Family business practitioners see the investigation of differentness family to family and detail to detail as the heart of today’s practice. When it comes to family business there is no “identikit.” No off the shelf package will sort out the identikit governance and succession problems of your family business clients. Each family differs down to your last incisive question that uncovers the particularity at the root of its challenges. David Harvey explains more. Family business practitioners see the investigation of differentness family to family and detail to detail as the heart of today’s practice and this requires new techniques and competencies. Your practice needs not just core accounting but also access to coaching, psychological, management, family law, wealth management, mediation and counselling skills to provide a tailored governance solution focused on the dynamic of each family. There is an alternative; you may be the adviser whose prognoses required the engagement of a more expensive adviser to undo the damage. The Family Dynamic A client review for a new family client seldom goes beyond the business fundamentals. Yet in family businesses there is no decision untouched by the chemistry of family – the big things in life – the family ethos, myths and history, passions, duties, friendships, values, convictions and personalities. Family businesses are shaped by families and so should that new client review be. The best of the men (and women) of affairs at the shoulder of business patriarchs and matriarchs have always known that the feud between two arms of the family may be about business outside but childhood jealousies and rivalries inside. “Our parents sent you to INSEAD and brought you back to run half the business – I learned top to bottom”, as a second son put it to me, will perhaps shape family dynamics for 50 years. Taken this way contract terms and discounted cash flows can become lesser considerations than narcissism and ego. Do you feel capable of discovering and negotiating with these issues? Can You Enlist Someone Who Can? Over the last 25 years family owners and advisers are more willing to face, discuss and learn from family truths and to consider family and business together to shape their responsibilities and responses to both. Yet even in economies such as India where the importance of family business is recognised, the recognition of family/business interaction is merely dawning. The right answers, competencies and networks are still a question mark for many advisers. A Little Knowledge Is Dangerous And so is the temptation to offer packaged solutions, where family or advisers read an article like this, or pick up a book and call for an off the shelf family constitution, family office or family Council as a magic bullet to solve problems. This misses the point. Without deep family introspection, discussion and the building of trust and communication empty structures achieve nothing. Yes, handling issues of family business governance and succession does require a tool kit of structures. It needs good knowledge of the application of trusts, international law, family law, foundations and tax. Most of all it requires knowledge of the interaction of the technical and the personal; the latter being the trained capacity to coach and mentor family business members by asking the right questions that bring families to communicate honestly and constructively about the future. The Indian Family Business Environment Worldwide the picture is partial, but “in Asia in general, no comprehensive picture is still clear on most aspects of family business” (K. Ramachandran – Indian Family Business: Their survival beyond three generations – Indian School of Business Working paper series 2005). Yet some 71% of listed Indian capital is family owned and that suggests that an even larger proportions of private business is too (S. Chakrawertti, Families aren’t such a bad deal, Commentators worldwide agree that family commitment to the long term, to family members and to community is a great strength often building greater profitability. Equally whilst little is known about survival rates for Indian family business, commentators agree that, everywhere they carry the seeds of their own destruction. The old saying “shirt sleeves to shirt sleeves in 3 generations” has much truth to it, perhaps 5% survive to the 4th generation. Crises of succession terminate many enterprises; the wrong heir; fighting heirs; unprepared heirs; heirs who did not want to inherit but wanted to be anything else; founders who die without any plan and leave heirs clueless about the business; founders who retire in name and within 18 months come back. In today’s India, with a more open and competitive economy even a shared decision between the generations can be fatal as markets change. Equally, validly many families decide rationally that the business is no longer for them and sell to everyone’s benefit. The worldwide GLOBE model study of societies (GLOBE Study of 62 Societies, Sage, 2004) was applied to south Asia as one of ten family business cultures. This work assesses the nature of family involvement in the business, provides pointers for the adviser and owner assessing their situation and so suggests culture specific issues and methods for structuring, managing and advancing family involvement (Culturally Sensitive Models of Family Business in Southern Asia – Gupta, Levenberg, Moore, Motwani and Schwarz, ICFAI University Press, Hyderabad 2008). The GLOBE data highlight particular governance and succession circumstances in India. A foremost feature is the joint concern for the wealth and welfare of the family, often expressed in the Karta system. As yet, though, there is little formalisation of this characteristic in governance save in the larger Indian dynasties. Jay Hughes’s book Family Wealth: Keeping It in the Family” is a useful introduction to that formality (Bloomberg 2004) as an inspiring tool kit for the advancement of family business and wealth. For Hughes wealth is not money but the developing aims of the family and the emotional and intellectual capital shared between them over decades, which will include stewarding and building wealth but also the personal aspirations of individuals and the family. If families can use their human and intellectual capital to their fuller potential, then the business has a vastly better chance of surviving – and growing. Hughes’s proposed and other governance structures are gaining familiarity: family meetings, facilitated for the honest discussion of difficult and substantial issues a family constitution of rules governing how business and family interact, including a framework for employment and recruitment into the business, the role of outsiders and the structure of ownership and succession succession plans to structure the change in generation creating a family’s mission statement structure for reporting the family’s human and intellectual capital on the Family Balance Sheet and a Family Income Statement – for instance accounted for in a family balanced scorecard clear definitions of roles and responsibilities the development of a family office as a centre of management for the family rules covering marriage, nuptial agreements and divorce and the impact on ownership; increasingly significant as families globalise These structures are only a means to and end; it is the work that families do together to create them through effective communication, mutual understanding and respectful agreement on the future that matters. Have family members worked hard? Are family members just signing a piece of paper or will they really commit? If the former then the family will need one lawyer to design a structure and a more expensive one to get them out of it. The second major feature of the GLOBE study points to the better educated next generation Indian family members offering challenges as well as opportunities. They want faster change, will draw in many more experiences and influences, will have often worked elsewhere and are unlikely to want to wait. They may drive profitability and expansion. Equally, tensions between generations may cause severe damage. Ramachandran suggests that the success of the few 4th generation Indian families is founded on focus on long term family wealth that averts green field risk, but diversifies and experiments with caution. The process of bringing the next generation into the business should take years, with a careful education emphasising responsibility and choices for the next generation and respect and recognition for the older one. Research by Professor John Van Reenan (Keeping family-owned firms family-run from one generation to the next can be bad for business, Bloom, Nick and Sadun, Raffaella and Van Reenen, John LSE2011) demonstrates that succession selection should be on merit, not primogeniture otherwise poorer performance is a norm. Today India’s business families have a greater global presence. To best support them as families short courses, articles and books (for instance Ivan Lansberg’s Succeeding Generations or Randel Carlock’s Strategic Planning for the Family Business) are a useful introduction. There is now a much wider access to family business professional development. Advising families in business on governance and succession is as specialist as taxation, treasury or forensic accounting. Gaining the necessary competencies should be taken as seriously by any firm wishing to increase the wealth of family clients. Skills gained, in the family business advisory discipline, nothing beats practice to analyse and support the individual circumstances of each family. Remember where we came in, no family business is identical. Reproduced with permission of the Society of Trust and Estate Practitioners www.step.org

Martin and Tracy Hamilton are the owners of Mash Direct, a family-owned farming and food production enterprise launched in 2004 in County Down, Northern Ireland. With six generations of farming expertise, Mash Direct provides quick-serve vegetable and potato dishes to local and UK markets. In this video they discuss how they run their family business along with their sons Lance and Jack, sharing their insights into how they combine their individual skills to create an award-winning business.

