Family firms are the backbone of economies the world over and the UK is no exception. With more than 6 million family firms in the UK employing over 13 million people, they are the engine room of communities across the country. Family businesses are different because they have a purpose, an underlying driver to flourish for generations, taking a long term view and in many cases the current generation see themselves as custodians of the business for future generations, seeking to pass the business on as a ‘stronger entity’ than the one that they inherited. All across the UK family firms make a difference on a daily basis, through the provision of jobs, creation of income and generation of wealth. Many have been around for generations, like Balsons, the butchers on the high street in Bridport that dates back to 1515 and is now in the 26th generation. Additionally, many family firms are embedded in a ‘place,’ often the location where they were founded, such as Walkers Shortbread in Aberlour and JW Lees Brewery in Manchester. These firms are part of the fabric of their community and it is not uncommon to find generations of families following a pattern of working for the same businesses. Research has shown that being a family business adds a real point of difference, from the way that they engage and support loyal employees to the way they are perceived by customers and suppliers alike. Because they are in it for the long term, decision making is focused on these goals and not made purely for financial return in the short term. Family firms are special and their narrative, the journey from the day they started with an entrepreneurial dream add to the essence of who they are, and help with creating an association with the business. Research has also shown that family firms are more trusted and good employers and they continue to make a difference through their resilience, drive and desire to succeed. Entrepreneurial family firms that have stood the test of time are resilient and innovative, making the necessary changes to continue to remain relevant. Family firms really are the backbone of the UK economy and a real force for good and that can only be a good thing. The obvious thing that makes family businesses stand out from their non-family counterparts is the ‘family factor’ and this is something that can be used to the competitive advantage of the business if harnessed in the right way. Sadly, all too often family business is portrayed as ‘small business’ rather than the reality that those in the know understand: family firms can be big business, take JCB, Wal-Mart, BMW, ALDI and many others and the myth has been blown away, but fundamentally it is more important that family firms are recognised for the positive values they bring to the economies and communities in which they operate. Rather than focusing on the sensational headlines around sibling disagreements, nepotism or inter-generational issues there are real positive attributes possessed and demonstrated by family businesses the world over on a daily basis which helps to show that family firms are a real force for good too. Family firms are generally seen as good employers, trusted and respected businesses, even more so when the family name is above the door and the business has been around for generations and the benefits associated with being a family business can be great. These benefits can even result in the family business deriving competitive advantage as a result. Here are ten benefits that family firms have: 1 – Values Family values can be translated into the way that the business operates, the culture of the family firm, and these can be passed from generation to generation as well as from family members to other employees. There is an immense level of pride amongst family members to respect the business, their predecessors and in many cases to act as stewards to pass on the business to the next generation and the values that underpin the family and the family business add to the essence of the family firm. 2 – Long Term View Family firms are recognised for taking the long term view, not always focusing on the short term financial performance and results of the business. A patient and often cautious approach can help to align resources and plans too. 3 – Loyalty Research has proven that shared values and vision amongst family members with clear and open communication of their goals and objectives can result in greater loyalty from family members too. 4 – Retention Employees of family firms are often cited by the family as an ‘extension of the family’ or as part of the ‘extended family’ and consideration and support of employees to such an extent can provide an incredibly loyal workforce who enjoy the work environment, the support of the family and the way that they are treated. 5 – Legacy Making a difference and creating a legacy is something that can come from a family in business and there are lots of examples where family firms are integral to the community in which they operate. Building on the efforts of previous generations and continuing the family tradition, protecting the name and the values that it upholds are also drivers for subsequent generations to continue in the same manner and to continue to give something back. 6 – Trust & Integrity Research has proven that the very nature of the family ownership can engender more trust from stakeholders and customers alike, and more and more family firms are celebrating their history and legacy in the brands that they are developing, recognising that it can be to their competitive advantage. 7 – Innovation Due to their governance and ownership structures family firms can be more innovative. In many cases, they recognise the need for innovation as part of their strategic planning to keep the business relevant and current and as such are able to respond to change and take on opportunities as they arise more quickly than some of their non-family counterparts. 8 – Entrepreneurship Successful family firms can be a breeding ground for entrepreneurship, supporting the next generation in their pursuit of new opportunities, either through opportunity, training, career progression or encouragement. 9 – Respect Many family firms are massively involved in their local communities and give back in many ways which engenders significant respect from the communities in which they operate. 10 – Relationships Whilst it may not be seen as the ideal situation for some, families that work successfully together get to spend more time together and sharing a drive towards goals for the business can be a bonding and fulfilling journey. Successful family firms reap the benefits and have structures in place for clear and effective communication, helping to minimise the risk of disagreements or conflicts arising. This enables them to focus on the business, with shared goals and commitments to getting the right results and without any doubt, when it all comes together, family business is different but can be a resolute force for good and secure competitive advantage too, further generating better financial results and performance that is of benefit in the long term too. Celebrate the strengths of family business. They are a force for good and provide significant benefits to communities around the world.

