Family Business Advisor Collaboration


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This presentation will help attorneys understand the benefits of collaborating with psychologists who work as family business advisors.

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  • Transition: The demarcations here are clear, but they aren ’ t usually clear in real life. For example - if you asked a group of family members in a business, where do each of you sit, you ’ ll get some good discussion!
  • Each has different interests, and if interests ignored, CONFLICT. Transition: Each circle also has several systems associated with it.
  • Transition: Because the systems are so varied, the professionals needed are also varied, and truly call for a collaborative or integrative approach.
  • When have you collaborated with the other circles? Transition: Why bother doing the hard work of collaboration with family businesses?
  • Transition: Why are these so much more difficult in family businesses than non-family businesses?
  • Transition: There ARE things family businesses can do to make it work...
  • Transition: The reasons these transitions can be so difficult is because of the differences in how a family operates vs. how a business operates.
  • Transition: So how can we get these systems to work in concert?
  • Transition: There needs to be good boundaries between each of the systems
  • Transition: Why are these so much more difficult in family businesses than non-family businesses?
  • Family Business Advisor Collaboration

    1. 1. Family Business AdvisorCollaborationHow attorneys can be more effective with their familybusiness clients by collaborating with psychologistsKalli Matsuhashi, MA, Licensed PsychologistExecutive |
    2. 2. Why collaborate with a psychologist?• If you’re not concerned about the quality of a relationship once the legal action or work has been completed, don’t!• When dealing with families or people with an ongoing relationship, the quality of the relationship matters.• The more successful you are in helping your client maintain positive relationships, the more successful you will be in building a long-term relationship with that client.
    3. 3. Psychologists and family businesses• Many attorneys are already quite good at handling the “human element”• It’s time to call on the aid of a psychologist FBA (family business advisor) to help when: • dealing with the conflict or emotional issues goes beyond the scope of your professional competency • you are stuck • your client is stuck • you can see the rocky road ahead...
    4. 4. When should you involve them?• Ideally, at the beginning of the process (but it usually doesn’t happen this way)• In crisis (usually because of conflict between 2 or more family members)• Have at your disposal a list of trusted colleagues who can help you as the trusted advisor• Concerns about cost...
    5. 5. Assumptions about conflict - True or False?• People are fighting about what they say they are fighting about...• People want to solve their problems rationally...• Family members conspire - consciously or unconsciously - to sustain conflict because it helps them avoid something even worse.• Families often argue to distract them from critical issues.
    6. 6. The Conflict Cycle Unspoken, but shared fears Peace returns Conflict ignites Conflict subsides Conflict escalates Conflict peaks (too much conflict threatens relationships)
    7. 7. The Conflict Cycle Bob, 58, has terminal cancer, but hasn’t yet taken care of succession of the business. Anxiety about this for his The brothers sons is too cooperate (for a uncomfortable, and while) they pick a fight. For Dad’s sake, The fighting escalates, everyone agrees to the rest of the family calm down. chimes in. Dad yells and threatens, Mom says, “See what you’re doing to your father!”
    8. 8. The Conflict Cycle Bob, 58, has terminal cancer, but hasn’t yet taken care of succession of the business. Anxiety about this for his The brothers The real fear: sons is too cooperate (for a Dad will die, that That uncomfortable, and while) past conflict will tear pick a fight. they the brothers apart, that Mom won’t befighting escalates, For Dad’s sake, The everyone agrees able to function rest of the family to the calm down. chimes in. without Dad. Dad yells and threatens, Mom says, “See what you’re doing to your father!”
    9. 9. Working with family businesses• Many of your clients may be owners of or members of a family business• Intersection of the legal and psychological can occur with estate planning, succession, developing buy- sell agreements, leadership development, organizational growth, etc.• Each of these have accompanying emotional and relational effects and potential issues * Hilburt-Davis, J. and Dyer, W.G (2003) Consulting to Family Businesses.
    10. 10. Emotional issues• Estate planning: facing one’s mortality, fear of not having enough, uncertainty about values, tax benefits vs. family benefits• Succession: feeling useless, feeling old, fear of being pushed out, afraid the children won’t be as successful, concerned about financial reward, fear of sufficient income after retirement• Buy-Sell agreements: sense of fairness, fear of not having adequate funds for a buy-out, fear of what to do next
    11. 11. The 3-Circle Model for FamilyBusinesses Ownership Business Family
    12. 12. The people 1. Family members 2.Non-family, non-owner 3 employee Ownership 3.Owner, neither family nor employee 4.Family with ownership interest 5.Family employed in business 6 4 6.Non-family owners employed in business 7 7.Family with ownership 2 1 interest employed in business Business 5 FamilyEach will responddifferently tochange
    13. 13. The systems Ownership/Governance System Ownership Values/vision Legal structure Ownership transfer Board Family System Roles & relationships Family valuesBusiness Family Myths/mores conflict transformation Clarity of communication Business Management & Leadership System Mission & strategy Culture of the organization Org structure Compensation system Decision-making system
