Family is (hopefully) for life. If the family business starts to interfere negatively with the relationships in the family, then there is imbalance. Family businesses are challenging because of the overlapping of family, business and ownership (known as the “three circle model”). Researchers from Harvard have extended this into four “rooms” by adding in the board room.

Because family members wear multiple hats, are in multiple circles, or sit in multiple rooms, they need an awareness of how those roles influence the decisions they need to make. Father or boss? Director or cousin? Manager or owner?

It’s most important to be able to have open and trusting conversations about needs of the business and expectations of the family. Those are underpinned by the core values and the common values across both personal and professional life. Each successive generation should ask why they are in the business. Successful family businesses foster a sense of stewardship among all members of the family (no matter what their specific roles).

Making multiple roles work requires setting boundaries between work time and family space. Conflict will happen, so rather than “fake harmony” (see previous article), the ability to communicate, deal with issues, and have “constructive conflict” is essential.

Some kind of a conscious separation of ownership and management is very helpful. Avoid having “too many chefs in the kitchen”. Family members who work in the business should be recruited and evaluated with the same criteria as anyone else. And “don’t hire whom you can’t fire”.

Consider This: Do family members involved in your family business understand the different hats they wear? Have you ever had to performance manage a family member employee? Do you have the governance structures to deal with conflict?

Original articles: https://www.forbes.com/sites/forbescoachescouncil/2021/04/22/how-to-balance-a-family-business-with-family-values-13-tips/?sh=1e3380cc11c7, https://www.country-guide.ca/guide-life/family-business-handbook-how-to-build-and-sustain-a-successful-enduring-enterprise/, https://www.businessobserverfl.com/article/five-steps-every-family-business-should-take-for-a-successful-succession, https://economictimes.indiatimes.com/news/company/corporate-trends/how-can-family-businesses-keep-themselves-from-splitting-by-separating-ownership-and-management/articleshow/81427776.cms, https://www.jdsupra.com/legalnews/defining-and-documenting-roles-in-a-1032865/

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

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Q. My child is not performing in their role in the family business / will use their inheritance to support a cause I despise / wants to take over / doesn’t want to take over / doesn’t want to do what I want. What can I do to bring them into line?

A. Since time immemorial, parents have been trying to get their children to do what they want, or follow in their footsteps. Which specific method to use is often a function of the age of a child. When they are young, we can tell them what to do and they might listen. But as they move into their teens, this becomes more difficult. Indeed, during a rebellious period (which some children never outgrow), they are inclined to do the opposite of what parents want.

The ‘stick’ works, but only for a very limited time. Using the stick (e.g. threatening to cut them out of an inheritance or other coercive tactics) on an adult is fraught with danger. While it may achieve the desired short-term result, the collateral relationship damage may be permanent. On the other hand, the ‘carrot’ can be akin to bribery, and also can send the wrong message to children about what is important.

It’s worth looking outside the box at interest-based negotiation, and even acknowledging that your children are adults who may not make the same life choices as you! These may not result in getting the children to do what you want, but may well result in a healthy and positive family relationship.

Consider This: (for parents) How has the way you try to get children to do what you want changed as they have grown up? (for children) how does the way your parents seek to get you to do their wishes make you feel?

Original articles: https://www.dallasnews.com/timeless-in-texas/2023/01/29/a-royal-pain-in-the-arse-dealing-with-unruly-members-in-the-family-business/, https://www.wealthmanagement.com/opinions/disinheriting-family-members-different-political-beliefs

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

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source https://davidwerdiger.com/2023/03/carrot-stick/

Transition Ready

In the early days of my billing business, a prospective customer asked me: “what if I was hit by a bus?” This highlighted to me the dependence of the business on me, and I set about making the business “sale-ready”. That didn’t mean that I planned to sell it, rather that if I ever wanted to, I could, because the business would be worth as much without me as with me. That is my definition of a true asset.

