Beyond 'cohesion': Why terminology must evolve through the generations

By Joshua Nacht and Andrew Pitcairn

Families experience significant and sometimes difficult changes over the years as elders pass on and new family members grow into leadership roles. Amid such transitions, doing things the way they've always been done can be a recipe for disaster. What worked for a two-generation family with five members may not work when the family reaches the fourth generation and now involves multiple households, varying wealth structures, different liquidity needs and geographical separation. For business families to succeed, we suggest they embrace a continuum of language that more accurately describes their circumstances and thereby supports their communication and relationship efforts.

Language greatly affects the way people think, how they interact and how they move forward. Having the right words to describe natural, generational changes in family relationships can help members understand and embrace their family's evolution, creating new opportunities for growth and improving the family's response to challenges.

The word "cohesion" has become a hot term in the the family enterprise field. Family business researchers and advisers talk about family cohesion, emotional cohesion, financial cohesion and spiritual cohesion. These terms can be confusing. Complex multigenerational families evolve over the years, and cohesion may not be the most important goal at every stage of family development.

Below, we describe relationships in business-owning families through the generations, using a range of terms that reflect subtle yet important variations in how a family interacts. These stages occur on a continuum, and the concepts purposefully overlap. One term or concept does not necessarily start when another stops, and managing the transition from one concept to another is art, not science.

Generations 1 and 2: Unified

"We are stronger together."

In the early generations, the family unit is small and often unified around the entrepreneur, who has a strong guiding vision for the family business. The leader of the business is usually the leader of the family. Relationships remain close, and being unified is the obvious way to operate successfully together. Unity is defined as the ability to work together as a tight family unit to achieve success through a shared vision. Although families should expect varying perspectives and disagreement even at this stage, unity as an aligning force provides many benefits to the family. The G2 sibling group may also accept a unity perspective as the basis for their relationships, depending on how many siblings there are and the group's emotional closeness.

An example of family in the Unified stage is the Smith family, a 12-person G1/G2 family with an operating company and an active entrepreneurial patriarch. Mr. Smith has worked hard to build his business, has set up a foundation to fund his multiple passions and has done extensive, visionary estate planning with the help of professionals. At this point, Mr. Smith realizes the need to address succession and transition planning in both his family and business, and is in the beginning stages of forming a family council in an effort to include the opinions of his sons and daughters.

The family has an annual retreat to discuss business-related issues, philanthropy and how to move forward as an ownership group with potentially unequal ownership percentages. Mr. Smith is the driving force behind decisions for both his business and his family at this stage, and the family is unified behind his vision.

Generations 2 and 3: Cohesive

"We stick together for our common good."

For the next development stage, cohesion is a wonderful term to use. Cohesion is defined as making the intentional choice to stick together for the common good of the family. The family is growing across generations and is no longer a single unit; children are growing up in multiple homes with an accompanying divergence in values, relationships and experiences that dramatically increases the complexity of family dynamics. As the range of perspectives and values expands, more frequent and meaningful disagreement is to be expected. The business may not be able to provide employment for all family members (nor do all family members want to work in the business), so the group of non-participating owners grows in size and significance.

These factors prevent family relationships from being "unified." The family's thinking and language must shift to emphasize how this more complex and diverse group can stay together. Cohesion works as a concept at this stage because it describes people who may be moving apart physically or emotionally, but purposefully maintain the bonds and relationships that perpetuate the advantages of a business family. At this stage, exploring what emotional, financial and social cohesion mean to the family can be informative and productive.

The Dunn family, a 43-person G2/G3 family, has realized the need for a more inclusive model as family members have increased in number and moved apart from each other. The focus has transitioned from a patriarchal view to a perspective of keeping the family cohesive and involved. They have a highly functional, nine-member family council that puts out a monthly newsletter and helps organize the annual five-day family camp. To encourage wide participation, the family has established various task forces made up of three to seven family members. These task forces focus on family vision, concerns, policies and education, reporting their findings to the family council. The family, which places a premium on communication, realized the current (millennial) generation was not reading emails but does use social media. As a result there is a social media policy in place, and social media are used to funnel information. The family is inclusive across branches and generations and shares a goal of building a cohesive ownership group to steward their successful business.

Generations 3, 4 and Beyond: Connected

"We choose to participate."

In the third and fourth generation and beyond, the family has grown in size and complexity and typically incorporates a wide range of values, wealth, wants and needs. Multiple generational perspectives also mean family members will see the family and its enterprise in a variety of contexts shaped by different worldviews. Because of the family's exponential growth, cousins of similar ages could be of different generations. As the family spreads geographically, cousins may grow up not knowing one another. Generational shifts may mean wealth structures are vastly different from household to household. Family dynamics can be quite complex, as the family tree now includes a number of different branches. Disagreements may have caused long-standing disconnects among various relatives. Segments of the family may have chosen to sell their ownership, under circmstances that could be amicable or acrimonious. The group of non-operating owners may well have majority ownership of the family business, or business leadership may have been transferred to non-family managers.

At this point, the family must consciously decide if and how members want to be connected. The concept of connection allows for greater choice and freedom in how people relate to one another. By the third or fourth generation, family ownership typically cannot be described as "cohesive" because the family itself is simply too large, complex and diverse to hold everyone together. Trying to maintain cohesiveness among a large G4 family ownership group may actually be detrimental because the concept doesn't allow for the differences that must be embraced at this stage. Connection, on the other hand, encompasses the ability to maintain close relationships if desired, or to be more distant yet still engaged. Connection, distilled down, implies that everyone has a say on if and how they want to be connected—without judgment.

An example of a connected family is the Watsons, a G8, 150-person family who sold their successful operating company years ago. They have a family foundation, but no one lives in the original hometown, and their geographic footprint is large. They realized that while trying to stay cohesive simply wasn't possible, they needed to remain connected. Among the important questions they asked themselves were:

• What does it mean to "be together"?

• What is the value of "getting together"?

• What is the value of doing good work together?

The family believes in the old adage, "A family that plays together stays together," and they use this approach to remain connected. The family has a destination reunion about every three years; about 120 people attend. They also encourage "mini-gatherings" in places near locations where clusters of family members live. They produce a newsletter, circulated twice a year, that focuses 50% on the family and 50% on the family foundation. Many believe that the shared interest in the foundation is what will continue to connect the broader family. Finally, they realize the need to become digital and have started to build an online family tree, adding video and pictures and depicting family members' hobbies and professions. All of these approaches are aimed at keeping the family connected even as they grow in size and location.

What is best for your family?

Unity, cohesion or connection? What's most important is that families take notice of the words they are using and embrace the concept that works best for their family's current circumstances. Be sure you are engaging in a meaningful dialogue about your family relationship dynamic. We encourage families to put serious thought into their specific dynamics and what they are trying to accomplish. Using appropriate words and concepts will help family members understand how they can best relate to each other, which we believe will lead to more favorable outcomes for the family and family ownership group.

Being adaptable, creative, attentive and, let's face it, a little humble goes a long way in the ongoing process of family development. Successful business families continually re-evaluate themselves and embrace a spirit of evolution in their thinking. A good friend once said, "It's not about best practice, but rather practicing what is best for you."

Joshua Nacht, Ph.D. is a third-generation, married-in member of the board of directors of Bird Technologies, based in Cleveland, and a second-generation owner of a real estate development and management company in Edwards, Colo. Andrew Pitcairn, a fourth-generation member of the Pitcairn family, is the chair of the Pitcairn Family Council.

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