As family business consultants, we are often asked, “How do you know if a family in conflict can be helped, or if they are headed toward either litigation or stagnation?” While there is no test of absolute certainty, we have identified a predictor of how likely a family might be to manage conflict in new and constructive ways: The Family Factor.
What is the measure of success for a multi-generational family business? Who should decide which path to take? are we learning the right lessons? and what is the balance between meddling and leading?
Amelia Renkert-Thomas answers these questions and discusses why public company models are not good guides for family business owners.
You’ve read the statistics: Only 30 percent of all family-owned businesses survive into the second generation and only 12 percent will survive into the third generation. Only three percent of all family businesses operate at the fourth generation and beyond. Even if you haven’t read Roy Williams and Vic Preisser’s 2003 book, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values, which gleaned these statistics from their study of 3,250 business-owning families, you’ve probably been served up the data by wealth management firms, private banks, and family business consulting operations seeking to persuade you that your family business is at great risk. “Do the right thing,” they say (invest more wisely, do your estate planning, form a family office, etc., etc.). Then, your business will continue generation after generation, and all will be well.
We here at Engaged Ownership don’t buy it.
NEW SERVICES ARE CHANGING THE LANDSCAPE OF FAMILY BUSINESS OWNERSHIP AND ADVISING
The Engagement Toolkit is a one-day training programmme designed to give family business advisors the tools and resources they need to work effectively with their family clients on governance design, succession planning, and multi-generational strategy.
MoreAtStake.com is a digital resource for family business owners and their advisors, offering essential information about family business governance, strategy, and succession planning through articles, videos, podcasts, and other resources.
Both are changing the way family business owners view their role and creating opportunities for advisors.
No family business—or family, for that matter—is without conflict. Conflict is endemic when people with different perspectives—owners, directors, managers, family—have different needs, perspectives, and priorities.
So, how can the next generation of owners deal with conflict and become engaged in business decision making in a way that sustains and builds the capital that has been created?