People have been talking about “the great wealth transition” for a long time, and for various reasons, these transitions are taking longer than expected. But not matter when the transition will actually happen, it is in the interests of a family to become “transition ready”. That means (a) the incumbent generation have clarity about what life looks like for them if and when they choose to retire, (b) the rising generation are ready, willing and able to step into positions of control within the family enterprise, and (c) the operating and non-operating assets of the family are well-governed and managed, and therefore the family has optionality regarding their future disposition.

Being “transition ready” is a lot more than having a will and an estate plan with a lawyer. It needs communication across the family, and shared vision for the future. Thinking and talking about our mortality and plans for the future can be very confronting. Not talking about it leads to fragile family systems that can easily fall into conflict.

Consider This: How “transition-ready” is your family? How might you measure that readiness for yourself, your children, and your assets?

Further reading: https://www.forbes.com/sites/insights-northwestern-mutual/2022/12/06/5-steps-for-starting-a-legacy-conversation-with-your-family/?sh=f72b41c57aab, https://www.advisorhub.com/resources/failed-succession-plans-the-8-lessons-they-teach/, https://www.natlawreview.com/article/5-questions-you-should-be-asking-about-succession-planning-your-family-office, https://www.bizjournals.com/dayton/news/2021/04/07/preparing-for-what-s-next-after-the-sale.html, https://www.forbes.com/sites/forbesbusinesscouncil/2020/08/25/creating-momentum-in-your-succession-planning-process/#683513481b88, https://www.thestar.com.my/business/business-news/2019/03/16/family-businesses-in-msia-lack-succession-planning/

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

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Q: If the world’s two richest men cannot keep their wives happy, what hope do we have?

A: No, that’s not a real question – it’s a meme that circulated following the news of the divorce of Bill & Melinda Gates. Many people with wealth realise that money can’t make a wife (or anyone) happy, but that doesn’t stop them trying.

In business, sometimes we decide to “throwing money at a problem”. That means directing significant resources (financial and otherwise) towards solving the problem.

In families, throwing money at a problem is taken more literally – directing liquidity to placate unhappy family members. The assumption is that it will “smooth things over”, but because it uses money as a proxy for the underlying problem, it doesn’t address the underlying problem.

The best this response can hope to achieve is to kick the problem down the road, i.e. defer dealing with it or pretend it doesn’t exist. However, consider that (a) the problem is not solved, and (b) in the meantime, the underlying family issues can continue to fester and can actually become worse.

Consider This: Have you “thrown money” at a difficult family situation? Why? What did you expect to happen as a result? What actually happened?

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

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#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
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source https://davidwerdiger.com/2023/03/wealth-and-happiness-2/

Q: How do we protect the next generation from blowing our money?

A: Stop right there. Whether you have created or inherited the wealth, the language of the question reeks of a power, control and mistrust dynamic.

Many families either hang on to their wealth or setup structures to prevent their children from “blowing it” (which is often controlling from the grave). Yes, it’s awkward having discussions about estate planning and family wealth, and who wants to talk about their own death?

A friend once said: “Procrastination is caused by fear. Don’t try to ‘learn’ how to stop procrastinating, find out what you’re really afraid of“. It might be fear of death, fear of losing control, fear that children will not do what you expect of them, fear that divorce might lead to a loss of the wealth, or something else (or all of the above). Understanding those fears is an important barrier to overcome.

Successful families have had a willingness to be open with each other about the wealth that they’ve created, and not wait until death to leave everything to their heirs. Legacy is about passing on values and life skills to the next generation. If that is done well, the money (while it may be significant) becomes secondary.

Consider This: What are you waiting for? What are you afraid of?