There comes a time when most families seek to sell their business, whether it be five years after its creation or two hundred years. The main reasons for the sale of a family business are usually retirement and/or lack of succession, but sometimes a strategic buyer makes an approach and the family is simply tempted to cash in. So, even if there is no immediate plan to sell, it’s usually in the family’s best interest to have the business in a sale-ready state at all times. How the family operates the business has a major impact on its saleability and ultimately its value of sale. Here, Natalie Wright , Head of Family Business at Mazars shares ten tips that will help achieve maximum value as well as a smoother process: Keep your customer base as broad as you can. Concentration amongst only a few customers increases risk and damages value. Consider your customers and customer relationships carefully and lock them in contractually. Long terms relationships with customers, enhanced further by forward visibility through contractual tie-in, gives buyers confidence that they will continue to buy from you. This adds to value. A churning customer base or a need to continually win new customers is a devaluing factor. Ensure that there are others in the business that are involved in the key customer relationships and general activity within the business. A buyer will want to see a sustainable business that can continue to operate once the family exits. If not, they are likely to tie you to the business longer term and will want to pay for the business over time rather than in cash up front. Lock your key people into the business. Whether you sell or not, these are of high value to you. Share schemes are a great way of doing this and incentivises the employee to help you grow the business. An EMI (Enterprise Management Incentive) share scheme is HMRC approved, is attractive to employees and is very tax efficient for the employee and the business. Manage your working capital carefully. Too much cash tied up in stock and debtors can be unattractive to a buyer and seldom adds to value. Cash sat in the bank definitely adds to the value. Take tax advice on the ownership structure of the business. Although rules changed recently, Entrepreneurs Relief still exists. Better to be taxed at 10% on the sale than 20% if you are able to. Leave it too late and you miss the opportunity. There is also pre-sale planning that may only be available to you if you action it before the transaction and where you have a sizeable legacy, it is important to protect it. Ensure that you prepare good quality financial information at all times. A buyer will expect to see this. Make it easy for them and keep it updated. Speak to others that have gone through a sale process to understand how the process worked for them and what they would have done differently with their business if they had the opportunity. It’s important to go into this with your eyes open and to maximise the opportunities and limit the risk. Think through the cash needs for you and your family for the future – get a personal cashflow forecast. Can you afford to sell now? What price would you need to get for the business to make it work for you and is your business worth that? Knowing your number can help once you get into negotiations as you can have peace of mind in knowing what you need to meet all of your objectives. Keep your premises clean and tidy. First impressions count. It is amazing what difference a coat of paint can make to the appeal of a business to a buyer. So, even if a sale is not on your agenda right now, it pays to be ready and to know the options. The above are good business practices anyway and you never know when someone will come knocking on your door. It is usually when you least expect it.

