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How to Run a Family Meeting Without a Feud Breaking Out

THE GLOBE AND MAIL – MANAGING – Thursday, November 5, 1998, B12

The great taboo in family businesses is the dreaded discussion of how the leader should pass the business on to the next generation.

Who can blame them? It's not pleasant to consider the possibility of a premature death - or declining importance and authority. Watching a mere youngster make decisions you would never consider. Besides, in many business families, the identity of the next anointed leader is a matter of considerable conflict. The whole matter of non-business communication makes a lot of business families uncomfortable.

Yet failure to plan the right way of letting go can cause major headaches later - for everyone except the lawyers and judges who will settle the family dispute later.

A Canadian survey by Pervin & Co. in 1998 and a U.S. poll by Mass-Mutual in 1997 indicate that more than 80 per cent of family-run con-cerns wish to keep the business in the family. But both surveys say about 60 per cent of these respondents have done little or nothing formally about it, and 20 per cent of the leaders state they are not confident as to the commitment and competence of the next generation.

Many families are not even well informed about their own business. A third of the 1998 survey respondents report they hold business meetings for the family, but most are ad hoc, reactive and in-frequent. Attendance isn't good, probably because the meeting's business focus isn't as satisfying as discussion of how family relation-ships and co-operation could help matters. It is therefore not surprising that participants are usually those working in the firm.

What this means is that membership in the business family is getting more complex as postwar families and businesses arrive at the time of transfer to the next generation and beyond. The real work in the family business is managing relationships and, for the business to survive over the long haul, family members must learn new ways to listen.

Successful business families realize this and establish a family meeting process that allows everyone to have a voice. They believe that the family business is not just a financial entity - all members of the family have some relationship to each other and to the business.

Talking it out can only clarify murky, unspoken issues. In one case, three second-generation owners of a children's camp called a meeting when it became clear that the core business could only ade-quately feed one family. Two siblings had to make other choices. After careful consideration, one sibling chose the camp, one sibling established a city camp for musically inclined children and one sibling was bought out and became an actor.

Many business families use their internal strengths and resources to work through emotionally laden, but critical, business decisions. As a starting point to this thoughtful exploration and journey, here are some general relationship questions that most people involved in a family enterprise should, at a minimum, consider. Use them at a family meeting to get the discussion flowing.

Who is committed to running the business, and why?
As each generation of owners and managers reach their mid-50s to early 60s, both generations of the family must decide whether to continue the accidental partnership that is the family business or make other choices. Who has a need to partici-pate in or even lead the firm? What skills do these indi-viduals bring that match their ambitions? Remember that leaders must head up both the business and the family, as decisions in one will strongly affect the other.

What is the leader's vision of self and the family company in the future?
This is a difficult question for those who have led the company for years and whose identity is tied closely to its operations. Is the leader interested in one last major move before handing over the reins? Or is the idea to hold power until death or disability? In light of the leader's intention, heirs should consider how they see their careers unfolding. Which roles would be satisfying? Which decisions would each like to make? Who would they like to work with?

If the business remains in the family, how will everyone build or maintain strong relationships?
Family stakeholders need to man-age their relationships. That's because each person's relationship to others and the business has the power to undermine the joy of working together – or create a powerful bond that becomes the glue for a long-term business.

What steps are required to accomplish each family member's personal and professional goals?
Accept that the past is the past – look to the future for solutions. Here's one way to envisage it. Imagine that a miracle occurs while you are sleeping and all the family's personal and professional goals are met. How would you know that this miracle occurred? What would happen?

These four questions are easy to think about but harder to discuss in an open forum with other business family members. Try them, and enjoy the awkwardness together as a family.

If we view business family problems as relationships with faulty communication patterns, we can focus on the here and now - not the past - and build relationships that work for the future.

ALL ARTICLES PERVIN FAMILY BUSINESS ADVISORS INC.

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