Every family leader should pose three questions to stakeholders

By Joshua Nacht, Andrew Pitcairn


We regularly meet family leaders who are concerned about how the upcoming generation is bonding, how family members are interacting and how wealth will affect family ties. They worry about how, and even if, the family will survive the inevitable challenges and make the most of available opportunities. Successful family leaders learn how to apply resources and open their minds to a range of perspectives. Above all, they ask deliberate and relevant questions.

Ask—don't assume

Family leaders should ask their stakeholders three important questions: Why, What and How. These questions help define a vision, develop the family and build a path to long-lasting and productive business-family relationships across generations. They also help identify anything that isn't working within the family structure, creating an opportunity to address concerns before they escalate.

As a multigenerational business family evolves from one relational stage to the next, its leaders must focus on opportunities and roadblocks facing the family. Whether families are already highly proactive or routinely responding to recurring tensions, there are common questions to put forth. These questions may seem generic and even simple, but it's surprising how often they go unasked. What can be particularly harmful is when leaders make assumptions about what family members are thinking or how things should be done. This can be a critical mistake. Assumptions degrade trust and disenfranchise family members, potentially causing them to withdraw from the family. Good questions, on the other hand, build trust, engage family members and seek diverse perspectives.

Every family's touchstone is the family vision: the summation of the highest aspirations the family can accomplish. Families must first determine what they are trying to achieve and then ensure family members are aligned in support of that vision. As families grow and evolve, they should explore what is important collectively and individually, and then work to develop their capabilities and resources to meet their many responsibilities.

Asking the right questions helps leaders and family ownership groups form a vision, develop the family and build roadmaps for success. This process engages family members, giving them a chance to express their ideas and be heard, and provides valuable insight into the family's tone and tenor. Effective family leaders ask Why, What and How? These questions help leaders guide their family to a prosperous future.

Why are we doing this work?

This question looks for the meaning behind proposed action. Depending on the state of the family and family business, the answers are likely to be very different. The Why lays a foundation for the family's overall approach to its mission. Being specific, transparent and inclusive in asking this question will elicit vital information about the family's state of mind, including the presence of different viewpoints and generational shifts. A complex, multigenerational family cannot truly understand its Why without being as inviting and inclusive as possible.

The Smith family is a third-generation family with 25 members, including spouses and grandchildren. The matriarch passed away years ago and the patriarch died last year, not long after the operating company was sold. As the family grew, members mostly followed the patriarch's vision and wishes; problems were largely unmentioned.

Suddenly, the family began to ask, "Why are we doing things this way?" While the patriarch led the family, they remained united behind his vision and practices, but they now question whether his is still the best approach for current circumstances. Some family members were uncomfortable even asking this question, as it raised feelings of disloyalty and betrayal. Others felt a need for change in order to give individual households more independence and self-determination, which they believed would foster a more harmonious relationship across the generations.

Asking the Why question gave the Smith family the freedom to express what was working and what was broken, allowing them to honor the past while looking to the future. It gave them permission to think outside the boundaries. For the Smiths, asking this question opened the door to a valuable process of introspection that gave rise to a renewed family vision.

What are we trying to accomplish?

At first blush, this may seem similar to the Why, but in reality it is quite distinct. "Why" is the search for meaning; "What" is the search for direction. The answers to this question are highly dependent on the stage the family is in, as well as leadership's awareness of particular challenges the family may encounter in that stage. Differentiating between what you want to accomplish and what you need to accomplish, and then tailoring the approach accordingly, can be vital to successfully framing a sustainable family system. Effective family leaders ask the What question as a fundamental way of addressing the complexity of a multigenerational business family.

The Lassers are a ninth-generation family with more than 150 members. The family is long removed from the original operating company. It is geographically dispersed and has vastly different wealth structures. Consequently, the degree of connectedness varies among family members. For years, the family struggled to maintain close ties and keep everyone happily involved.

