Spotting the differences
Growing up, I looked forward to receiving the latest issue of Highlights magazine, the publication whose family owners are featured on the cover of this edition of Family Business. I would immediately turn to the Picture Puzzler page, a section that contains two seemingly identical pictures with a task to find the differences between them. Today, my two young daughters, who are now subscribers to Highlights, experience the same excitement when the newest issue of the magazine arrives. Like their father, they immediately turn to the Picture Puzzler page. Unlike their father, they can usually quickly spot all the differences.
Over the years, working with our great team to put together issues of Family Business, our handbooks and our Transitions conferences, I have tried to look for the differences that distinguish successful family businesses from unsuccessful ones. Of course, there is a large body of general business literature on this subject, including some of my favorite books like Good to Great, by Jim Collins; Scaling Up, by Verne Harnish; and The Hard Thing About Hard Things, by Ben Horowitz. Likewise, there are numerous books about how to improve family dynamics. These books frequently address ways to create a lasting values-driven culture that provides long-term value to the shareholders and other stakeholders.
Many of the successful family businesses we cover have recognized that the right advisers are key to helping both create a sustainable business and improve family dynamics. In addition to finding the best board members, choosing the right third-party advisers — such as consultants, investment bankers, financial advisers, accountants, lawyers and executive search firms — has become more critical in a time of increased specialization. All too often, for many family businesses, the selection of an adviser is done through very informal means and the decision shaped with minimal understanding of the differences among them, some of whom appear to actively strive to ensure their terminology is opaque. (Do we really need the many acronyms some advisers use, or are they just ways to confuse and shift the power dynamics?) Moreover, many family businesses struggle to understand the best way to conduct due diligence on potential advisers, question whether and when they should switch firms and wonder how best to ensure the myriad of different service providers work together as a team.
Family Business has introduced a new section, called “How to Hire an Adviser,” to help readers better understand the benefits of hiring different types of advisers and the different business models among them. The section, written by leading advisers in a variety of disciplines, also provides a list of potential interview questions to help ascertain whether the firm’s interests and goals align with yours. This issue features advice on hiring a compensation consultant from Bertha Masuda of Compensation Advisory Partners. Getting these “inside views” is incredibly helpful, and I’ve already used some of the interview questions in recent discussions with potential advisers. Armed with more knowledge, I’ve found it easier to spot the differences among service providers.
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