The theme of the Transitions West 2012 conference, which took place in November and was sponsored by Family Business and Stetson University, was “Ownership, Management and Entrepreneurship: Building Family Legacies.” Conference sessions focused on three important ways to build for the future: (1) Develop a comprehensive governance plan; (2) Establish a family council to foster collaboration among the extended family; and (3) Teach financial literacy to your next-generation members, and encourage them to be entrepreneurial.
January is an appropriate time to start planning. The new year brings new opportunities, new goals and, perhaps, a new vision. As one family CEO put it, “An organization’s ultimate purpose is to aim for immortality, to create a community that will last not only through your lifetime, but that of your grandchildren.” If your company has already developed a mission statement and a vision statement, take these documents out of the drawer, dust them off and renew your commitment to the family values—or, if necessary, revise the text. If you have not formulated these statements, sit down with your family members and outline what is important in your lives, your business and your community.
Think about how you will bring the next generation aboard. Do you have a family employment policy, and have you structured a comprehensive shareholders’ agreement? Have you given thought to mentoring the next generation? Now is the time to consider how you will prepare your young people for leadership and teach them about wealth management and values.
Another suggestion put forth at the conference was to produce a family history. Writing down the family story helps future generations understand how the company was built, who was involved and what the underlying values are.
Several owners of large family firms described their leadership programs for next-generation members, including internships, summer “family camp” experiences, one-on-one mentoring and junior board membership.
Arne Boudewyn, managing director—family education and governance at Abbot Downing, said the two most difficult issues for family businesses are “resolving conflicts among family members who are in the business, and formulating a succession plan.” A key word here is plan, and the sooner the better. Family councils, among other governance structures, provide a forum for families to discuss leadership criteria and the succession process.
The new year is the perfect time to renew your commitment to your family business. My recommendation is that you resolve to develop or refine your family governance plans. This will help you to more smoothly navigate the challenges that lie ahead.
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