can select the highest potential individuals for the interactions and organize the interactions so that they are most productive — for example, by holding them as one-to-ones over a breakfast or dinner. She can also brief the executives in advance on the style of the board member and potential question areas and brief the board members on the executives they will meet.


Handle strategic planning… strategically.

Older-style boards typically become involved only at the end of the strategic-planning process — typically in a board meeting devoted to review and approval of the strategy. By contrast, active boards often push to be involved from the start because the strategy is so important to the company’s performance.


The notion of involving the board in strategic planning can make CEOs anxious and defensive. They fear that the board may undermine the planning process due to insufficient knowledge about the business. They also worry that board involvement in strategic planning will be the thin edge of a wedge and lead to board interference in day-to-day management of the company.


The key to navigating this challenge is to keep strategic planning in the hands of management but to invite the board to provide advice and feedback from the beginning. One good way to do this is to involve the board early in deciding on the right, big-picture, strategic direction for the company, without getting into the details. The CEO and her team can develop and present to the board several options to the board, explaining why each has merit. Then the executives can solicit board input on each but not ask for a vote. In this way, the CEO and her team can gain valuable board perspective that will strengthen all the choices that are developed and obtain early board buy-in for both the options and the ultimate strategic plan that’s chosen.


The CEO can then provide periodic updates on the strategic-planning process through letters to the board and board meetings. This allows the board to stay engaged and provide input but keeps the control over the actual process with the executive team, where it belongs. Active boards are a corporate reality. How to work with them effectively should be one of the most important items on the CEO agenda. As we have outlined, the CEO has an opportunity not only to manage this new relationship but also to make the active board an asset in building long-term, high performance of the company.






Solving the Puzzle of Ownership Alignment in a Family Enterprise
Wednesday, 20 September 2017 00:00

alignment  noun | ə-ˈlīn-mənt
State of agreement or cooperation among persons, groups, nations and the like with a common cause or view point.



Successful ownership alignment is a continuous process rather than an end or accomplishment in itself. The ever-evolving, complex life cycles of the business, family and individuals cause constant shifts in perspective, goals and interests over time that make true continuous alignment an elusive and dynamic pursuit. Ownership alignment is more like an ongoing cycle of seeking and building consensus, then having it fray and unravel only to rebuild it all over again. If you recognize this precarious and fragile cycle for what it is then you develop a greater appreciation for why it is so important to invest constant effort and time into the processes and structures that help families strengthen their capacity to maintain alignment as they transition through the generations.

Through my work with family businesses across sectors and my own experience as a family business partner, I think about alignment or misalignment amongst the ownership group as being analogous to a puzzle. I see the ideal picture of family enterprise as representing the rewards of ownership where owners derive not only monetary benefits, but also deep emotional satisfaction. This gratification stems from their individual and collective roles within the enterprise — whether as family member, shareholder, employee, executive, director, or some combination — and from strong alignment among the ownership group.

Now imagine that picture is broken up into puzzle pieces. Exactly how each puzzle of the family enterprise can come together to form that ideal picture will vary from family to family. Some families do a much better job than others of “solving” this complex, ever-shifting, real-life puzzle by creating and maintaining alignment, even in highly challenging circumstances. Some struggle with alignment for decades.

So how can your family improve the speed and accuracy of work on the puzzle of ownership alignment? This article answers that question by describing four alignment-critical dimensions of ownership in family enterprise.


Focus on the Four Borders

Consider how most people first approach a table filled with disconnected puzzle pieces. Typically they start with the four border sections to create a solid frame for the picture and then to work within that frame. In the same way, the four border segments of the ownership alignment puzzle are critical for setting the continuity process up for success. They include the following:

  1. Vision of the family, the family legacy and the family enterprise
  2. Values by which the family operates on all dimensions of the enterprise
  3. Leadership at the senior level and throughout the ownership group
  4. Governance structures, processes and communications to promote better decision-making and relationships




Getting these four framing pieces of ownership alignment right through committed deliberation and action is critical for ownership alignment and its intending benefits. An ownership council can be a forum to discuss and seek alignment around these dimensions, but broader, informal related conversations and action should happen through the family.

