Separating Family Governance from Business Governance

A client recently told us, “The younger generation is just too busy. It’s hard to get everyone together for family meetings.” Another client said, “We used to meet annually. They were great meetings. But we skipped a year due to scheduling conflicts. It’s now been four years since our last meeting.” A third client told us, “We don’t really hold family meetings. We spend a week each year at our vacation home. That’s basically a family meeting.” These recent conversations are a helpful reminder that, from time to time, it pays to revisit both the why and the how of family meetings . Why do we hold them? And how do we make them meaningful? Let’s explore. Why hold family meetings An annual family meeting is a conscious choice: To be intentional rather than reactive To be connected rather than merely adjacent To be aligned instead of drifting Core reasons families choose to plan such a gathering. Legacy . Let’s define our future legacy and do all we can to put it in place. The money you leave your children is only half the story. Your children themselves – their character, their relationships, their actions – are the other half. When a family gathers to review its vision and values, it is shaping the culture and character of future generations. That intentionality compounds over decades. Celebration . When preparing for the meeting, organizers should start by asking, “What are we celebrating?” Recognize accomplishments. Highlight milestones. Tell stories of growth, resilience and generosity. If you can’t build a meaningful list of things to celebrate each year, you aren’t looking hard enough. Celebration reinforces a powerful message: we are not just related; we are in this together. Building Relationships across Generations and Branches . As a family grows into the third generation and beyond, intentional time together becomes critical. Cousins do not naturally develop deep bonds without shared experiences. Shared values and experiences will keep a family together when money, business decisions or differing perspectives create tension. Strong relationships are the real glue. Communication . Most family conflict does not come from bad intentions, but from unmet (usually unspoken) expectations. Family meetings create space to discuss assumptions, values and expectations before the family is in crisis mode. They also create a structured opportunity for quieter members to speak up rather than deferring to the loudest or oldest voice. When done well, the meeting becomes preventive maintenance for family relationships. Family governance . Larger families have formal governance mechanisms, while smaller families tend to rely on informal ones. Family meetings are a natural time to communicate what is happening, evaluate what is working, and clarify roles and responsibilities. Clarity reduces friction. Create shared experiences . This might be bringing in an outside speaker, watching and discussing a TED talk, or having everyone read a book beforehand and discussing it at the meeting. Shared intellectual and emotional experiences shape family culture. They create inside jokes, shared language, and common reference points that endure. Family history . Re-tell the stories. How did the business start? What risks were taken? What mistakes were made? What almost didn’t work? These conversations allow the older generation to pass on wisdom while they are still here and give the younger generation a chance to ask questions while answers are still available. Stories have the power to shape identity as well as share information. Have fun . We all want to laugh and have fun. If the meeting isn’t enjoyable, no matter how productive it is, members will find excuses not to attend in the future.

A family office embedded in the business can be cost-effective & manage risks to the family. Here is how to manage some challenges of an embedded office.

Is your family office successful? Learn how to evaluate family office performance, define meaningful success metrics, and identify signs that may warrant an independent review.

Families considering a family office must weigh complexity, cost, and control. This article explores when forming a family office makes sense and when it doesn’t.

Why should I allow an outsider to review my family office? This is a key question we frequently encounter. One of the primary purposes of your family office is to maintain the privacy of the family. If you allow someone to spend time in your office, understanding the services, processes and procedures, then you are giving up elements of that privacy. Why would you do that? What could the family office gain? A better question might be, “what do you have to gain?” Could there be risks or gaps that you haven’t thought about? Are there holes in your control processes? Could you better serve the family by bringing some services in-house, or perhaps by outsourcing something you currently do in-house? What additional services might you consider providing for the family? Are there ways to deliver your services more efficiently or effectively, perhaps allowing your team to expand their offering? Do your reports to the family provide them the information they want and need? Are you effectively using technology? And, not to step too hard on your toes, but when you changed your bill pay and approval processes during the pandemic, did you look at your controls to ensure they are still relevant and effective? If fraud were to occur, where is it most likely to happen? What is a family office diagnostic? We have worked with a wide variety of family offices over nearly 20 years, and are often challenged to come up with creative ways to add controls (e.g., how do you segregate accounting duties in a one-person office?) or enhance an offering. A family office diagnostic shows how your office compares to other family offices, gives you a quantitative grade, and most importantly, provides a series of recommendations for how to improve the office – risk management, effectiveness and efficiency. Such a diagnostic can be a great prelude to creating strategic plans , as you prepare to service the family’s next generation or consider technology upgrades. As for the privacy issue that we opened with, we zealously guard the family’s privacy; our continued business depends on our discretion. Please reach out and let’s discuss a family office diagnostic.

