21 Jan Family + Business: It’s All a Matter of Balance
By Margaret Wilson, Tandem Partners & Ann Quinn, Quinn Strategy Group
It has been suggested that many family business problems stem from the inherent conflict between the distinct, yet overlapping parts of the family business system. Each part of the family business system – business, family and ownership – has a distinct set of needs, goals and structures. Some family businesses respond to this challenge by ignoring the emotional family components, while others disregard rational business processes in favor of family interests. In our experience, the most successful family businesses are those who develop a balanced approach to family and business.
Professionalization is one tool that can help family businesses maintain this balance. By “professionalization,” we mean adding professional business practices and structures. Some examples might include developing a more organized approach to family communication. Or developing policies related to family employment and compensation. Or putting a buy-sell agreement in place. As the family expands, maintaining a shared approach can become more challenging, emphasizing the need for professionalization. These and similar activities can initiate discussions about family and business interests, helping to balance the two.
Strategic planning is another tool for balancing business and family priorities. Strategic planning involves external and internal analysis of the family business. It causes the organization to look outside its customary way of conducting business. It can help preserve family traditions, while creating new vision and direction for the future. It can bring together family and non-family members. All of this helps to clarify priorities and promote the sharing of perspectives on business and family issues. Engaging in strategic planning helps the family overcome challenges, align their vision and increase their chances of long-term success and sustainability.
Outside perspectives also are critical to maintaining family business balance. Whether through a formal board of directors or the informal use of professional advisors, “outsiders” serve as an important sounding board. Those standing outside the family business can lend fresh perspectives and challenge conventional practices. They can help address controversial issues that the family may have had trouble discussing. Family businesses may hesitate to embrace outside perspectives due to concerns about family dynamics and conflict. However, an outside perspective is often crucial to managing the interaction of business and family.
No one formula can guarantee the success of a family business. However, adopting a professional, strategic approach and incorporating outside perspectives can significantly improve the chances of managing both family and business dynamics to the benefit of both.
For families in business, success is not just measured in fiscal years, but over generations. Yet often, leaders are so focused on the day-to-day that they aren’t able to step back and focus on the issues that impact long-term sustainability. We help leadership teams assess where they are now, where they’re trying to go and how they’re going to get there. Our expertise in the areas of organizational strategy, structure, process and performance is a unique feature of our work, and integral to our transition management approach.
Most leaders accept that at some time in the future, their time at the helm will end and the business will be given into the care of the next leader. However, just thinking about the transition can be daunting and overwhelming for the senior leader. If that weren’t enough, most owners experience their own succession just once. Tandem Partners provides the experience and professional guidance needed to move through the strategic, operational and interpersonal issues that are all a part of transition.