    14. 14. Advisors to the family business Ownership Lawyers Estate Planners Accountants Financial Advisors Family Business Family Therapists/Psychol Business/OD ogists Consultants
    15. 15. The good news about family businesses• Family businesses represent 80 - 90% of all businesses in the North America• They hold a tremendous amount of wealth, and have a 6.65% greater ROA than non-family firms• Independently owned family businesses (IOFB) contribute nearly 65% of the GDP and employ 62% of the US workforce• Outperform non-family owned businesses in shareholder value and revenue growth(Raymond Institute/MassMutual, American Family Business Survey, 2003
    16. 16. The bad news...• More than 30% of these family businesses survive into the 2nd generation, but only 12% make it to the 3rd generation; 3% to fourth and beyond• In a 2003 survey, more than half of the CEOs due to retire in 5 years had not yet selected their successor• 19% of the companies surveyed had not completed any estate planning other than a will• Only 37% had a written strategic plan(Raymond Institute/MassMutual, American Family Business Survey, 2003
    17. 17. Over and over...• It is the intangibles that cause failures*: • Family conflict and boundary issues • Lack of clarity about goals and values • Family communication problems • Family behavioral problems• * Habbershon& Astrachan. (1997) “Research Note Perceptions are Reality: How Family Meetings lead to• Collective Action” Family Business Review, X(1), 37.
    18. 18. Multigenerational succession success• Family meetings• Functional board• Strategic planning• Collaboration of advisors• *Adapted from Astrachan, J. and McMillan, K.(2006) “United States”, in Handbook of Family Business and• Family Business Consultation, Kaslow, Ed.
    19. 19. Recognizing life cycles• Are the life cycles and stages of development in or out of synch? • Individual • Family • Ownership • Business• Transitions = High risk for conflict, stress, problems
    20. 20. Family vs business systems Family System Business SystemEmotional system Task based systemMission is to nurture off-spring into Mission: produce profitable goods andcompetent adults services (effective strategy)Equality rules Competency prevailsAcceptance is unconditional Acceptance is based on objective performanceRelationships are permanent Relationships are temporary andPower: generational/birth order contractual Power is primarily based on authority and influence
    21. 21. Healthy family businesses - Ownership• Mission and goals are clear• Functional board of directors with outsider members• Sound plan for succession and transfer of ownership over the generations
    22. 22. Healthy family businesses - Management• Decision making based on knowledge and expertise• Responsibility and authority are balanced• Leadership is spread throughout the company/family• Succession is planned early• The organization makes use of knowledge to adapt to changing environments for sustainable, competitive advantage
    23. 23. Healthy family businesses - Family• Family members are able to resolve conflicts with support and trust• Boundaries between work and family are appropriate and respected• Communications are open and clear• Family is clear about goals and navigates toward goals• Family has good direction and leadership• Intergenerational boundaries are appropriate, respected
    24. 24. Healthy family businesses - Family (cont’d)• Effective procedures are in place for managing conflict• Decisions made by fair and effective processes• Guided by shared core values• Family council or other formal regular family meetings
    25. 25. Importance of structure & process• They play a critical role in long-term growth of company• Help companies get things done effectively and efficiently• Have an impact on succession• Regulate the interaction between family and business
    26. 26. Unhealthy family businesses• Poor communication, unable to manage conflict• Low trust between family members• Goals and values of the family are unclear• Lack of sufficient expertise - the family tries to do it all• Little thought to succession planning• There is not a functioning board of directors• Family issues spill over into business issues (and vice versa)
    27. 27. Entry points for intervention Family Business Ownership Goal setting Coaching Leave or stay Career planning Skill sets/goals Inactive shareholders Counseling/ Mentoring Stock ownership forIndividual coaching Executive coaching Performance reviews nonfamily and inlaws Conflict Role clarification Boards of directors Family role 360-degree feedback Board of advisors Family dynamics Education Ownership councils Boundaries Organizational structureInteractive Retirement Relational issues Team building Family councils Strategic planning Goal setting Family retreats Leadership Career planning Nonfamily members Counseling/ Compensation coaching System Professionalization of the business/firm Company culture
    28. 28. Types of intervention Emotional Role clarification Conflict Conflict management 360-degree feedback Family role Individual values Sibling team building Education Family dynamics Coaching/mentoring structure Organizational Self-esteem Boundaries Performance building Team Retirement Identity issues management & Relational issues Family relationships development for family Addictions issues Compensation & benefits Therapy planning for family Couples counseling Family council Business roles meetings Ownership structure Family retreats Balance sheet Career counseling Strategic planning Values-based Compensation strategic planning Performance Integrated Management succession planning Technical Skill development Team building Content Process