Assessing The Family System
A critical starting point for working with any family that is united by shared ownership of financial wealth or a business is to make an assessment of the family system, including looking at family culture & values, family expectations, family messages, trust, communication and decision making.
Boundaries
Good governance requires the creation of proper boundaries between Family and Business. The "family side" also needs its own proper forums (e.g. a regular family meeting or a more formal Family Council) for discussion of family issues. Good governance also requires making a clear distinction between Ownership and Management.
Family Leadership
Families need leadership, family champions and family elders. Family Leadership should be separate and distinct from business leadership. Family Leadership often requires quite different skills and qualities. The family leadership needs to provide the family with a clear vision of the future success of the family and of its individual family members.
A process for resolving conflicts between family values and business values
Business owning families and families united by financial wealth often need help to manage conflicts between family values (for example, their obligations as parents) and business or commercial values (e.g. their roles as directors). Conflict is a natural aspect of the complexity of an enterprising family system. Some conflicts can be resolved by governance solutions; some conflicts require learning new skills. Some conflicts are interpersonal in nature and require working with the family culture.
Passing on Shared Family Values
Shared Values help to keep a family united. Many families fear that the traditional Asian values that made them successful will not pass onto the later generations. Successful families articulate their shared family values and incorporate those values into the family governance system. Even more importantly, successful families will make sure that their shared values are enacted values, not just espoused values. They also accept that individual family members will have their own personal values which can be different from the shared family values.
Family Trusts need to be aligned with family values goals and objectives
Trusts and other legal structures need to be designed so that they will reinforce and support the family governance processes and the family goals and objectives. Many families value family harmony, and it is important to realize that this cannot be achieved through simply setting up an ownership structure. The ownership structure is valuable but it is also important to invest in the family culture and relationships. How can the family trust structure be used to invest in the qualitative capitals of the family?
Families need an ongoing strategic planning process for the family
There needs to be an ongoing, disciplined process for a family to plan strategically to manage and to grow its Human, Intellectual, Social, and Spiritual Capital. This could be the task of the family council or a family learning and development committee, supported by a chief learning officer. A tool that can be used to assess the growth in the qualitative capitals of a family is the family balance sheet (Hughes).
Creating Balance in the Family
Family unity and cohesion requires finding ways for all family members to participate based on their skills and interests, while allowing freedom to individuate and for individuals to go on their own journeys away from the family. Enterprising families have to learn how to manage polarities. They need leaders who can both engage and be assertive.
Successful family businesses need emotionally committed ownership
The emotional support and commitment from family member stakeholder owners is a special asset on the balance sheet of a family enterprise. On the other hand, the absence of interest and support from family member stakeholder owners is a sign of entropy. As such, creating educated, informed, committed family owners is another critical task. Where ownership is held in trust, then the task becomes ensuring there are educated responsible stakeholder beneficiaries.
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