Family businesses benefit by leveraging knowledgeable senior family leaders with innovative members of the next generation. Research shows that family business protégés — the incoming younger generation — report being most satisfied with mentors who were “still directly involved and active in their family companies rather than retired.” Those same protégés wanted a mentor who seemed invested and interested in their personal development. Mentoring is a critical issue for sustaining a multi-generational family business. Guidance has to be given to younger, less experienced workers. More importantly, the next generation of leaders needs to learn what it means to run a business, juggle employee personalities, and make difficult decisions. Fortunately, many family businesses already have the resources to solve this problem themselves. If a family business stays around long enough it is going to have seasoned members who become less active (on one hand), and it is going to have younger members who are more innovative and tech savvy (on the other). For senior members in particular, this mentor-protégé model creates a dignified process of passing the torch from one generation to the next. Leveraged the right way, these two groups can partner up to improve the chances that a family business survives for years to come. The Co-Mentoring Model Pairing an old industry veteran with an upcoming practitioner pre-dates modern businesses. Feudal systems relied on a master and apprentice to keep trade secrets alive over many generations. Today’s co-mentoring model improves on the traditional model, thanks to advances in the understanding of human psychology. Co-mentoring uses the gifts, talents, and understanding of both mentor and protégé. Instead of a rigid, hierarchical relationship between master and apprentice, each is co-mentor to the other. Seasoned family members stay active and can counsel the young about business practices and professionalism, as well as pitfalls to avoid. Younger family members receive crucial advice while bringing new ideas and innovative processes to their elders. Family And Tradition If you investigate successful family businesses, one recurring theme you’ll encounter is a sense of pride and understanding of family values. With the help of a co-mentoring process, older family members can impart that pride and understanding to the next generation. When McKinsey & Company published ‘The five attributes of enduring family businesses’, it noted that multi-generational businesses “make sure to permeate their ethos of ownership with a strong sense of purpose.” In other words, they deliberately build structures and processes to transmit important family values. Finding The Right Mentor And Protégé The most successful businesses tend to handle relationships more effectively. This is no secret. In this circumstance, that means pairing the right mentor(s) with the right protégé(s) to achieve the maximum results. Mentors don’t have to be family members per se. Neither do innovative protégés. But it tends to be the case that family members occupy both spots, especially for smaller or newer family businesses. Barbara Weitman, who has authored more than half a dozen books on small business planning, cautions against founding parents serving as direct mentors to their children. In her J.K. Lasser’s Finance & Tax for Your Family Business, Weitman writes that sometimes “mentoring is better left to non-family members” because young workers may take family instruction as criticism or judgment, even when it isn’t intended that way. This is sometimes true. Parents remain parents no matter the age of the children. But it’s also true that parents are biologically designed to help their children become more successful. What’s right for one family business isn’t necessarily right for another, and sometimes parents make the best mentors. It’s impossible to tell each family business which individual mentor best pairs with which younger family member, but I know the most successful businesses will tend to figure it out for themselves. Ripple Effects Perhaps the most significant by-product of a robust mentor-protégé system is better succession planning. We know that open communication is key to engaging the next generation, but it’s also key when it’s time to choose the next leader. A good mentor-protégé system encourages trust and honest dealings between generations, and Lord knows succession planning is easier when the kids get along better with Mom & Dad. Between 65 and 75 per cent of family-owned businesses fail or are sold before the second generation gets a chance to take over, depending on the country. No matter where you look, the failure rate reaches 90 per cent before a third generation takes over. Good mentoring is one more levee against that tidal wave of failure.

Finding a family successor is one of the greatest challenges for family firms but when done correctly, it will deliver value for the company over and above any other strategy. For all family firms there comes a point when the founder has to retire. The family has to then decide whether to keep the firm family-owned and family-managed. When there are strong assets (the unique contributions that only families can bring to the firms) underpinned by efficient governance structures, a family succession is the right path to take. But how to ensure the path ahead is clear for the chosen successor? My book “The Family Business Map” co-authored with Joseph P.H. Fan, identifies a number of challenges that families and businesses across the world face during a succession process. These include cultural issues, the transferral of family assets and competency. The first three are: The challenge of succession culture The challenge of transferring family assets The challenge of being competent When Culture Matters It would be unrealistic to believe that the culture of any given country doesn’t affect the succession planning of family firms. In fact, this is probably the strongest influence over the firm’s decisions in this process. A succession model which works successfully for, say, a 40-year-old US family business couldn’t easily be applied to a Chinese Confucian-based family firm in Malaysia where the sons would typically inherit the lion’s share. To take a very different example, consider the case of Chief Abiola of Nigeria, the country’s most influential entrepreneur since independence, who lost his entire business empire leaving his more than 40 children with nothing to inherit — in large part due to the lack of an established culture of transferring wealth from generation to generation in Nigeria. In contrast, in the Middle East, firms are to a large extent governed by Sharia law which dictates certain protocols that have to be respected and in Thailand and India, for example, children rarely go against their parents’ wishes. No one culture is easier than another and the families simply have to work around the cultural reality that the firm and the family live in. Transferring The Family Assets Powerful family assets are the pillars upholding family business strategies and it is their transfer from one generation to the next which lies behind the success of every family firm. Whether the assets are in the form of the firm’s heritage, powerful business networks or core values, the key is to find common ground between the generations. The assets are typically transferred through an apprenticeship model where the younger generation are exposed to the family firm from an early age and are taught everything about the firm over a long time frame. In addition to providing the younger generation with a strong platform from which to take over, this model also prepares the older generation to let go. This model works successfully for firms across the globe. The Mulliez family stands out in France’s business landscape for successfully transferring their values. The family’s business stable includes the retail distribution groups: Auchan, E. Leclerc, Decathlon, Flunch and Leroy Merlin,all grown from the founder’s textile manufacturing business, Phildar. In 2011, the family could count 780 direct descendants, 70 percent of whom belong to the family association which controls the business interests. Their family motto, “tous dans tout” (everyone in everything), reflects the core values of solidarity, family heritage and responsibility towards future generations. With a large pool of talent and a strong entrepreneurial spirit among family members, the Mulliez family is a role model for families in business around the world. While the apprenticeship model is successful at transferring family assets, it doesn’t prepare the younger generation particularly well for changes in the business and the economic environment, nor does it facilitate a change in business strategies. A particular challenge among Asian family firms is the third generation who went abroad to study and returned with a mix of old Asian and Western values. This is a recent phenomenon which is expected to become more prevalent given the globalised world we inhabit. The Measurable CV The succession decision will involve many questions for both the older generation and the younger generation alike. For cultures where it is expected that several members of the younger generation will take over the ownership and management of the family firm, answers should be sought to: How to choose between equally able children? Will they make good business leaders or will the company suffer under their leadership? Will the heirs collaborate in the future – do their personalities blend well – or descend into sibling rivalry? How do we nurture the competencies necessary to take the firm forward? And how shall we support others who wish to pursue a career outside the company? Family firms are typically founded by entrepreneurial creative people who build the company on hard work and experience, without necessarily having formal training. Thirty years down the line when the succession question arises, the company is no longer the same entity it was when it was founded. The workforce will have increased and new markets might start to look attractive. For that reason, it is valuable for the younger generation to gain experience outside the firm — whether this involves going to business school or having job, board or CEO experience elsewhere — which can then benefit the family business when they return later. The De Kuyper family succession process is one example of a very formalised approach to finding the right successor for the family business which I have written about in a previous article. My research has shown that a combination of the apprenticeship model and education/experience outside the family firm is the ideal path to take. Succession planning typically takes ten to thirty years to complete and is best done when communication is transparent and shared among family members so that everyone can envision the path ahead. For family firms with strong family assets and few roadblocks, a family succession is the surest road to success. Morten Bennedsen is the André and Rosalie Hoffmann Chaired Professor of Family Enterprise at INSEAD and Academic Director of the Wendel International Centre for Family Enterprise. He is a contributing faculty member to the INSEAD Corporate Governance Centre and is co-author of the book The Family Business Map: Assets and Roadblocks in Long-Term Planning (Palgrave Macmillan 2014). This article was first published on the INSEAD website and has been reproduced with permission.

