Toronto Canada

Tel: 1 (416) 360-0177

apervin@pervinfamilybusiness.com
http://pervinfamilybusiness.com/

Pervin Family Business Advisors

Library

The New Business Family

At a family wedding, a few years ago, I had the extreme pleasure of meeting a cousin I had not seen in more than 40 years. Two experiences deserve mention here. First, she remarked that my eldest son was acting in a similar fashion (read: a little wild) to how she remembered me at 10 years of age. Second, she and her husband described how their family business failed in 1983.

Their story involved a sibling and inter-generational misunderstanding and conflict that ended badly. Today, they have their own successful family firm and hold vivid memories of that tragic life experience.

We spoke about the resources available in 1982, when they sought assistance, compared to those available today. How far have we travelled since then? We have, in fact, come so far that the family business landscape is totally changed.

Then, the focus was on the founder – that is, the owner-manager. All the literature centred on the controlling nature of the entrepreneur. Consultants concentrated on the succession plan as an event and with it the inter-generational transfer of money, shares, the estate and, ultimately, power within the business and family. It all confirmed Dad – at this time, it was usually a male who had started the business, often post-World War II – as the central family business character, surrounded by others who were trying to get out from under his heroic shadow.

The leaders in the field were attempting to find ways for the two forces of family and business to co-exist and thrive, but they primarily saw the family business through corporate business models. Owners, for their part, thought they were running their affairs according to business principles, but instead mistook ad hoc paternalism for management, confused secrecy with privacy, and allowed family roles and relationships to shape decisions on strategies and assignments. As for the family, members got their training on the job, outsiders could not rise in the hierarchy, primogeniture and other forms of nepotism were the norm, women were typically overlooked or marginalized and no one but the patriarch – not even Mom – took part in discussions with advisors, who were usually the long-time accountant or lawyer.

Today, thanks to the efforts of many insightful individuals from many disciplines and countries, the major premises have shifted.

The understanding of family and business systems has expanded to include ownership systems, recognizing that some owners may not be family members or active business participants. There is also recognition of how individual personal needs affect family business dynamics. Together, these forces have given rise to the family-business concept of the Accidental Partnership, a powerful and bizarre family ownership phenomenon that arises due to circumstance, not choice, and it has provided a better framework with which to examine family interaction, unspoken expectations and obligations of business family life.

As a result of these and other revelations, professionals in the field now see family businesses as distinct from corporate business environments. They work on the relationships between the business, family, shareholders and individuals and on finding ways to bring these complementary interests into the decision-making culture of the business. Family culture and commitment are now blended into business strategy, and performance goals are aligned with shareholder strategies. Continuity planning is now approached as an integrated process, with a view to preserving and improving business family life and governance systems, replacing the old and fragmented succession, business and other planning concepts.

We now focus not just on patriarchal leaders but also on sibling and sibling-cousin teams, inter-generational teams, transition teams, family teams and on the governance and performance of the family enterprise. Women frequently play a central role in all of these configurations.

Much of the progress in current thinking about family businesses has arisen as we have tried to better understand the unspoken expectations of all the business family members and balance the role of individual personalities within the family, business and shareholder dynamic. We now work creatively to find bridges between these circles of influence, which has become a complicated matter as the sheer numbers of families and shareholders that participate in the average business family multiplies. Nevertheless, it stimulates clever thinking about ways to govern, share information, communicate, contribute to the community and, ultimately, make decisions so that everyone feels they have an appropriate voice.

Without taking anything away from the contribution of business families themselves and the way they have adapted to change and endorsed better means of self-government and collaboration, I like the way business family services and knowledge are developing. If my cousin had been able to tap into this knowledge 20 years ago, life for her family would have been completely different.

ALL ARTICLES PERVIN FAMILY BUSINESS ADVISORS INC.

Printer-friendly versionPrint Article

Return to the Library


Send this article to a friend

Items marked with an asterisk (*) are required.

Please send this article to the following person:

Please tell us who you are, so that we may tell the person who sent them the article.

If you like, you may also include a message.