Let’s consider each of the four borders in more detail.



1. Vision

A common vision can promote alignment and rally owners to take action to bring it to life. In many cases, family enterprise members focus mainly on their vision for the business: what they want its mission and related strategy to be, now and in the future, as related to potential returns and other metrics such as community impact. That’s certainly important, but vision is also about the family and its legacy.

What do family members want for the family in terms of cohesiveness, relationships and longevity? What kind of legacy do they want to leave through the enterprise?

Asking those questions in the context of vision — whether informally or as part of a more formal visioning exercise — can lead to much greater shared understanding among owners and, ultimately, alignment around priorities and goals moving forward. Owners also feel more emotionally engaged by a compelling vision of family and legacy, further promoting alignment.



2. Values

Values and vision go hand in hand, as the former will always shape the latter.

Shared values also inform owners’ decision-making around the business. This can, of course, happen at the level of mission: What is the business’s main reason for existing? But values can also relate directly to business practices and offerings. For example, members of a family who own a hotel chain may be against offering adult TV content in rooms, based on their values. Similarly, the collective values of family owners of agricultural businesses will inform whether the business uses pesticides or GMOs or how it manages animal husbandry.

Values also guide how the family, especially members working in the business, will interact with employees (treating them like family, for example), and how the business will interact with customers, suppliers, and partners (seeking win-win negotiation terms, for instance).

Again owners need to apply an understanding of their collective values to the family, as well. How will we interact with one another? What do we value most, whether respect, trust, communication, or some combination? Do we wish to promote a feedback-rich culture? If so, how?

Answering value-related questions helps owners uncover a set of shared values and use these for better-aligned understanding and decision-making around what they want the business and family to be.



3. Leadership

Leadership may start at the top, but it permeates every level of the family and organization, significantly influencing alignment among owners.

Whether acting as CEO of the business, board director, ownership council or family council leader, individuals in positional leadership roles set the tone, culture, and actions related to ownership alignment. A leader can and should ask of the broader ownership group: “How important is ownership alignment to us and how can we maximize it?” But personal leadership is also important throughout the family, whether related to a formal role or not.

Strong, consensus-focused leadership at all levels is especially important as the number of shareholders grow, as is the case in the cousins stage of family enterprise, where the number of owners can stretch into the tens or even hundreds. Leaders who evoke stronger alignment among owners and drive related rewards will:


  • understand the importance of “familiness”
  • see the big picture of where the family and enterprise are heading (for better or worse)
  • promote the family’s bedrock values
  • skillfully manage conflicts
  • inspire people to join in the family’s vision
  • bring together diverse perspectives


In contrast, leaders who tend toward autocratic styles will most likely disrupt alignment among owners with broadly negative consequences. This can take the form of nonconsensus-driven decision-making (“My way or the highway”), undermining of others’ influence or authority, or dismissing or quashing alternative opinions or points of view.



4. Governance

The final framing piece for ownership alignment is governance. This provides the structures and system for guidance, communication and decision-making across the family, ownership and management dimensions of the enterprise. Information for decision-making and the outcomes of decisions need to be shared across the enterprise, and governance mechanisms help ensure this happens.

There’s no single formula for how to build a governance system. Families vary widely with regard to governance structures and processes. Some have a full suite of governance bodies, including a business board with independent directors, ownership council, family council, shareholder assembly, philanthropic organization boards, and so on. Others have minimal formal governance features. It depends in part on the size and complexity of the family and business.

But the important thing is to be committed to the principle behind governance: sharing of information and decision-making for collective benefit. When this is the case, owners are much more likely to be aligned around all dimensions of the enterprise: values, vision, mission, culture, ownership goals and others.

In this way, we can see governance as helping to maintain the integrity of the frame for ownership alignment, by keeping the other pieces in place through formal/informal means of communication and relationship-building.

For example, one family has external evaluations of its board and directors as well as its family employees followed by leadership coaching and development sessions. This part of their governance system ensures they have the important conversations about how effective they are being as leaders of their family enterprise and how to strengthen the same.