To complement its existing core business in supplying glass bottle containers, closures and decoration to international food and beverage brands, leading glass packaging firm, Croxsons, has recently launched a home & beauty division. The move builds on sustained business growth and will see Croxsons provide single-source packaging solutions for brands in this sector, including candles, reed diffusers, perfumes, cosmetics and personal care. The Surrey-based business has been supplying a broad base of clients ranging from the smallest start-ups, to the largest multi-national, with unique glass packaging and closure solutions for nearly 150 years. A Queen’s Award for Enterprise winner, Croxsons’ ongoing relevance is founded on the value the company places on nurturing business relationships and the breadth and completeness of their offering – a ‘family of packaging’ defined by providing single-source, multi-choice glass packaging and closure expertise. Commenting on the new venture, Croxsons’ chairman, James Croxson, said: “The launch of our home & beauty division has been on the cards for some time now. Given our glass packaging expertise, global connections and ability to provide stand-out primary packaging solutions, we firmly believe that we are well placed to provide brands in this sector with an unrivalled and engaging customer journey.” To oversee the initiative, the company has recruited Amanda Pritchard as a national sales manager. A trained packaging technologist, Amanda brings over 15 years of beauty packaging experience to the role. “I’m delighted to be heading up our move into the home & beauty sector,” she said. “The fact that Croxsons offer a complete product offering is a major selling point and I’m looking forward to building on this with current contacts and using it to develop new relationships. Given our expertise, we are looking to concentrate mainly on bespoke solutions, with some standard products featuring bespoke decoration.”

Family businesses believe their governance arrangements are entirely or broadly fit for purpose, according to 69% of respondents to a new survey published today by Smith & Williamson. Smith & Williamson’s latest Family Business Survey, conducted in September 2020 and which draws on responses from more than 140 families from the United Kingdom and internationally, examines and analyses the pressing themes of family-owned businesses. The report looks at the foundations for future governance that families are laying, both amongst themselves and where they have a business. The research, focuses particularly on family constitutions: are they present or absent, relevant or ignored? Just over a third of respondents (38%) to the survey said that they currently have a constitution, with 56% having none and 6% saying they did not know if they had one or not. More than three quarters of respondents (79%) introduced their constitutions to ensure their governance had some rigour; almost a third (32%) because of the size of the family and the challenges of managing it; only 16% were prompted to produce constitutions because of disputes arising. Interestingly, most constitutions had been put in place either more than ten years ago (41%) or fewer than two years ago (22%). Furthermore, more than half of those without a constitution thought they would need to implement formal governance structures in the next two years. The research also reveals: More than half (55%) of those who completed the survey rated regular family meetings as nine or ten out of ten for importance. More than three quarters of respondents (77%) have a family council Almost 60% of respondents thought their family was to some extent a brand in its own right. This points to the family business or financial interests having a real social purpose over and above a return on capital. Rupert Phelps, Family Wealth Partner at Smith & Williamson Investment Management LLP and Smith & Williamson LLP commented: “There can be little doubt that the larger the family, and the more generations it has been active in business, the greater the need for formal governance procedures to be in place. The evidence from our survey shows governance does tend to be a greater priority for large family businesses, but smaller businesses also recognise the advantages good governance can bring.” “Where families had created their own constitutions in the last few years, they were often evangelical about the process and the catharsis it provided; others had constitutions created using differing degrees of professional help. However, there was also a strong feeling that advisers should just guide, not control, the process. Families felt they had to take responsibility for the content, with advisers and consultants facilitating the thinking.“