The family introduced an advisory board decades ago, and this proved to be a useful communication conduit to gauge the family's pulse. The current chair was frustrated by the difficulties of connecting the family and decided to use the advisory board platform to open a dialogue. He created a questionnaire to be sent from the board to all family members asking for feedback about what was important to them as a family and what they saw as the role of the advisory board. Board members then reached out personally to all family members, including spouses, assuring them that input was appreciated and valued. They also took the opportunity to pose questions to family members, sowing the seeds for better connections.

In the end, family members were able to address the "What" question by being vocal and honest in discussing how they felt about being part of such a large and dispersed family. They indicated family connections were important, but not something they wanted to feel pressured into. They emphasized that formal efforts to gather the family should be infrequent and meaningful. These answers addressed what the family as a whole wanted and provided direction for family leaders.

How will we accomplish our goals?

The How question is the synthesizing question. How moves the family toward action; all the planning in the world doesn't make a bit of difference if the plan is left on a shelf. By asking "How," families can establish precise measures of accountability and accomplishment. Different families have different implementation mechanisms, including family councils, advisory boards or just a single family leader stepping up to initiate change. Regardless of the goals, real progress almost always occurs through meaningful engagement and investment of resources.

The Berg family is a fifth-generation, 325-person family that sold its 65-year-old operating company back in 2001, thus providing liquidity to the family.

Over the generations, family leaders had to address multiple changes in the family structure, from facilitating further liquidity needs to managing a large shareholder base. Fortunately, the family was proactive early on and established a family council as a communication and education platform to keep owners knowledgeable about the business and to give management and the board of directors a direct channel to family input. This helped leadership to better understand what the family was thinking and to know what was important to them, mitigating risk to the operating company.

Among the actions taken by the family council were:

• Identifying and educating family members interested in becoming a director, trustee or employee.

• Transmitting essential information on the family legacy and values to rising generations.

• Ensuring transparency regarding the operating company.

• Organizing owners' meetings and family reunions.

• Hosting educational events (on topics such as budgeting, investments and taxes).

Asking How helps move the family into an ongoing process of action designed to accomplish goals. This question must be continually revisited as goals are achieved and the family evolves. As with the rest of these complex questions and answers, there may be many paths to action. Gaining the perspective of as many family members as possible helps build the ability to integrate complementary points of view. Tangible action helps the family see that their work and input is being valued, and that progress is achievable. Effective communication leads to success

Communication can be a tricky topic, and many forget that communication is a two-way street. Asking the right questions helps bring everyone together. The core questions of Why, What and How engage the family in a deliberate, inclusive and collaborative process that helps the family create answers together. While asking the questions is the basis, it is through the art of listening that people feel valued, included and heard. How family leaders respond to the feedback is key to building trust and a sense of togetherness.

Leaders who ask thought-provoking questions understand the importance of two-way communication and help their family successfully navigate the transitions inherent in business families. Making a sincere effort to open lines of communication, actively listen to family members and build empathy are actions vital to a family's sustainability over the long term. Effective family leaders ask their stakeholders questions that are seemingly simple, though deeply meaningful. This greatly enhances the chance of healthy survival from generation to generation as a business family.

We recently had the privilege of speaking with a member of a third-generation family. He informed us that they contacted much of the shareholder base and asked a series of questions, all geared toward a better understanding of what the owners felt, thought and wanted. When we asked him how things went, he replied, "While we made no promises and offered no solutions, almost everyone universally voiced their gratitude that we were willing to listen. They felt valued." We call that a pretty good start.

Joshua Nacht, Ph.D., is a consultant with The Family Business Consulting Group and a married-in, third-generation member of Bird Technologies' board of directors (nacht@thefbcg.com). Andrew Pitcairn is the chairman of the Pitcairn Family Council (ad.pitcarin@pitcairn.com).

Copyright 2016 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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September/October 2016

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