India has a rich and magnificent history of family businesses. The country’s rich history and culture have molded the edifice and character of family businesses over the years. Yashodhara Basuthakur and Dr Nupur Pavan Bang from the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business explain more. The joint family system was the backbone of these businesses and provided the required resources and capital for the cohesion and growth of the firms. In the early eighteenth century, India was predominantly an agrarian economy, with a deep-rooted caste-based social system that defined the occupational choices of the communities. Agriculture was the primary source of income and livelihood. The manufacturing industries were few and mostly in textiles, handicrafts. But India was lagging in the development of the economic, political, and commercial infrastructure essential for trade pursuits. The turn of the eighteenth century marked the transition from mercantile capitalism to industrial capitalism. The colonial rule led to the decline of the vibrant Indian merchant community. The Indian businesses faced discrimination in trade, policy and bank loans. During the Industrial Revolution in 1850, India became the supplier of raw materials and a market for the products of the British factories (cotton, iron and steel, chemicals, etc.). Some of the businessmen who emerged during this time were the Birlas, Kasturbhai Lalbhai, Walchands and the Tatas. They constantly criticised economic racism and created bodies of commerce and trade associations to lobby for the Indian companies. They invested in research and development and introduced new product lines. The Indian led business enterprises had expanded in scope and scale across the country by the end of the 1940’s when India gained Independence. The Indian family businesses also actively engaged in social causes and philanthropy through generous contributions to charitable trusts and other institutions driven by the cultural and religious traditions of “daan” (giving) as a sense of duty to the community. They played a pivotal role in institutional building by partaking philanthropic activities such as setting up premier educational institutes, research, and cultural centres for the progress of the country. The post-independence period marked with communal unrest was not very conducive for business. Additionally, the new Industrial Policy (1948) of free India was introduced which saw increased participation of the government in economic affairs. The large-scale nationalisation and government monopoly of critical industries such as utilities, transportation, iron and steel, heavy industries, armaments, atomic energy, manufacturing curbed the freedom of operations of the private enterprises. The Monopolies and Restrictive Trade Practices Act, 1969, put severe bottlenecks with respect to the quantities and types of goods or services that could be produced by the private sector. The firms now had to obtain licenses or permits to expand or start new businesses. Because of the limited licenses and capacity constraints, firms focused on diversifying into areas wherever they could acquire the required licenses instead of building on their core competencies. Some of the multi-generational business houses focused on restructuring by consolidation and expansion within the new framework by acquiring overseas companies and expatriate houses to enter new industries. Other business houses acquired a significant number of licenses to thwart competition and block other firms from entering the space. Also, there was a new genre of technology-savvy entrepreneurs who were well-educated with degrees from abroad and joined their family business or started new ventures. Some of the legacy business groups even lend their expertise in areas like engineering, iron and steel (Tatas) and shipping (Walchands) to the newly formed government enterprises. However, this period also witnessed some of the older business families already in their third generation going through splits due to waning family ties. The families had not yet adopted professionalisation, and the dominant family coalition still controlled the ownership and management. The economic liberalisation in 1991 was a landmark decision which opened the economy and introduced several macroeconomic and structural reforms. These reforms brought in a gamut of opportunities and challenges for the family businesses. While the businesses now had to compete with foreign multinationals and new entrepreneurial organisations for capital and resources, but they could now enter sectors which were earlier exclusively reserved for the public sector. The family firms were quick to restructure and respond to environmental changes. Some of the multi-generational businesses were able to weather the turn and came out triumphant in the new economy, while others who couldn’t sustain disappeared from the thriving business scenario. This era also witnessed the dawn of a new set of stand-alone first-generation family firms who harnessed the information-led economy by investing in research and technology. A study on Indian family firms by Bang, Ray and Ramachandran (2017) looks at the listed firms during the period from 1990 – 2015. The study categorises the firms based on ownership and management into two categories, namely family business group firms (FBGF) and stand-alone family firms (SFF) . According to the study, ninety-one percent of the listed firms are family-firms, which is a key driver of the Indian economy. In the year 2015, the top 30 family firms contributed to almost 50 percent of the total revenue of all listed family firms, which translated to 13 percent contribution to the GDP of India. Overall, listed family firms contributed to 26 percent of the GDP (Total Income). Out of the listed family firms, the FBGF’s contributed to 21 percent, and the SFF’s contributed 5 percent to the nation’s GDP. The family firms contributed to 28 percent of indirect taxes and 18 percent of direct corporate taxes collected by the government exchequer. The family-firms built more assets in the manufacturing sector, which has a long-standing impact across all industries. The SFF’s were predominantly in the services industry, owned and managed by the founder (or first-generation). The SFF’s played a critical role in the rapid development of the services sector and generated large-scale wealth and employment opportunities. During the post-liberalisation period, there was increased participation in equity markets by the family firms to meet the financing needs for expansion and growth. Among the listed family firms, the firms incorporated before the 1980’s were more likely to create business groups as a response to the macroeconomic conditions. The average age of the listed FBGF’s in the sample is 38.44 years, whereas that of SFF’s is 28.73 years. The family firms have displayed resilience, character, and adaptability over their long history and played a pivotal role in India’s growth story. However, with the current shifts in the economy and society, there are major challenges that family businesses must surmount. The family firms at the crossroads of succession have to take the decision on either to transition to next-generation or professionalise by inducting non-family managers. The family firms have to adhere to stricter and transparent corporate governance guidelines, better leadership and connect with the community to continue to chart the success story in years to come and ensure the perpetuity of the business and family. The authors are Yashodhara Basuthakur and Dr Nupur Pavan Bangfrom the Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business.