Colemans is a stationery, office supplies and art & craft retailer with 13 stores across the East Midlands plus an online business that serves customers throughout the UK. We spoke to Tallie Patterson-Gordon, the third generation of the family who recently joined the business that was founded in 1969 by her grandfather, John Coleman. After starting his career as a fishmonger, John bought the local newsagents and progressed to selling stationery, office furniture and machinery. His daughter, Tallie’s mum, joined the business and has been running it for the past 35 years and as Tallie explains, “she has been the most inspiring female Managing Director too.” Joanna has driven the business from strength to strength but has remained true to the underlying values of the business, putting her staff and customers first. The company has been built on ‘second to none’ customer service and one of John’s favourite phrases is that “the customer is always right” as they collectively strive to fulfil their vision as the ‘customer’s first choice for stationery, arts & craft’. Fond Memories Growing Up Tallie joined the business in the summer of 2020, a difficult time for many businesses due to the pandemic but is already thriving in her new role. Looking back to her childhood she has fond memories of the family firm. As Tallie explains, “It’s hard to pinpoint a first memory as the business was always there as I was growing up but one thing that I do remember is that one of the major benefits as a child growing up in a family owning a stationery store is that I always had the best pencil case full of the newest smelly gel pens! School holidays were also great as I never had to play pretend shops, I got to do it behind a real counter with a real till although it was not so much fun for my Mum when a customer reported her for using child labour!” Like many next generation family business members, Tallie appreciates that the family business was always there. As she adds, “there isn’t a situation where you simply put on the ‘out of office’ and don’t talk about it, or when you get to the airport that work isn’t mentioned until you get home. I used to be frustrated by how we always seemed ‘to talk shop’ but now that I am involved, it is all I seem to talk about!” A Career Outside Of The Family Firm First Growing up there was never any pressure to join the family business and Tallie was able to follow her own dreams. “Joining the family business was not always in my plan. I did a lot of debating and public speaking at school and initially fancied following the law route, but as I got older I realised that it was buying and selling things that made me tick, the ability to see if we were making money or not and that retail was probably the one for me,” continues Tallie. Retail was calling and after a few different internships Tallie gained a place on the Sainsbury’s Graduate Scheme. “I spent five years at Sainsburys and loved my time there. They’re a brilliant company to work for and give a lot of responsibility to young employees,” she continues. “They gave me a lot of broad experience from a stint in Digital and Technology Strategy to a role on the front line at the Camden Road Supermarket, the store with the second highest footfall in the company. This really was a baptism of fire for me but I absolutely loved it. I turned the store around from having a very poor ‘mystery shopper’ score to one of the highest in the company,” adds Tallie. Her roles continued to change and provide more experience, returning to head office roles in procurement and three years buying various different meat and fish products. As Tallie explains, “I started as the charcuterie buyer which was hands down the best role ever – I got to travel to Italy, Spain and Germany eating the most amazing selection of cured meats. That led to turkey purchasing and in December 2018 I was the turkey buyer – probably one of the more stressful roles, especially when a supplier rang on December 18 to say they were 26,000 birds short for Christmas! I ended the buying role as the fish buyer in charge of £350 million annual sales, which although demanding was brilliant before some time in Business Development setting up a wholesale business division,” she concludes. Making The Leap To Join The Business But the family business was on the mind and the point reached where Tallie wanted to take control of her own destiny. Politics and processes were getting in the way and Tallie began to think about a role where she could make her mark. As an only child, and having seen the success that both her Mother and Grandfather had achieved, and without any pressure from either of them to return to the family firm, timing seemed to suggest it was right to make the move. As Tallie continues, “Mum was turning 60 in April and I was due to get married in May (delayed due to Covid-19) and it seemed like the right time to make a lifestyle change too with the plan over the next five years for Mum to slowly ramp down and me to slowly ramp up.” 2020 proved to be a strange time to join a business in the retail sector with Tallie joining when the shops were closed due to the national lockdown. This however enabled Tallie and her parents to use her digital skills to help develop and build their online presence. As Tallie adds, “We have built a brilliant new website which contains over 5,000 products and my role has been focused on improving the ecommerce and social media side of the business. We are already seeing the benefits and are getting some amazing reviews on the site and it has been a great project to help further develop a broader understanding of the family business too.” More Than Just A Family Business For Tallie, although it is often stated by other family businesses, Colemans is “not just a business run by a family. Care and respect for each other is our number one value and last year we celebrated our 50th anniversary and special recognition was given to our longest serving members of the team who have worked for us for over 20, 30 and 40 years! We have a lot of people who have worked for us since they left school and if you cut them in half they would say that they have ‘Colemans’ through the middle! I have grown up with these wonderful people in my life and even have a Godmother who is our Group Operations Manager!” Heritage Is Important Too For Colemans, the story is everything and the heritage hugely important. As Tallie explains, “The business is still grounded by the same values as when it was founded." "At 87, my Grandfather still comes to work most days and has set up a fantastic photo framing business in one of the outhouses of our Oundle store." "He is a hugely respected man, both in the business and in the local community. We are so proud to be a 51 year old family business that is still trading and I think/hope that everyone is excited that it is going to carry on into the third generation.” The Next Generation Challenge Although 2020 has not been the year that anyone expected, Tallie has used the time to start defining her role and the opportunities that lie ahead. As with everything, one of the biggest challenges she faces is time. “Coming from a large business where everyone has a clearly defined role to a business where everything is on you, time is a big challenge,” admits Tallie. “Prioritisation is so important and something that I don’t think that I have quite mastered yet but I’m getting there. I still get frustrated that some things on the ‘to do list’ just have to wait but I will get more used to it as I settle in. Obviously, there is a big challenge for smaller, independent retail companies like ours to continue to cut through the increasingly Amazon dominated, digital world and to remain viable and profitable too and for me personally, the adjustment to working in the family firm. Although I have grown up with this business, you don’t quite realise how different it is working for your family than a non-family business until you are in it!” “There is no ‘off switch’ and the laptop doesn’t close on a Friday night and come out again on Monday morning because you never stop thinking about it. The highs are so much higher and the lows are so much lower because there is so much more at stake.” Looking To The Future Tallie remains optimistic about the future and the opportunities that are open to them. “The opportunities are endless. In a family business, the world is your oyster and there is no one stopping you which is the best thing and the worst thing at the same time as you always feel that you could be doing more,” she continues. “I am excited about the opportunity to build on the great grounding the business has but also to continue to evolve the business, to modernise and future proof it. For our business, there is a massive opportunity to just make more of what we already do. We don’t shout about things enough so I am excited to get the word out and about the brilliant services that we offer. It really is an easy win for us – for example we have our own printshop and printing press but the details of this are currently in a display folder behind the counter and customers only really find out about it when they ask – we could be challenging companies like Papier with our printing offer!” Tallie has already embraced the business, the family business model and is beginning to make her mark, making a difference and helping to achieve the business mission to be the number one choice for stationery, art and craft in their local area and has a desire to expand more across the country. “I want to continue to operate bricks and mortar shops in towns where it is viable to do so supported by an all singing, all dancing online offering that delights customers both nationally and internationally,” she adds. “I am also passionate about the role and need for the success of local, independent businesses and to develop even more convenient delivery and collection points to enhance the customer experience and provide the convenience that shoppers really want.” Tallie is the third generation of the family to take a step into the family firm and is going in with her eyes wide open. “I am well aware of the ‘rags to rags in three generations’ phrase but have no concern about the future of our family firm. There are so many amazing family businesses that continue to thrive and prosper well after the third generation have taken over and we are planning to do the same, although the retail landscape is extremely daunting and posing some challenges at the moment – all I can do is focus firmly on the future and as I keep telling myself, all I can do is my best!” The future looks bright and the longer term aim for Tallie is simple – “to be running a successful retail family firm with a small management team of bright, ambitious people that have the drive to keep pushing the boundaries and coming up with new ideas that keep pace with the ever changing retail environment too.” We look forward to the continuing evolution of Colemans as it moves into the third generation and beyond.

