“N o business talk during the drive to our family vacation home and over the weekend. But, on the way back all bets are off.
That was one of the rules a member of a family-run business told me recently.
There is more operating here than the rules of a family business. This family's rules work because of a commitment to keeping the family strong, healthy and viable. This dedication is a key to their success financially and lays a vital foundation for meeting the upcoming, inevitable challenges of succession.
This family and others like them live by their principles. Such keys to their success have only recently been the focus of research and discussion. They are not customarily taught in business school. Nor are they a quick fix. These families commit to a process that may take years to implement.
In another family, I met Barney, who had established a successful law practice. After years of running it alone, his daughter and son joined the law practice. With considerable assets and a determination to “assure effective, healthy and strong family relations,” Barney decided to convene the family. Knowing he “would have to step aside at some point,” Barney realized the importance of laying a foundation for succession. They met at a popular resort spot and he decided to do something quite remarkable.
Barney used the first meeting to read a written statement describing his love of family, the importance of keeping money in perspective and why philanthropy should be part of the family mission. Also known as an Ethical Will, Barney's statement outlined the principles that play a vital role in his life. After the reading, Barney and his wife decided to tell their children “everything about all the assets and liabilities. We wanted them to know all about the viability of all our businesses and get an idea as to what they would be inheriting.”
The response from their children was astounding.
“They were flattered that we shared this intimate financial information with them. It resulted in a more trusting relationship between the generations.”
The family meetings have continued for about 10 years. After the first meeting, Barney worked for two years developing a family charter. The family reviewed and edited drafts before signing. In the final form, the charter defines the purpose, functions, and rules for family membership. It also established two family groups, a Council for descendents and an Assembly that gives a voice for all non-descendents. Barney sees this as “the glue keeping the family together for generations to come.”
The work by Barney and his family demonstrates the important principles that lay the foundation for success. I have developed a model called V.O.I.C.E. as an acronym to describe this process. How any family's V.O.I.C.E. is developed will vary from family to family. The basic operating principles, along with some examples from Barney, act as a guide:
“V” stands for values and asks the question, “What values guide your life and the family business?” For Barney, a healthy, strong, and connected family guides how he thinks and acts. He used an Ethical Will and a Family Charter to give life to his principles. A Family Mission Statement is another tool used.
“O” stands for openness. With courage and a leap of faith, Barney demonstrated high levels of openness by revealing the contents of financial statements to his adult children. Ask yourself, “How transparent do I want to be with my intentions and the facts of our business?” Access to financial information can relieve anxiety for heirs and help them prepare for the future.
“I” stands for Inclusiveness. Everyone affected by the plan should be involved and have some input. Barney made sure everyone had input during the family meetings. Consider the potential drawbacks of leaving someone (e.g. an estranged child) out of the process.
“C” stands for Communication. Barney listened deeply to what others had to say and made a strong effort to understand all points of view. Family leaders should ask themselves: “Am I really listening even when if I hear something I oppose?”
“E” stands for Extraordinary Leadership. Barney managed his own anxiety as he showed the books to his family. Family leaders work to stay calm as they forge a vision for the future. They also realize the importance of nurturing leadership in others. How are you fostering leadership potential in your family members?
The V.O.I.C.E. model is based on the best practices of successful families. They measure success as the preservation of assets and family relationships over time, and they never lose sight of these goals. n
Eric Weiner, Ph.D., is a Milwaukee-based family legacy advisor. He is the author of a new book titled, “Words From the Heart: A Practical Guide to Writing an Ethical Will.”