The added dynamic of family issues imposed on a business can present unique challenges that you may not have the time to address.
The case studies included in this section highlight some of the challenges that entrepreneurs and family business owners face and the steps our facilitators took to help business owners clarify their goals, develop a clear road map for success and implement solutions to meet their objectives.
Succession
Case 1: The communications contractor
Jack and Emily have built a successful communications contracting company. They have three children — Mark, Lisa and Brittany. Mark and Lisa are both currently studying at university. Brittany is much younger than her siblings and is still in grade school.
Jack's perspective
Jack would like the business to be passed on to his children. Jack would like to retire in ten years and believes that there is equal opportunity for Mark and Lisa in the business. He hopes that Mark and Lisa will do what is best to take care of Brittany.
Emily's perspective
Emily wonders whether there will be any future opportunities in the business for her younger daughter.
Mark's perspective
Mark wants to finish university, find a trade and become involved in the business. Mark has expressed an interest in working together with Lisa in the business.
Lisa's perspective
Lisa wants to finish her degree in economics and gain business experience. She is not sure whether she would like to be involved in the business. She feels that Jack shows favouritism to Mark because he is the oldest.
Process:
In individual meetings with Jack, Emily, Mark and Lisa, each of them had the opportunity to say what was on their mind, and give their own perspective, without fear of repercussions. In the facilitated group meeting, a variety of issues were discussed, including the short and long term objectives of the stakeholders, the family's ownership and management succession planning objectives, grooming of potential successors, motivation and retention of key employees. A meeting summary and forward work program was then prepared setting out a summary of the discussions and what actions then needed to be taken, by whom, and within what time frame.
Outcome:
Family members' needs were identified and a plan was devised to satisfy their objectives. A succession timeline was created to show what steps had to be taken by when in order for Jack to be able to retire, and the successor(s) to be ready to take over, in ten years. A family participation plan outlined guidelines for family participation in the business and informed family members about what to expect and how to prepare for entry into the family business. A domestic agreement policy was put in place to protect the family's ownership of the business in the event of a family members' marriage breakdown.
Communication
Case 2: The window manufacturer
John has built a successful window manufacturing company. He has three children. Two of them, Tom and Kate are involved in the operations of the business. The third, Brenda, is a dental hygienist and not active in the business.
John's perspective
John wants to reorganize the business to take advantage of some tax opportunities. He claims to have a succession plan in place, under which Tom and Kate would manage the business under a co-leadership model. All three children will receive equal shares of the company.
John advises that there is good communication among family members. All are aware of the plan. Apparently John makes business decisions in collaboration with Tom and Kate.
John is proud to leave his empire to his children. In the event of sudden death, John has asked a close advisor to assist Tom and Kate in the transition.
Tom and Kate's perspectives
Neither Tom nor Kate wants to be in the business, but both are reluctant to tell their father because they do not want to disappoint him. According to Tom and Kate, John has control over everything and all decisions are made by John, without consultation with either Tom or Kate.
Tom and Kate feel that they are neither adequately trained nor prepared to take over the business. Because of John's controlling nature, they do not see the opportunity of ever being groomed to run the business. They wonder if selling the business is an option but worry about where they would work if there were no business.
Tom and Kate feel that John is leaving them a mess. They have no idea what will happen in the event of John's untimely death.
Process:
Through individual meetings, the facilitator was able to determine that the objectives of the family members seemed to be at odds. While Tom and Kate said they didn't want to be in the business, they only felt that way because of their concern that they would not be properly trained to run it. Through facilitated group meetings, the family members began to communicate effectively and, as a result, were able to begin tackling their issues.
Outcome:
As a first step, to facilitate a smooth transition of the business and to give family peace of mind, a contingency plan was devised for John, which set out what was to happen in the event of his unanticipated death or disability. A management development plan was prepared, which outlined the career paths of family and non-family managers to fill the company's projected executive staffing needs in the future. Tom and Kate also developed personal development plans, which set out their individual goals and actions to be taken to achieve those goals in the upcoming years.
Governance
Case 3: The auto dealer
The founder and other family members agreed to sell the family business and live off the proceeds of sale. They wanted to ensure that once the business was sold, the family members would not lose touch. They also wondered how they would be able to manage all of their financial assets.
A family council, which provides a regular forum for open communication, was formed, to help nurture family relationships, avoid misunderstandings and conflicts and to allow the family to work effectively towards the common goal of ensuring the success and preservation of the family and its wealth. In addition, a family office was established, providing a central source for information on, advice about and oversight of all of the family's financial matters (integrated financial services).
Strategic Planning
Case 4: The real estate developer
George had spent 40 years building a successful real estate development company. His daughter, Maureen, was being groomed to take over the business. To assist Maureen in establishing a leadership presence in the business, George, Maureen and other members of the senior management team undertook a strategic planning process.
At an off-site location, the facilitator worked with the group to determine their values, future vision and current mission of the organization. After assessing the internal and external environmental factors affecting the direction of the company, the facilitator assisted the group in brainstorming ideas and developing goals and strategies. The goals and strategies developed allowed George to take a less active role in the future of the organization and required Maureen to step up and demonstrate her ability to lead the company.
Change Management
Case 5: The electronic components designers
Demand for their unique electronic components had grown to such a capacity that the team of designers was not able to keep up with the demand given the restraints of their current facility. Due to lease arrangements, neither moving locations nor expanding the existing building were possibilities. The management team decided to implement a modified work schedule that would allow for two shifts. Management left it to the employees who were going to be affected to put forward recommendations on a shift schedule.
Process:
The employees elected a representative committee to work with facilitators. Facilitators assisted the committee in brainstorming ideas and thinking through options. We designed and distributed a questionnaire to the employees seeking feedback on ideas and other considerations to take into account.
Through a series of facilitated discussions, the committee determined the most appropriate schedule and put forward a list of recommendations to the management team.