Families and their values change over time and the impact on the family business needs to be addressed too. Landaal Packaging Systems, a family enterprise based in Flint, Michigan, focused almost exclusively on the corrugated box industry for more than half a century. After dramatic changes in both the family and the marketplace, the family began to shift its identity away from the box industry to focus more on the family itself. The United States corrugated paper industry was losing the battle with China, resulting in ever-shrinking margins and consolidation of firms. The family had prematurely lost three of the four siblings in the second generation. The Landaal family created an innovation centre to help revitalize the local community, redirecting its focus from corrugated paper toward customized packaging, point-of-purchase displays and sustainable packaging. Landaal’s story reflects a growing trend: Successful enterprising families are becoming more aligned with their values, more cohesive and more resilient in order to handle the greater stress and complexity arising from today’s exponential rate of change. In a landmark global study published in 2012, The FFI/Goodman Longevity Study, 90 percent of the families who responded owned more than one business and 20 percent owned more than five. On average, those surveyed had changed their core business more than two times. A colleague, Rich Morris, points out that in the past, one good business idea might sustain a family for three generations. Today, each generation will need to come up with three good business ideas just to keep up with the changing world. As the family business changes, so will the family’s identity. A family like the Landaals may no longer self-identify as “the box people,” for instance, but rather as an enterprising family that deploys its talent, financial resources and networks in ways that align with its core values and purpose. Thus the family (rather than the legacy business) is viewed as the entity through which money flows and where entrepreneurial talent is cultivated. To make this transition successfully, the family will need to reflect on and define its purpose and values. It should address not only the question, “What kind of business or enterprise do we want to be?” but also, “What kind of family do we want to be?” The Haws Corporation, of Sparks, Nevada, a successful manufacturer of drinking fountains for more than a century, has embarked upon a proactive approach to family governance. Recognizing the competitive advantage of being family owned, it uses its family governance to align the goals of the owning family with the board and management team while developing the next generation of family ownership. The result has been an increase in the breadth and depth of business opportunities that they now pursue within and outside of their core business. Rather than remaining tied to their past, they are visioning the future and bolting on new businesses that will be more relevant to their next generation of family ownership. Investing in technology and bringing new solutions to their existing customers is helping to build a whole new enterprise that would not have been possible by simply continuing to invest in the “old” business. Four Types Of Cohesion How might you involve your own family to more effectively and proactively respond to changes in your core industry? First, you should establish family cohesion and alignment. One model emerged from a 2008 study by Torsten M. Pieper and Joseph H. Astrachan. The study found families that have been in business for a century or longer tend to have high levels of cohesion in four areas. 1 – Family emotional cohesion : Family members get their most basic needs (for belonging, security and connection) met through the family, which functions and communicates well. These families convene family gatherings, engage in charitable activities as a group and take other steps to stay connected. 2 – Family financial cohesion : The family provides for its members through gifts, inheritance and other mechanisms. 3 – Business financial cohesion : The business provides benefits to the family through salaries, dividends and investment opportunities. 