Over the years, I've really enjoyed working with the various people at Family Business Magazine, and am honored to have another article published in the current edition. I've had many questions over the last few years about how family businesses should make distributions to owners, and I finally wrote my thoughts on the topic. Being thoughtful on this topic, involving the various family owners in documenting philosophy and approach, can go a long way toward building family harmony. I hope you enjoy this article.  Please reach out about creating a vision and strategic plan to support your legacy.

One of our family business clients recently asked for a benchmark or assistance in setting an amount for charitable giving from the business. What a great question! The challenge is that family businesses have such different goals, values and approaches; it is difficult to compare them to each other. Most family businesses are at least doing nominal charitable giving, such as sponsoring youth sports and local schools or perhaps in-kind donations of whatever product or service they provide. Many family businesses do this without tracking them or even much thought. When it comes to larger donations, businesses have to think about why they are making them. Some businesses make donations as public relations, perhaps instead of advertising and marketing. These businesses may have larger donation budgets than others, as it combines marketing with charitable desires. Some businesses make very few donations, explaining that they distribute money to owners and encourage them to donate personally. A few family businesses we know have used the Biblical-tithe as a rule, giving a tenth of their net income, either donating in-year or perhaps setting up a foundation or donor-advised fund. Some businesses set a fixed amount annually, based perhaps on what they did in the past or a number that “feels” right. Other businesses choose to make donations in particularly good years, or perhaps when they sell a line of business or a particular property. One conversation we’ve held many times is about how important it is to ensure that donations from the business match the family’s shared values while ensuring they support (or at least do not detract from) the business’ goals. In other words, if a donation could lead to bad social media or alienate groups of customers, or if perhaps the recipient organization only matches the values of a subset of owners, then the business should not make the donation. Focus on where the family and its values are in alignment, and ignore the areas where they disagree. None of this musing answers our client’s question about how much they should budget for charity each year. We would love to hear from you on benchmarking charitable giving – how has your family business set amounts for such donations? Please reach out about creating a vision and strategic plan to support your legacy.

In working with families, family businesses and family offices on their vision and strategic plans , we’ve long discussed how the vision and values should identify where to focus your efforts and attention. Many times, we’ve looked at business opportunities and evaluated whether they aligned with the family’s values, as well as their vision. We’ve targeted investments, new businesses, philanthropic initiatives, succession plans, training programs, and much more based on their desired future-legacy. This has been a clear benefit of knowing who you are, where you want to go, and what is important to you. You can choose to change your vision, but don’t operate outside of it. As I created the vision and values for Big Canyon Advisors, I was reminded of another benefit to having a clear vision and purpose: providing boundaries about what not to do. I am focused on inspiring families to achieve their legacy for the next 100 years; spending time on activities that don’t support that vision is a distraction, limiting my success. Recently, several people have approached us about referral opportunities with good, solid companies. However, while such arrangements could be profitable for the business, since they are not within the vision (and are potential conflicts of interest), we have declined these opportunities. Our vision statement has helped us understand not just where we are going, but also where we should not go in order to stay on track. Having a clear vision and strategy for the family and business keeps us moving toward our goals, while also providing boundaries to help us say “no” to things that could distract or waylay us on the path toward success. This is just as true of the families, businesses and family offices with which we are working. Please reach out about creating a vision and strategic plan to support your legacy.