Original articles: https://naples.floridaweekly.com/articles/tips-to-prevent-your-kids-from-squandering-their-inheritance/, http://www.williamsonherald.com/features/business/commentary-consider-training-your-family-to-handle-inheritance-properly/article_1b04fd32-66ad-11eb-bdef-a3dab823138b.html, https://www.bloomberg.com/news/articles/2021-02-17/how-to-talk-to-your-family-about-money-inheritance-and-wealth-to-avoid-fights, https://www.kiplinger.com/retirement/estate-planning/601269/how-do-we-protect-the-next-generation-from-blowing-our-money, https://www.thisismoney.co.uk/money/pensions/article-8494985/Parents-hoarding-wealth-avoid-children-losing-divorce.html

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

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source https://davidwerdiger.com/2023/03/wealth-transfer-fear-2/

Q: How do we tell the kids about our family wealth?

A: First and possibly most important point: they already know. By the lifestyle you lead and the people you mix with, your children have already made assumptions about the family wealth. They will also have garnished information on this topic from friends and from public sources. That means in terms of controlling the conversation, you are already well behind, so be aware of what you can and can’t control when it comes to talking about wealth. That also means it’s never too early to be aware of the messages you are sending to kids – both implicit and explicit.

The way to approach talking to kids is to lay a strong foundation. Wealth, in and of itself, is not a foundation. It’s not a goal; it’s the means to a goal. The foundation is around the values and beliefs about wealth: what does it mean to be wealthy? what can money buy and what can’t it buy? what responsibilities come with wealth? what are the family values that transcend wealth?

These are deep and difficult questions. Before attempting to talk about them with kids, ensure you have some answers to them for yourself. That can be a process in and of itself. It might be helpful to have some of these discussions facilitated by an external advisor to ensure that you are well prepared, and that they stay on track.

When to actually sit down and talk about it? Milestones are useful: when kids complete school, get married, or themselves have kids. Always be prepared to answer the question “why are we talking about this now?”

Consider This: In what ways does your family talk (or not talk) about wealth? How did you find out about your family’s wealth (I found out when I was teased in school)? With that in mind, how would you like your kids to find out?

Original articles: https://www.wealthprofessional.ca/news/opinion/top-concerns-of-family-office-clients-wealth-disclosure-to-children/362291, https://economictimes.indiatimes.com/wealth/plan/how-to-involve-the-full-family-in-money-decisions-10-things-you-should-do/articleshow/87390847.cms, https://www.globalbankingandfinance.com/its-time-to-talk-intergenerational-wealth-planning/, https://www.barrons.com/articles/how-to-talk-to-your-adult-children-about-your-finances-and-why-its-important-51631912873, https://www.forbes.com/sites/dennisjaffe/2019/05/29/what-do-we-tell-the-children-intergenerational-talks-about-the-family-business-and-wealth/#2ee4136f78e0

[Republished with permission]

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
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source https://davidwerdiger.com/2023/03/can-we-talk-2/

Many families struggle with the ‘why’ of their wealth. Defining a philanthropic strategy is a great way for a family to articulate a purpose for their wealth. However, only 20% of families have a formal process for doing so.

At the start of COVID, there was concern that financial pressure on families would lead to a reduction in philanthropy. But in a recent survey, 43% of respondents said that the pandemic had not altered the way their family thinks about or acts when it comes to contributing to the community and wider society. The pandemic has also been effective in turning many families’ attention to the inequalities closer to home, which has led to an uptick in local giving initiatives.

The rising generation of family business leaders have been the driving force behind families increasingly integrating philanthropy into their business practices. Families are also using philanthropy to engage and educate their rising generation in the family business, and starting to think in a more holistic and cohesive way.

Philanthropy is a great entry point for young children about wealth – according to some it can start as soon as the child says ‘mine’ for the first time. Some experts encourage families to structure a three-part allowance for children: spending, saving, and giving. 

But philanthropy is not a panacea that will lead to fighting family branches uniting around a common theme and singing kumbaya. Conflicts between family members or branches can actually be aggravated through highly emotional discussions around giving. Tread carefully, and first build a foundation around shared values.

Consider This: Is family giving a source of conflict in your family? or something that brings family members together? Do you give with a strategy or is it more scattergun? Are you inculcating the giving culture in your family into younger family members? 

