Successful Transitions in Family Business
On this episode I discuss what successful transitions in family business look like with Dr. Jim Grubman who is an internationally recognised consultant, speaker, and educator in the multidisciplinary field of family wealth psychology. He works with affluent families and their advisors to understand how wealth and life can be integrated successfully.
On this episode we cover many different topics. We look at how different generations have reacted to recent events and experiences.
We explore the role of governance and discuss what ‘good governance’ looks like and what it does for families in business.
We look at ”resilience’ and what that really means during this current crisis and what that can mean for transition and succession planning. .
Many families are finding out what areas they have done well in and where they need to learn when it comes to both governance and succession (or transition) planning.
We also look at the important role that advisers play in working with families during these transitions and the elements that make up the ‘Generative Alliance’ that can help family businesses to thrive.
Key Takeaways:
1. The Differing Experiences of each Generation
For some rising generation family members this is the first experience of adversity on a global scale. The last great recession of 2008 is twelve years ago and since then market conditions have been relatively positive, on the whole. As such some may be seeing and feeling things that they haven’t before. Contrast this with some senior generation members who may have experienced several spells of disruption over their time in the family business. What impact does this have on successful transitions?
We also discuss the impact of stress on our cognitive energy and how this changes across the generations and how this may impact successful transitions in family business
2. The Importance of Good Governance
We have heard over recent episodes how important the presence of ‘good governance’ is in a family business during times of crisis. We explore that a little more with Jim in this episode and talk about what ‘good governance’ looks like in a family business. What role does it help to play in making decision making and communication more effective during difficult times.
Having the correct ‘structure’ and the right forums to be able to communicate with the right people at the right time is an important contributor to the successful navigation of any crisis and this is no exception.
This is also a time for you as a family to assess how your governance has performed. Has your Family Council done what it is there to do? Has everyone behaved in a way that really aligns with your values as a family? Are there areas that you would look to improve upon and adapt given the impact of the current crisis? Now is a great time to do this as it may be the first time that this has been tested. Is now the time to start putting this in place so that you can start the conversation around succession or transition planning? If so I can help.
3. What do we mean by ‘resilience’?
Jim has worked extensively with previous guest Dennis Jaffe and they have recently published an article in the excellent Tharawat Magazine that looks at the characteristics of the firms that have demonstrated resilience during times of crisis. You can read the article here but to whet your appetite some of the characteristics are;
- Good channels of communication
- The ability to not just talk about facts and figures, but feelings too
- The ability to listen
- Patience
In addition Jim shares a great phrase from a family that was interviewed at a conference he attended. The comment made by a member of the next generation really resonated with me, it goes something like “we have created a forum where we know we are safe, but that our ideas are not”. I love this, I think it sums up the supportive and challenging environment that can create successful transitions.
4. Good Leadership is key
Jim and I discuss the role of good leadership and how that can play a role in ensuring that momentum is maintained during any transition,
Good leaders will be looking at and assessing how their next generation have performed during this crisis and whether that impacts on any planned transitions. This does not mean that they need to fundamentally change but it may have highlighted that some up-skilling would be required to make them a better leader.
5. The Generative Alliance
Having good advisers around during a successful transition is vital, having those that are experienced and understand family dynamics even more so and ideally you would also have advisers who show high levels of emotional intelligence.
During my chat with Jim we discuss the three legs to the stool of a Generative Alliance. These being
- The Senior Generation
- The Rising Generation
- The Non Family Adviser
Having the important conversations needed for a successful transition can be really tricky when you are part of the ‘system’ as such having a specialist facilitator working alongside you during this process can be invaluable. There are more and more specialist advisers available to family businesses who would be happy and willing to help. If you would like to work with me to help you achieve a successful transition in your family business, you can get in touch by emailing me russ@familybusinesspartnership.com.
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About Jim Grubman
Dr. Jim Grubman of Family Wealth Consulting is an internationally-recognized consultant, speaker, and educator in the multidisciplinary field of family wealth psychology. He works with affluent families and their advisors to understand how wealth and life can be integrated successfully.
You can find out more about Jim here: www.jamesgrubman.com
You can connect with him on Linked In here: Linked In
And on Twitter here: @JimGrubman
Video of the Interview