In turbulent times there is a clear need for “white space” – that is, quality time for reflection with a trusted neutral person. Greg McCann explains more. Even before COVID-19 rocked our world, family enterprise leaders have had the challenge of navigating today’s rapid pace of change, global interdependence and complexity. They’ve also had to adjust to the fact that the average family enterprise now consists not of one but of five or more businesses. Add in all the other challenges of running a family enterprise, and it’s no surprise that one thing every leader I have worked with other the past 20 years has agreed on is the need for “white space” – that is, quality time for reflection with a trusted neutral person. Those who get this through leadership coaching find it leads to a direct increase in their capacity and agility as a leader, which helps them meet the challenges family enterprise leaders face today—and will almost certainly increasingly face in the years ahead. So, how exactly do these qualities of capacity and agility benefit you as a leader? What does a leadership coach do to develop them? And, what should you look for in a coach? The benefits of developing your capacity and agility Developing your capacity means becoming better able to think on different levels—to identify whether any given problem is a problem to solve, a system issue in need of a strategic solution, or a culture issue to influence. It also benefits you by deepening your self-awareness—so you know your strengths, weaknesses and blind spots, which helps you relate more effectively with others. It also increases your empathy for others, which research on emotional and social intelligence has shown is a significant benefit to business leaders. Agility is about being able to choose the right style or approach for a given situation or relationship. In short, developing your capacity gives you a greater number of effective ways to think and act, and agility helps you choose the right one for each situation. Together, they help you become a better leader; and with many family enterprises over-managed and under-led today, that gives you a powerful advantage. What A Leadership Coach Does A leadership coach creates the framework for all this work to occur. For example, I often spend a day with new clients and then arrange for three one-hour calls per month. This framework is designed to allow the time for leaders to pause, reflect, and process challenges, opportunities, patterns and even choices they may or may not be conscious they are making in the hustle and bustle of business. It is also allows leaders time to process big ideas—such as, considerations about changing your enterprise or your family—with someone who is neutral, which can be hard to find among your family members. Coaches are also more focused on helping you explore your own good ideas than on giving you advice—recognising that giving someone advice robs them of developing their capacity as a leader. They start with the belief that the client has the answer, and it is the coach’s role to facilitate the exploration of those options with questions, objective feedback, a re-framing issues, and an offering of stretch goals. In other words, a good coach views each discussion as less about solving some immediate issue (say, a sibling conflict) and more about helping you develop your overall capacity (for example, recognise your communication patterns, which may or may not serve you in the current and other situations). What To Look For In A Coach Trust is vital. You need to ask yourself: Can I trust this person to have my well-being and development as of primary importance? Trust, in turn, rests on competence and character. Is the person you are considering as a coach competent at what they do? Do they have experience and training as a coach? Expertise in your industry may not be necessary but understanding the nature of a family enterprise is. As for the coach’s character, it helps to ask yourself if you respect him or her as a person and a professional. Do you think they can support you, push you when necessary, and have the fortitude to go deep when necessary? As someone who has both had coaches and been a coach for two decades, I can say that it is one of the best investments you can make in your leadership development.

A family business that has made it to the 3rd generation has already beat the odds. Approximately only 12% of family businesses will ever make it to this point. Making it to the 4th generation proves to be even harder with only 4% ever getting there . There are some key inter-generational conflicts that make transitioning the business to the next generation and working with another generation family member even harder. We all know working with any family member can be a challenge, but working with one that has very different goals and expectations stemming from a generational gap can be difficult to manage and understand. Danielle Walsh explains some of these inter-generational conflicts that include: Differing work ethics: The founding and 2nd generation often worked very long hours. The founding generation is likely to have spent more time working in the business then at home, the same can often be said about the 2nd generation. The 3rd generation tends to value work-life balance and looks to automate or find efficiencies to ensure they can find time for family. This is also very different from the 1st generation since back then there was often a stay-at-home parent. Now days, it is the norm to find two working parents, which means both parents need to have some flexibility with work. This differing work ethic can sometimes lead to conflict between the generations due to a lack of understanding and a significant change that can be hard for the older generations to deal with. Communication: The founding generation and 2nd generation of many family businesses are famous for being poor communicators. I have often heard “No, I haven’t told anyone else – they should just know.” The 3rd generation tends to be much more transparent and willing to take the time to communicate with family members. Keep in mind, however, that the way the 3rd generation communicates often frustrates the 1st and 2nd generation. Emails and text messages instead of phone calls or face-to-face. This change has had a major impact on how families communicate and for the older generations it can be difficult to adapt. This sometimes leads to communication significantly slowing down or even stopping between the generations, which can leads to serious issues for the business. Being aware of the method that an individual prefers to use to communicate can certainly help bridge the communication gap. The 3rd generation needs to be aware that just because they sent an email about it, doesn’t necessarily mean it has been clearly communicated to all. Differing priorities: This ties in with the differing work ethic above. The 3rd generation tends to prioritise work-life balance and family. This can be very different from what the founding and second generation have done, which can lead to conflict. In my experience, the 2nd generation is often frustrated by what they perceive as a lack of commitment to the business by the 3rd generation. The 3rd generation is often frustrated by the demand on their time. Clear expectations need to be outlined so that all members of the family irrespective of the