Further reading: https://mg.co.za/opinion/2021-03-09-few-wealthy-families-employ-a-philanthropic-strategy/, 
https://www.campdenfb.com/article/next-generation-takes-philanthropy-heart-family-business, 
https://www.wealthbriefingasia.com/article.php?id=189213#.X7NUQ3AzaUk, 
https://mibiz.com/sections/small-business/experts-see-short-long-term-shifts-with-family-business-philanthropy, 
https://ssir.org/podcasts/entry/giving_across_generations_maximizing_impact_through_family_philanthropy#

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
#entrepreneurship

The post Defining Philanthropy: COVID & beyond appeared first on David Werdiger.

source https://davidwerdiger.com/2023/03/defining-philanthropy-covid-2/

[REPLAY] If you couldn’t bear to watch Megan Markle bare her soul to Oprah (or if you couldn’t look away from it, and from the endless commentary that followed), here are two practical things you can actually take from the latest episode of this saga:

1. There are serious challenges to growing up in a wealthy family with a public profile. The weight of expectations is heavy, and finding identity and meaning can be difficult. Marrying into such a family has similar but slightly different challenges.

One of the hardest issues is: who can one talk to about this? Who can genuinely understand the experience, show empathy, and be a helpful sounding board? I don’t think this can come from a televised interview and the opinions of the social media masses. As my good friend says: “the poor want to be rich, and the rich want to be happy”. People without wealth or fame see them as a panacea that will solve all their problems. People with them understand that they come with their own problems.

However … 2. There is an intergenerational narrative here that has struck a chord with some younger people. A stodgy old institution deeply rooted in colonialism and vestiges of racist culture being exposed publicly (by a whistleblower) and forced by external pressure to change and adapt to the times. That is a similar script to the #MeToo movement and other such exposures of established cultures.

This is not the forum to discuss how a royal family stays relevant in a changing world. However, this same narrative plays out in many families, where the rising generation challenges established cultures. Those families need to build their own intergenerational bridges, and work out how to adapt and remain relevant to their own emerging stakeholders, both born and married in..

Consider This: Do the members of your family have a support network that provides empathy and a safe space to vent? Are they comfortable with their “privilege” and able to see both the positives and negatives? Is your family able to openly discuss and challenge family cultural norms?

Original articles & further reading: https://www.telegraph.co.uk/women/life/meghan-millennial-hero/, https://www.psychologytoday.com/us/blog/your-brain-work/201203/has-coddling-entire-generation-children-set-them-fo, https://www.npr.org/2016/09/13/493615864/when-it-comes-to-our-politics-family-matters, https://www.nestegg.com.au/retirement/11590-intergenerational-imbalance-the-central-problem-of-our-time, https://www.thenational.ae/opinion/comment/everyone-suffers-when-younger-and-older-people-don-t-mix-1.811571

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
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source https://davidwerdiger.com/2023/03/rising-gen-established-culture-2/

When taking young children for a long drive in the car, we would regularly hear them ask “are we there yet?” Children quickly become bored and impatient, and don’t always have a sense of time (especially if they are too young to wear a watch).

In families, rising generation family members are wondering “are we ready yet?” to take a position of responsibility or leadership within the family enterprise. They have a very keen sense of the passage of time. The family may or may not have the forum where that question can be asked, and even if they do, it may not result in a clear answer. While they may even have something of a succession plan, the incumbents might continue to stall, often with the excuse that “the kids are not quite ready”.

First question to ask is: why is this happening? Most likely, it’s coming from a place of fear on the part of the incumbent generation. Fear of a future when the the family enterprise is no longer a big part of their lives (what will replace it?), and general fear of the unknown. Families need a safe space to discuss these fears, both individually and collectively. Mentors, confidantes and independent advisors can be very helpful here.

So when your children ask “are we ready yet?”, you really need to ask yourself “am I ready yet?”

Consider This: What discussions has your family had about succession? How broad are these discussions – have they allowed the voices of the incumbent generation, the rising generation, and other stakeholders? Are family members able to say what they really think?