Commitment and Skills Complete the Picture

While the focus has been on the four primary border dimensions that affect ownership alignment, it is important to mention two additional factors that influence alignment: commitment and skills.

Think of commitment as an invisible string or glue that holds the four framing pieces together. If owners aren’t genuinely committed to increasing alignment and its benefits, the strength of the other factors won’t matter. Things will fall apart in the enterprise and family, whether figuratively or literally.

Skills are also necessary for good alignment among owners. That is, no matter how committed people are to the enterprise, they will need skills to maximize quality and performance on all dimensions by navigating the enterprise successfully and helping others do the same. Skills represent the capability with regard to the four border segments presented here: vision, values, leadership and governance.

Specific skills that help boost the power of those framing pieces include curiosity, authenticity, listening, openness, conflict management, empathy, giving and receiving feedback, patience, forgiveness, the ability to ask good questions, and others that can be thought of broadly as reflecting “emotional intelligence.” Such skills not only reduce anxiety in the enterprise, but enable members to identify and bring out their best for collective benefit.



Putting All the Ownership Pieces Together

The analogy presented suggests that it’s like working on a constantly changing, three-dimensional puzzle with thousands of pieces. But like any skilled puzzle-solver, you can make this challenge easier by focusing first on the framing pieces — vision, values, leadership, and governance — and ensuring strong levels of commitment and skill to support the effort.

In this way, you can continue to craft the ideal picture of your family enterprise, as built on a truly aligned ownership group.









Seven Steps to Recruiting Value Add Independent Directors
Monday, 14 August 2017 19:24

Incorporating independent directors into a family firm’s board is considered one of the standards for family business success. The prospect of finding independent directors who can both challenge business leaders and represent ownership interests can be daunting. Following these seven steps will help identify directors who will add value to the family business enterprise.



1. Establish a Nominating Committee
Identify three to four people to manage the director search process and recommend candidates to the board, which is responsible for electing a new director. The nominating  (or governance) committee can facilitate an inclusive process, incorporating stakeholder perspectives to identify candidates who will support the needs of the business and the shareholders.



2. Collect Stakeholder Opinions 
Soliciting stakeholder opinions on the characteristics of a new director gives participants an opportunity to express their point of view and will make it easier to accept the ultimate conclusion of the board. It is helpful to:


  • Review strategic challenges and board member expertise – Consider how your industry is evolving and the degree to which the business is prepared. What parts of the strategic plan are new territories for management? What skills might a new director have to support management in executing the plan?
  • Assess the board’s culture and function – Clarify what you would like to maintain and what you would like to change. Consider the impact of near term retirements on the board’s culture and whether you are seeking a director who might become the chair in the future. What director characteristics are important to enhance the board’s functioning?
  • Consider family and shareholder dynamics – Independent directors who build relationships with shareholders, spouses and future shareholders can be valuable in creating alignment between the board and shareholders. What characteristics will be important for a new director to relate well with shareholders?
  • Explore potential added value for management – Ask management to identify specific skills in a new director that will be helpful to them. Taking into consideration the board’s view of management’s opportunities for growth, what attributes might a new director have to mentor to management



3. Create a Board Prospectus
As a tool for recruiting new directors, the prospectus outlines important factors about the business and the expertise desired, including:

  • A summary of the business’ history, products, markets served, strategic focus and size
  • Rationale for seeking a new director
  • Board structure, including number of independents, committees, meeting frequency and board fees
  • Board responsibilities
  • Desired director experience, attributes and education



4. Solicit and Review Candidate Pool
The nominating committee manages a process of circulating the prospectus to colleagues, advisors and personal contacts requesting candidate referrals. They collect and review candidate resumes to establish a pool of candidates whose background aligns with the prospectus, at least on paper. Using a firm experienced in searching for family business directors can be helpful in expanding the candidate pool.





