Govern your house and you will know how much cost firewood and rice; raise your children, and you'll know how much you owe your parents.
In the first article of this series we describe that one of the main objectives when working with or in a family business is to help create conditions that allow effective communication between the leaders of today and tomorrow. In our case study, (the second-generation heirs to an empire of food distribution nationwide, the Woods brothers), while facing the challenge of a crisis related to the transfer of their shared patrimony to the next and third generation (who so far had shown no interest in participating in the company), decided to get to work and make a plan to organise the succession, involving their children, bringing in an external consultant that promised to help the Woods to create conditions that allow effective communication between the second and third generation, through a system of "family governance structures”. These conditions were imperative and help the members discuss, analyse and propose different scenarios to address the future of the heritage they have shared so far.
The center of decision-making would be a Family Council (a body cohesive in their decisions and clear goals, based on effective communication, mutual respect and recognition), and to regulate these decisions and provide a framework of agreements that would allow them to function properly, the Woods siblings decided to create a set of rules, named the Family Protocol. After that, they started to face the Cousin Consortium stage of the evolution of their family business with the creation of a scenario for leading their children into the succession of their patrimony: The Cousins Forum.
The main goal of this kind of body is to be a key instrument in the preparation of the next generation to be capable and responsible owners as members of a wealthy family. The Forum reports directly to the Family Council. Such preparation is usually set on two levels at the same time:
a) Forum Meetings: While having meetings in formal and well organized sessions addressing issues related to family governance and legacy, future shareholders learn to work together, to discuss and to reach conclusions in order to develop the abilities as a group for the next step of leadership of the family. Usually, Working Committees are created, in issues related with Philanthropy, Culture and Values, Management or Entrepreneurship.
b) Educational training: designed to improve the group skills and knowledge needed to be responsible owners and/or manager, in areas not covered by the formal education they could have received in their University or high level studies.
Although the training plan is specially designed for the next generation, the best value that a family can get of this kind of work, is that every member of the family (as many as the common sense suggests), participates in the educational training sessions, in order to generate the necessary conditions and safe environment for the establishment of conversations on specific issues related to the transmission of the family patrimony, as well as the orderly and secure exchange of concerns and expectations among generations.
Every dialogue should confirm that the family wants to truly continue on with this heritage in the future or, in the worst case scenario, lead solutions for those who don’t want to keep going on together as a result of this process. This work will then lay the plans, strategies and projects to be undertaken by the family to achieve their goals, following the rules and the governance structures they’ve created, letting the effective conversations between generations be a natural part of their lives, for the sake of balance and harmony of their heritage preservation and transmission.
*The persons and names in this story are fictional
Originally published on line in Thrawat Maganzine. To access the article please clck here.