Original articles: https://www.campdenfb.com/article/next-gen-report-discovers-generational-disconnect-succession-readiness, https://www.forbes.com/sites/dennisjaffe/2022/12/13/older-and-younger-generations-are-colliding-as-family-enterprises-face-new-realities/?sh=179150328b2b, https://www.barrons.com/advisor/articles/the-ultrawealthy-need-to-hand-off-to-the-next-generation-dont-ignore-family-dynamics-says-this-advisory-51663358401?tesla=y, https://www.campdenfb.com/article/re-engaging-next-generation, https://hbr.org/2020/01/does-your-family-business-have-a-succession-plan, https://www.dtnpf.com/agriculture/web/ag/columns/farm-family-business/article/2019/11/11/succession-second-mountain, http://www.campdenfb.com/article/why-blocking-next-gen-succession-gulf-zero-sum-game, https://www.manilatimes.net/the-curse-of-failed-successions/505687/

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
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Q. My child (age 20) has no interest in joining the family business. What can I do?

A. Very sorry to hear that; unfortunately, your options at this stage in your child’s life are far more limited. Any motivation you might provide for them to join is likely to be extrinsic and therefore may not be enduring. I’m going to defer on this question and discuss when to start preparing successors.

By the time they are in their late teens, your children will have some very entrenched views about the family business, which will be gleaned from years of observing its impact on you and the family at large. What you think might be motivations to join (job security, being an ‘insider’ with respect to the family wealth) might actually translate as negatives for your child (workaholism, working under the scrutiny of judgmental family members). While there are financial benefits of having a family business, these may be offset by the lifestyle burden associated with being an owner-operator, or the constant talk about the business around the kitchen table.

What can make a big difference in their perception is the family business narrative within the family. Family businesses are about much more than just the financial. They have elements that other business do not have: they can embody the values of the family, and they can have socioemotional wealth – non-financial benefits such as the sense of identity, the family’s contribution to the economic and social benefit of community, and the power and influence that comes with all that.

Family businesses with more socioemotional wealth are more likely going to stay in the family from one generation to the next. Preparing successors starts with nurturing that from a very young age.

Consider This: What are the pros and cons of being part of your family business? How are these perceived differently across different generations of your family?

Further reading: https://www.forbes.com/sites/dennisjaffe/2022/09/01/values-define-a-family-business-but-who-defines-the-values/?sh=6a26f1d4813e, https://www.thomasnet.com/insights/family-businesses-rarely-transfer-to-the-next-generation-here-s-why-it-matters/, https://www.entrepreneur.com/article/383633, https://www.philstar.com/business/2021/06/27/2108306/family-business-most-valuable-family-asset, https://www.campdenfb.com/article/what-impact-family-business-family-office, https://www.financeasia.com/article/planting-the-seeds-of-success-creating-an-enduring-legacy/454702, https://lighthouse.mq.edu.au/article/april-2019/why-would-anyone-go-into-the-family-business, https://www.crainsdetroit.com/special-report/beyond-profits-family-businesses-can-create-socioemotional-wealth, https://www.smartcompany.com.au/partner-content/articles/family-business-and-the-secrets-of-successful-succession/, https://www.biztimes.com/2019/industries/human-resources-management/what-happens-when-theres-no-one-to-take-over-the-family-business/, https://www.scmp.com/business/china-business/article/2172343/why-mainland-chinese-children-are-starting-turn-their-backs

Actionable Generational Wealth Succession 

For more in-depth, thought-provoking discussion points and further commentary on family and business conflict resolution, access my Familosophy newsletter archives by signing into our newsletter https://DavidWerdiger.com. We will send you the archive links from there.

#familyoffice #wealthmanagement #conflictresolution #strategicmanagement 
#nextgensuccession #intergenerationalwealth #governance #leadershipdevelopment
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The post Why Join the Family Business? appeared first on David Werdiger.

source https://davidwerdiger.com/2023/02/why-join/