4 – Business emotional cohesion : Family members consider the business to be part of their identity. They have a sense of loyalty and stewardship to the family firm. These four types of cohesion evolved over time in long-lasting family businesses, but they can be deliberately cultivated during the early stages of family enterprise. How might your family create greater alignment, cohesion and resiliency? Family business leaders should consider three factors: innovation, awareness and practice. Innovating With The Family Innovation is change that creates value. Virtually every business must look at both incremental innovation (how to improve a store, a product or a service) and breakthrough innovation (how to go from Blockbuster to Netflix). The family must approach its enterprises with an innovative mindset. Family enterprises often resist change. Families tend to seek harmony and stability, which can easily lead to stagnation. Once the business enters its second generation, members can become risk-averse, sometimes to an extreme. Innovation should be considered a crucial part of the family’s values and purpose. Given the impact of rapidly evolving technology, generational differences and a changing competitive environment, families must be open to rethinking their relationships to their enterprises. Cleveland-based Bird Technologies, for example, operationalized its values through an ongoing practice of clarifying the family’s core values and translating them into business values. The non-family CEO reports periodically to the board and the shareholders on how business results were achieved in line with shareholder values. This operational, tangible and holistic integration of shareholder values with business function creates and sustains a culture that exhibits the four types of cohesion. Deep Dive Into Awareness Consider the time, energy, talent and reporting you devote to your business. Now compare that to the effort you make to enhance your family’s involvement in its enterprises. A family system is highly complex. Each member brings to the table his or her unique behaviour patterns, roles and ways to deal with stress. Along with this complexity comes greater interdependency, so stress and change in any part of the system affects the whole. If this is not brought into awareness and considered in business choices, the family cohesion is put at risk and what could be a strategic advantage turns into a threat. Family leaders should assess each individual’s identity and values—what drives them and how they contribute to the family’s individual and collective strengths, weaknesses and blind spots. How does the family cultivate and convey its character and align it with the family’s reputation? Each of these factors can be viewed relative to the four types of cohesion described above. Families and their advisers can be tempted to rely too much on structure and outcomes and thus minimize the importance of process and innovation. Your family can’t outsource this self-analysis to a lawyer or accountant any more than your fitness coach can do your workout for you. Planning, structures and policies can be productive after this deep dive into self-assessment. Otherwise, such planning is at best defensive and at worst a land mine waiting to be stepped on. Too often, we resist dealing with the “soft” or human side of a business—the family—until there is a crisis. This reactive mindset should be replaced in family enterprises by a proactive model that builds momentum as entrenched communication patterns are identified and defined. This proactive process deepens as the defences and underlying emotions that fuel negative patterns are exposed. This creates an opening for rebuilding damaged relationships. The family will emerge with a better understanding of one another, a chance to build trust and commitment, and productive methods of communicating. Ongoing Practice If each year your family went away for a weekend to listen to fitness experts talk about the latest trends in exercise science—and that was all you did to stay in shape—what kind of condition would you be in? Let’s extend this analogy to your family enterprise: If you and your family don’t regularly undergo a process of assessment and strategic planning, your enterprise will not be healthy. Just as you might start a fitness program by getting a thorough assessment, you can do the same with your family enterprise. What are your strengths, weaknesses and goals? You might factor both strength and cardio fitness into your workout regimen; similarly, you should factor values, trust, education and communication into your “family practice regimen.” Everyone in the family must be willing to start out by working on himself or herself. To focus on “fixing” one family member will undermine true progress. The most effective way you can encourage another family member to take responsibility for and work on his or her own issues is by modelling the desired behaviour. Most of us exercise more effectively when we work out with others and when we have good coaching. You can find “workout buddies” by attending conferences and peer-group sessions, and a consultant can do the coaching. But remember, you still have to do the heavy lifting yourself. This article originally appeared in Family Business Magazine’s Jan/Feb 2015 issue (Equip your family for success in today’s world) and is reproduced here with the permission of the publisher, Family Business Magazine.