5. Conduct Interviews
The nominating committee then narrows the candidate field incrementally until a qualified director has been identified. It is helpful to break the interviewing process into the stages noted below to compare candidates and share thinking about the right fit for the board.

a) Provide candidates with the prospectus and confirm their interest.
b) Interview each candidate via telephone.
c) Review the interview outcomes and identify a small group of candidates for in-person interviews.
d) Invite candidates to meet in person with nominating committee members.
e) Review the in-person interview outcomes, determining whether you have the right candidates to choose amongst. If so, move forward.
f) Consider the value of additional interviews or a chemistry fit social gathering with key stakeholders for the final candidates.



6. Decide
When you have identified a board candidate whom you believe has the right skills, values and cultural fit, extend an invitation. At that time determine whether or not the candidate is interested in accepting, contingent upon reference checks.




7. Conduct Reference Checks
Conduct reference checks and any additional vetting to confirm the candidate’s value add to other boards, their level of expertise, and, if they have had family business experience, the manner in which they were helpful to the family and business system.









Delivering a Difficult Message: Performance Feedback in a Family Business
Monday, 14 August 2017 19:16

“My brother is not pulling his weight at work, which means more work for our mother and me. I don’t know what to do about it… so I do nothing, and the problem persists.”



For most people in most situations, delivering a difficult message is, well, difficult. Delivering a difficult message in a family business is typically even more challenging because of the multiple and deeply personal relationships that exist. Difficult messages must be delivered, though, and avoiding this task will likely only make matters worse. With the long-term success of the family business at stake in situations like this one, it’s essential to deliver those messages effectively.

We should remind ourselves why we want to give feedback in the first place and what it is we hope to accomplish by doing so. The need to deliver a difficult message typically starts with your perception that you have a disagreement with someone else or their performance is falling short of your standards. Since performance feedback is one of the most difficult messages to deliver to family members, we will address that specific case.

Your goals in delivering this difficult message are (1) to share your perspective in a way that your recipient will understand it, (2) to learn the other person’s perspective of the same situation, and then (3) to ensure that the performance shortfall is addressed so that sustained success can be achieved for the family and their business.



Soft start-up

Effectively delivering a difficult message requires work before the message is actually delivered. If you simply launch into your message, you will likely ambush the recipient… and most who are ambushed will be defensive and therefore not receive your message as well as they otherwise might. Using a “soft start-up” will help you to minimize this particular challenge and increase the chances that your message will be received as well as it can be.

A “soft start-up” introduces the idea of sharing feedback even before you actually deliver the message. In our example, if your sibling isn’t pulling their weight at work, you could introduce the discussion by saying: “There’s something I’ve been thinking about, and I want to share it with you. I feel it’s an important item and therefore will take us more than just a minute or two to discuss. When would be a good time for you to have this discussion with me?”

In my experience, recipients of the above request typically find time to talk in short order. However, if the recipient tries to delay the conversation significantly, then you can simply respond: “This matter is too important to wait that long. When could you find some time to talk in the near future?”



Sharing your perspective

Once you’ve established a time to meet (in a comfortable and private location), it’s now time to begin delivering your message. I have found that the most effective way to initiate the conversation is with a question: “I'd like to share some feedback that I hope is helpful. Is that okay with you?” In theory, the recipient could say “no,” and the conversation will come to a stop. Practically speaking, though, I’ve never encountered a situation where the recipient responds with anything other than a simple “yes.”

Asking for permission is important for a couple of reasons. First, it explicitly communicates to the recipient that you are about to deliver a potentially sensitive message to them. This gives them a few moments to prepare which will make it more likely that they will actually hear what you have to say. Second, you will feel more comfortable providing the specific feedback. You have, after all, just received explicit permission to do so!

After receiving permission to proceed, the most effective way to deliver the difficult message is using the following framework: “When you [describe the recipient’s troubling behavior], I feel [describe the emotions – some combination of happy, sad, angry, and scared – that the recipient’s troubling behavior triggers in you].”

The value of this simple framework is that it focuses on the recipient’s behavior (which is changeable), rather than their personality (which is not). It also allows the recipient to see how their behavior impacts others (namely you).

In the example that opens this article, this framework might be used as follows: “When you put in fewer hours at work and, as a result, are not as productive as the rest of us, I feel angry, sad, and scared. Angry because I feel like you are taking advantage of me, sad because I feel like I cannot trust you or depend on you like I once could, and scared because we are losing ground to our competitors who, presumably, have all of their key employees working their hardest.”