generation know what is expected of them and what they can expect from the business. Business priorities also tend to differ. The 3rd generation often prioritises innovation, change, and the use of technology which can be difficult for the 2nd generation to support. This is an issue that is becoming more and more common in family businesses and particularly in the jewellery industry. Therefore, we will further explore this issue below. Innovation & Change I don’t think we should be too surprised that the 3rd generation often find that they struggle to get their current owners (the 2nd generation ownership group) to endorse change and allow them to implement new and innovative strategies for their jewellery operations/stores. It just might happen to be due to one of the more common outcomes of inter-generational ownership. It is well known and documented that 1st generation family business owners are very entrepreneurial, which by definition means they are innovators, risk takers and typically passionate about both the industry they are in and their business. They tend to dedicate all of their time to building the business which in turn fuels their continued passion for it. But the next generation, the 2nd generation, often join the family business while gen 1 is still at the helm with their primary role in the family business being one of managing what is already there. They become managers and focus on improving effectiveness and efficiencies (refining) of what the founders built. They typically do not have the same degree of passion as the founders which is to be expected since it is not their baby that they brought to the world but rather that of the founders. As Gen 2 move along their career paths in the family business they tend to become risk averse and less open to change. They view their role as gate keepers to what the founders have built and continue to build. They tend to rely on Gen 1 to continue to innovate, implement change and take risks. These same managerial traits then get to permeate their thinking once they become owners. Note: Of course, the above does not apply to all Gen 2 individuals but it does apply to many so in that regard it is worth addressing. Then along comes Gen 3 who are a whole new breed of individuals with very different expectations with respect to life balance and very different expectations with respect to the use of technology (change) as well as a keen desire for innovation since it surrounds them every day. Gen 3 tend to be quite comfortable with change even rapid change and they tend to view business risk as a necessary frame of mind for success. Clearly these Gen 3 traits will be in conflict with those of the Gen 2’s described above. As such, Gen 3’s often feel like they are being stalled in their desire to innovate, implement change and take calculated risks to grow the business and take it down new paths. We can see this in the desire of many 3rd generation family members to shift from brick and mortar stores to online stores. This change is not a small one. The 2nd generation that has continued the family legacy and often maintained the business in a very similar way as the founding generation may not be comfortable or used to taking major risks such as this one. Without taking this major risk, the business may not survive long-term. A major shift in business strategies, like going from a store to online, is one that often occurs only once the 3rd generation has become owners and have control. However, this may be too late. Ideally, this change occurs with the support of both generations meaning a wealth of experience and a united front. One of the major risks for the family business (other than the inability to survive) is that they may lose those entrepreneurial Gen 3’s who do not have the patience to wait for approval to implement their strategies and who feel passionate enough to go out on their own and often in the same business. So what can a family business do mitigate this risk? 1. Gen 2 needs to recognise that Gen 3 are different and that they want operational improvements now (versus later), they want a work-life balance that meets their expectations, they want to innovate and be current with respect to what technology can do to help meet all of these objectives. 2. Gen 2 need to accept that the differences between them and Gen 3 is nobody’s fault but more so an outcome of inter-generational transfer of power and ownership. 3. Gen 2 and Gen 3 should implement a management succession plan that will allow Gen 3 to prove their skills, decision-making, and ability to work together over time. Without a clear plan, the competent Gen 3’s are likely to leave. By implementing a management succession plan over a specific timeframe the Gen 3’s have the opportunity to prove themselves to the older generation. When this happens, Gen 2’s often feel more comfortable relinquishing managerial control but also tend to embrace the new ideas and changes put forth by the 3rd generation. 4. Gen 2 needs to realise that Gen 3 may manage and lead in a very different way. Often Gen 3’s will have a management team made-up of some family and some non-family managers. It is no longer just one person that will fill all the roles (like mom or dad did). 5. Strategic planning is very rarely completed by family businesses. If there are competent and knowledgeable Gen 3’s in management it can be of benefit to let the next generation (in this case Gen 3) do the strategic planning and then have them present it to the owners (Gen 2). This helps bring together the next generation, allows the next generation to gain the trust and respect of non-family managers and provides new and different insights on how to move forward. This doesn’t mean than Gen 2 has no say it just means we allow the next generation to put together the first draft of the plan. Allowing the 3rd generation to participate in this type of decision-making plays a big part in keeping them motivated and retaining them in the long-term. There is no magic solution to dealing with inter-generational differences – just know that all family businesses face these issues at some point. Being aware of these issues and accepting them are steps in the right direction. Learning to work with them will lead to greater success for the business and will help safeguard family harmony. By implementing a comprehensive family business succession plan you will increase the likelihood of transitioning to the next generation successfully and it will certainly help manage the inter-generational differences by clarifying what is expected (what is expected work in the family business, manage the family business, and own the family business). About the Author - Danielle Walsh is the founder and President of Walsh Family Business Advisory Services, a consulting firm that specialises in assisting family owned and operated businesses navigate the rough waters of management and ownership succession. Danielle is a Chartered Professional Accountant (CPA), Chartered Accountant (CA) and a member of the Family Firm Institute (FFI), an international association of family business professionals providing in depth information on family businesses from around the world as well as ongoing education and training in the field of family business consulting. Danielle has obtained the FFI Certificate in Family Business Advising and the FFI Certificate in Family Wealth Advising.

