The XYZ Company has been flourishing over the last 30 years. They currently have over 5000 employees and one foreign strategic partner. Begun about sixty years ago, the entrepreneur turned it over to his children to jointly manage in the 1950’s. They have done an excellent job growing the company into the largest company in their market. The role of the Chairman of the Board has been ably managed of the second generation for over 40 years but the second generation is aging. There are numerous individuals in the next generation, several of whom work in the business and already over 50 family shareholders. They called for assistance in creating an effective succession process and to maintain family harmony in the process.

 

The Strategic Initiatives Solution: We began by interviewing a number of family members and learned that the family has become increasingly alienated in the last few years. Several members stated that before they had Holiday Gatherings, but now they have none. There have been several large conflicts between family members and although there is no open feuding, it was quite clear that there was still a great amount of unhappiness between them. Although family loyalty remained high, many family members rated the amount of trust relatively low. Many family members were quite worried that the next generation would not be able to hold the family and business together as well as the last generation. In working with complex family systems we generally recommend a number of steps which include the development of a Family Council, Vision and Mission Statement, Family Seminars and a clear Succession Process.

 

First we suggested a Family Council. This subcommittee would be responsible for guiding the family through the Succession Process. It was composed of representatives of each family. They met on a monthly basis and became the forum for dialogue of various issues including succession, competitive businesses, and performance review of family members, conflicts of interest and other delicate issues. In this case the Family Council worked parallel to the Board of Directors taking the family conflicts out of the Board meetings. Second we recommended a series of Family Seminars for all family members. These seminars focused on the development of a healthy family business, the ingredients for success, communication and trust-building skills. Through careful facilitation these Seminars allowed family members to discuss difficult issues and begin healing the old angers and resentments that were blocking future progress. Third we encouraged a thorough review and assessment of the Board of Directors. In this case the Board was quite contaminated by the family dynamics. We helped the subcommittee come up with a structure to reform the board, a profile for new board members and performance standards for the Board. Next we helped the Family Council bring together a Shared Vision of the different family branches. We use a structured format to facilitate understanding of the organization’s and family’s values, purpose and vision of hoped for achievements. The Family Seminars gave the broad overview of the vision while the Family Council specified and articulated the vision in detail. The Shared Vision set the goal of family harmony and responsible ownership. We assisted the Family Council in writing a Family Protocol and agreement between family members. This agreement included such issues as: the buying and selling shares of the family business, involvement of spouses in the business, performance review of family members working in the business, qualifications needed for members of the next generation to join the business and a training and orientation program for members of the next generation who are interested in working in the business. As of this writing, all family members report that significant progress has been made in accomplishing their goals.