"If one of our goals for having a difficult conversation is to ensure that the performance shortfall is addressed,

then both parties need to be at their best when engaging in this conversation."




Offer to partner

Now that you have shared your perspective with the recipient, invite them to share their perspective of the situation with you. Occasionally, this step will provide the deliverer with important additional information that can clear up differences quickly. Even if this additional information does not resolve the situation, both parties now have the more complete picture that is necessary for improving matters.


While it might be tempting for the deliverer to walk away at this point – the bad behavior is, after all, the recipient’s problem – remember our third goal for having this conversation: ensure that the performance shortfall is addressed. Walking away at this point could provide the recipient with an “out.” If you sincerely want to increase the likelihood of addressing the recipient’s performance shortfall, you need to stay involved. So, offer to partner with the recipient as they begin to work on addressing the bad behavior. Depending on the specific issue, there is a virtually endless list of ways you can provide assistance, but a great way to start is to ask the recipient the following question: “What keeps you from [doing the desired behavior]?” Framing the bad behavior in terms of constraints typically leads the recipient to be more open to discussing the issues. Once you understand the constraints that the recipient faces in addressing this situation, you can best suggest specific options for improvement.


In our current example, asking the constraints question might reveal that the recipient is kept from pulling his weight at work because he feels he’s been placed in a position for which he is not qualified. If so, possible solutions might include a structured training and development program or putting the recipient into a different position for which he is sufficiently qualified. If, on the other hand, “What keeps you from pulling your weight at work?” reveals a different constraint (e.g., serious health issues afflicting the recipient’s spouse), then an entirely different set of solutions would be appropriate.



Timeouts when flooded

Even the most carefully planned conversations don’t always go well. The above steps will certainly increase your likelihood of having a productive conversation, but there’s no way to guarantee success. And, in those occasions where the conversation falls apart, it’s important to have an appropriate tool: timeouts.


Difficult conversations are often challenging because they involve emotions and emotions can sometimes get out of control. In those instances when we lose control of our emotions – a situation that I refer to as being “flooded” – the best solution is to borrow from the sports world and call a timeout. When one is flooded, one does not think clearly. As a matter of fact, research in the field of neuroscience shows that one’s IQ typically drops when flooded and a flooded individual also loses access to the area of the brain where logical thinking resides. If one of our goals for having a difficult conversation is to ensure that the performance shortfall is addressed, then both parties need to be at their best when engaging in this conversation. And, if just one participant becomes flooded, then both parties are clearly not at their best.


The most effective solution in this situation is to call a timeout and take a break from the conversation. Once both parties have had a chance to clear their heads – a process that usually involves something as simple as each participant taking a brief walk alone – they can resume the conversation. If the situation becomes flooded again, simply call another timeout! It may take some time to make progress via small periods of productive conversation, but trying to press on while even one participant is flooded will lead to no progress at all (and, potentially even a setback)!



Catch them doing right

Speaking of neuroscience research, there’s significant evidence that positive feedback is more effective than negative feedback. While it’s true that sharing your perspective on what the recipient is doing wrong can help them to avoid derailing, shifting the focus to dreams and possibilities will allow the recipient to flourish. As leading researcher Richard Boyatzis says, “You need the negative focus to survive, but a positive one to thrive.”1


So, as you and the recipient work together on their performance improvement, don’t just let them know when they make mistakes (which they undoubtedly will as they first attempt to change their behavior) – also be sure to point out to them when they are behaving in the right way. An example in our case: "I've noticed that you've been putting in more hours at work recently and, as a result, that your productivity has increased." If you can catch them doing right, you will increase their likelihood of behaving correctly more often.



In closing

For anyone involved with a family business, delivering a difficult message is challenging but necessary. While there is no process that can guarantee success in these precarious situations, the steps laid out above can significantly increase your likelihood of achieving the ultimate goal: improved performance that leads to sustained success for the family and their business.

1 "When You Criticize Someone, You Make It Harder for that Person to Change" Havard Business Review, 2013.







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