Stewardship matters for successful and enduring family businesses. Stewardship is a defining hallmark of businesses that achieve success, significance and sustainability. In crux, stewardship encapsulates the essence of responsible and meaningful value creation in a sustainable way to benefit stakeholders, as well as the larger community that they are a part of. It underscores the importance of an ownership mindset, a long-term perspective and an inclusive approach. These stewardship elements undergird and reflect the business leaders’ motivation and commitment to nurture and grow what they are entrusted with, such that it can be handed over in a better shape to successors. Stewardship is particularly pertinent to family businesses, which form a key component of economic activity around the world. This is especially relevant in Asia, where family businesses remain the mainstay of business ownership, and families continue to be influential players in the business landscape, as owners as well as managers. Successful and sustainable family businesses create wealth and growth for the family across generations. In their stewardship journey, such great and lasting family businesses leave a rich legacy, contributing significantly to the multiplier effects such as knowledge creation, economic development and capacity building of human and social capital to benefit society in the long run. Family businesses are very diverse in nature – ranging from small, medium local enterprises to huge conglomerates that operate across industries and countries. For our purpose here, we broadly define family businesses to include companies with the presence of family members as shareholders as well as board members and managers who are able to influence strategic decisions. We use the term family businesses to include family companies, family firms and organisations. Notwithstanding their diversity in scale and nature, family businesses in general face some common challenges: Responding and adapting to the vortex of disruptive changes stemming from the global and local fronts, while still maintaining the sense of purpose that propelled them to success Maintaining coherence and harmony as ownership becomes more fragmented over time Attracting, retaining and “professionalising” talents that constitute the human capital essential for family businesses to maintain their competitive edge Transitioning successfully during periods of leadership renewal, especially for firms where the influence of the founder-leaders dominate Guarding against the pitfalls of hubris and complacency on one hand, and a reluctance to adapt due to inertia to changes on the other Upholding high standards of resource management and corporate governance Faced with such challenges and an increasingly demanding business environment, stewardship has become all the more relevant and important. Well-stewarded family firms emerge over time as engaged, forward-looking and adaptable enterprises. They are able to leverage their inherent strengths and competitive advantages. Guided by their values, such family businesses remain resilient in the face of changing times and disruptions, overcoming adversity and outperforming their competitors. Stewardship is, however, always a journey. Every generation of family business faces unique circumstances, challenges and opportunities. A family business with a successful stewardship experience in one generation does not guarantee its continual success into the next. Hence, for family firms striving towards success, significance and sustainability, a resolve to continually imbibe, propagate and reinforce stewardship concepts and actions is vital, and remains relevant and timely. Download and read the full report below:

In 1997, Gael and Francesco Boglione moved their young family from central London to Richmond. Their new home, Petersham House, overlooked a local plant nursery, which had been carved out of the grounds of their Queen Anne home in the 1970’s. Francesco recalls initially not knowing what to do with the place. Inspired by his youthful travels to India, when as a self-confessed hippy, he bought and sold unusual furniture, paintings, sculptures and decorations as a means of funding his expeditions. He recalls a vision materialising. Bringing a gentle approach and an ability for drawing out beauty in the simplest of things, Gael’s natural style, elegance and attention to detail was at the heart of the transformation, evolving over the years into the strong ethos maintained today. In 2004, after extensive restoration works, the nursery re-opened, completely transformed. Furniture, gifts and antiques were found amongst the plants which adorned the greenhouses, and in the most elegant wooden teahouse, whole leaf teas and homemade cakes were offered. The nurseries became an instinctive mix of Gael’s love and enthusiasm for nature and the earth, mixed with Francesco’s desire to deliver products and services in a peaceful and beautiful setting on the river. Over the years, Gael and Francesco have steadily nurtured the space, drawing upon their travel experiences and incorporating their Italian and Australian cultures within this English garden setting. They have created a lifestyle destination, reflective of their values, love of food and personal collections within their home. The family is dedicated to positive living; where ethics meet aesthetics, philosophies which are interwoven in every aspect of the business. This is demonstrated from the way they look after their employees, to what is sold and served. In recent years, Gael and Francesco have encouraged their children, Petersham’s next generation, to step forward, forging a future for the nurseries and Petersham offshoots.

What matters most to high net worth families is giving their wealth a purpose. What does it mean to be wealthy in the 21st Century? Are successful families around the world driven by wealth generation, wealth preservation or the application of their wealth? Withers recently commissioned a research study to find some first-hand answers to these questions. Through quantitative analysis of the attitudes of 4,500 individuals with more than US$10 million in personal wealth and a further 16 in-depth interviews with multi-millionaires and billionaires around the world, we wanted to investigate the modern meaning of wealth. Equally importantly, in the course of the research we have sought to identify the valuable lessons that families have learnt from their own experience which they would wish to share with other families facing similar challenges. The research has spanned three continents – Asia, Europe and the Americas – because we wanted to find out if individuals and families from different cultures really do have a different perspective and experience of wealth and have different lessons to pass on. The results have provided a fascinating insight into the changing dynamics of family wealth between generations and between continents. What characterises wealth-owning families today is a growing recognition of the importance of purpose when it comes to the creation, control and distribution of wealth. Across all cultures and generations, the sense is that wealth matters because of what you can do with it. The research, drawing directly from interviews with high net worth international families, has revealed that generational succession in wealthy families around the world has led to a fundamental re-evaluation of the purposes of wealth and family businesses. In the words of one interviewee, as they assessed their wealth: “The most important things are how you make it and how you distribute it. If you can do that in a way that is socially acceptable and keeps your family happy, then you are winning.” Withers partner Sarah Cormack comments: “For many wealthy families, we found that simply having large amounts of money to invest is not enough to provide purpose and cohesion to the broader family group. Having come to realise this, wealthy families are responding by re-immersing themselves in active business operations or (and, in many cases, also) putting their wealth into effect to effect positive changes in their communities.” “Maintaining commonly-held reasons for working together as a family is a continual process. It is brought under intense pressure when a family sells out of active business ownership and moves to a financial/investment-based footing (or back again). When a new generation is called upon to take ownership of the family wealth, there is a similar potential for it to unravel, as the younger family members bring their own values and interests to bear. Clearly, anything that creates coherence and harmony is valuable, and these days it appears to be the social application of wealth,” says Cath Tillotson of Withers’ research partner, Scorpio Partnership. The research established five key lessons that wealthy families have learned through coping with succession and working to preserve their assets and family unity, as illustrated through the points and quotes below: Transitions Are Complicated Whether selling a business, setting up a foundation or passing control of wealth to the next generation, families should ask themselves ‘why are we doing this?’ at each transitional stage to find the common objectives that keep them and the family wealth intact. “In Asia we have three generations living side by side… the hard business stuff has become the easy stuff, and the soft family stuff has become the hard stuff.” Take Your Time As a collection of individuals, and not an organisation, family businesses require a unique leadership style which should involve listening, learning, observing, sharing and understanding. “Family members often think they are unique, with the right skills, so you have to be willing to let go. Sometimes you have to be willing to lead from behind and recognise just because you can do the job, doesn’t mean to have to.” Leading With Principle Wealth ownership means that attention is trained on you. Family business heads should lead by example and the wider community will view wealth ownership with greater respect when it is used as a force for positive social change. “Values cannot be taught. You have to inculcate them through your own actions.” Recognise Your Limits Within a family business there are many roles to play; no single person can play them all well. Once skills, strengths and motivations are accurately assessed (including one’s own), other family members and professional advisers can be effectively appointed to fill the gaps. “As a leader you have to be open-minded and accept that other people are sometimes smarter and better than you… A business family has to be multi-disciplined and that means accepting outside help sometimes.” Giving The Next Generation Just Enough Each generation should be able to think of themselves as the first generation. This means that those in the next generation are given everything they need to be successful and no more. For those in older generations, this also means recognising when to step aside. “It is better to let children find their own way… If they want to come into my family business, they can, but they will have to earn their place, just like everyone else.” Withers worked with leading wealth research agency Scorpio Partnership, basing the research on 16 in-depth interviews with multi-millionaires and billionaires from Asia, Europe and the US . The opinions and experiences described by these individuals were cross-referenced against the attitudes of 4,500 individuals with more than US$10 million in personal wealth, who answered digital surveys on a wide range of subjects over the past two years.

The Walkers story begins in 1898 when the twenty-one year old Joseph Walker opened the doors of his own bakery with a loan of £50 and the ambition to bake ‘The World’s Finest Shortbread’. In the first year of business, Joseph used every spare moment to perfect his shortbread recipe. It was time well spent. Soon, shooting parties from the local estates were making detours just to visit Joseph’s bakery. As word spread and demand for his quality shortbread increased, Joseph took the first steps to expanding the business by moving to a larger shop in the Speyside village of Aberlour and investing in a horse and cart to deliver his baking further afield. 1930-1950 / The War Years During the 30’s, the business – like Joseph’s family – was expanding. Two of his sons – James and Joseph – joined the company, bringing fresh ideas with them. By 1936 they had introduced three valuable additions to the Walkers setup: a range of cakes, a selection of confectionery and…the company’s first delivery van. Now that Walkers produce could be sold at ever-greater distances the prospects for expansion were looking promising. Then came the war. Wartime rationing and their commitment to the Home Guard meant that Joseph’s sons couldn’t develop the business or their range of products as they would have liked. Despite these adversities, however, they kept the business going and their customers happy by supplying them with the same tasty breads and oatcakes to which they had become accustomed. 1950-1970 / From Aberlour to Harrods While some manufacturers began to cut corners by using margarine instead of butter, Joseph believed that people still appreciated the care that went into making a superior product like Walkers shortbread. And he was right. That’s why, even after Joseph Walker died in 1954, his sons knew better than to alter a winningly simple recipe consisting of just four ingredients: flour, sugar, salt and that pure creamery butter. As demand grew so did the business. By 1961, all three of James’ children – Joseph, James and Marjorie – had joined the company, making the third generation of Walkers working for the family firm. The workforce was now almost one hundred, and Walkers had a fleet of 14 vans as well as shops in Grantown and Elgin. Local grocers began stocking Walkers products, and the family had to invest in bakery machinery to help them meet demand. Naturally, they baked to the same high standards, simply on a larger scale. Soon their shortbread was on the shelves of fine food stores all over Britain. By the 1970’s, Joseph’s grandchildren had begun exporting Walkers shortbread to over 60 countries around the world – all of it still baked to his original recipe, of course. 1970-1990 / Growing Success By 1975 Walkers had outgrown their extended bakery and moved to a custom built factory. This gave us the extra space and facilities needed to develop new products such as our delicious Chocolate Chip Shortbread and speciality biscuits. Many of the people who worked for Walkers during this time are still with us today; most are local folk who often come from the same family – mothers working alongside daughters, fathers and sons. Community values have always been central to life in the Scottish highlands and the same is true of our business. Now, as a hundred years ago, Walkers test every new product in Aberlour’s village shop. Though today our customers are based all over the world, our products are still given their first seal of approval by the villagers of Aberlour. That way we can ensure that each cake and biscuit offers a real taste of Scotland. 1990-2008 / Delivering Goodness Whether it’s enjoying one of our traditional varieties or new products like our luxurious almond, ginger and chocolate covered shortbread, Walkers’ reputation has continued to grow as new customers the world over discover the quality of our baking. This has been recognised by industry over the years too, with Walkers picking up numerous international accolades including five gold Mondiale medals and the Food from Britain Innovation Award. 2008 – Present Day Much has changed since Joseph Walker baked his first batch of biscuits over a century ago. But, although we’ve updated many of our methods and are constantly adding exciting products to our range, some things remain a constant; Joseph’s grandchildren and great-grandchildren have always remained true to that original ideal – to bake ‘The World’s Finest Shortbread’. In fact, when the family opened another factory at Elgin to produce their popular new range of shortbreads and biscuits, it was only on the condition that they would continue using the finest ingredients: plump fruits, aromatic spices, chunks of real chocolate and wholesome nuts. Find out more by visiting www.walkersshortbread.com