Open, honest and clear communication is one of the most important hallmarks of a successful multigenerational family business. Family businesses simply cannot afford to have breakdowns in trust and communication as the effects can ripple outward to affect their most important relationships. Improve communication in your family business with these tips: 1. Pick The Right Time And Place For Discussions Research shows that environments matter to an employee’s attitude and productivity. The same can be said for communication, in that work conversations should probably happen at work and personal issues hashed out on non-work time. Even if it’s impossible to keep business discussions from spilling over into family time, train yourself to have serious discussions in the right time and place. Ask yourself: Should the conversation happen during work hours? Does it involve multiple family members? Should a formal family meeting be held? One problem that many family businesses face is a lack of time to think about long-term business issues. As a result, important conversations about the future of the business happen haphazardly. One of the reasons I recommend establishing formal governance structures in a family business is that family councils or family board meetings offer structured times to discuss long-term strategy. Family retreats are another way to get away from the business and focus on the big picture. 2. Choose The Right Medium Some communications need to happen face-to-face. Others can happen in an asynchronous fashion by email. One issue that frequently crops up in multigenerational family businesses is that family members who are not involved in daily operations can feel left out of important discussions. One way to avoid unintentionally leaving people out is to use written communication whenever possible and to hold regular in-person meetings with key stakeholders when necessary. 3. Keep Roles In Mind In a non-family business, roles are fairly discrete and well understood. A manager has an explicit role to play – as do executives, employees and everyone else. When managers communicate with employees, they typically don’t have to juggle multiple roles. However, a family business combines personal and professional roles in a way that can make communicating complex. Husbands and wives are presidents and CEOs, children are managers and employees. Non-family employees may be close family friends. Though families can do their best to keep personal and professional time separate, it’s rarely possible to keep these different roles from bleeding into one another. When you speak to an employee or partner, who are you really talking to? Are you talking to your husband or wife? Or are you speaking to your colleague? Think carefully about the role that you are occupying when speaking to a member of your family. Make sure that the way you communicate fits the role you are playing. 4. Set Communication Guidelines Because family members see each other often and in different places outside of work, a great deal of information about the business may get passed along informally. When conversations happen in casual or informal settings, important information can sometimes get lost or forgotten. These lapses in communication can cause a great deal of business and family friction. If your business currently doesn’t have a communication policy, set one. Consider: How should firm-wide communications be issued? How should family-wide messages be sent? How can you make sure not to lose or leave out important details? How can you make sure that the right people see the message? 5. Make Communication A Two-Way Street One of the fastest ways to shut down open communication is to make the people around you feel as though you don’t listen. When communication breaks down or conflicts arise, one of the most effective things a family business leader can do is simply listen. Here’s how to engage your active listening skills: Stay quiet and hear the other person out fully, without interrupting. Keep an open mind when disagreements arise and work on seeing the other side of the issue. Ask open-ended questions to draw the other person out and clarify the issue. Put away distractions, look the person in the eye, and be present for the conversation. Bottom line: All of us could probably benefit from working on our communication skills. If nothing else, becoming a better listener can yield many personal and professional dividends.

Family-owned businesses have tremendous advantages stemming from their special status: deep community ties, values, family traditions, and the ability to take a long-term view of success. However, family businesses also face unique challenges. The most successful multigenerational family businesses are able to overcome these barriers, incorporating new ideas while retaining the competitive strengths that made them successful in the first place. Let’s talk about some of the common obstacles that arise in family businesses. Barrier 1: Failing To Keep Non-Family Employees Happy Are your non-family employees happy and fulfilled in their jobs? If not, you may be damaging your firm’s ability to retain talent. One common complain that we run across is that non-family employees feel that there is a ceiling to their career progression within the firm. Since they are not family, they may be barred from top positions within the business or think that they don’t have a clear way to move forward in their careers. If you want to retain key employees (and you should), it’s critical that you make them feel that the firm’s success benefits them as well as your family. Consider allowing key employees an ownership stake or initiate a creative compensation scheme. Bonusing well or offering some share of the firm’s profits can help align their interests with the firm’s and motivate key non-family employees to stick with your firm. Barrier 2: Letting Family Drama Affect The Business Though family relationships may be key to your firm’s culture, sour dynamics between family members can be very damaging to business success. One of the problems we see over and over is that family members may lack an avenue to express their wants, needs, and concerns – personal and professional. When family members don’t feel heard by others (especially matriarchs and patriarchs), family drama can spill over into the business. Non-family businesses have natural barriers to conflict; it’s unlikely for two employees to be so angry at each other that they will overcome workplace boundaries and escalate the fight. Lacking a Human Resources department, many family firms lack formal rules and processes for mediating disputes, making it hard to handle the inevitable spats that can arise between employees. Though we’ll never be able to completely do away with family drama, formal structures like family councils, boards, and forums offer safe spaces where grievances can be aired and problems mediated. We strongly advocate for formal governance as a way to help a family business retain the values and intangible capital that makes it strong while managing conflict. Barrier 3: Lack Of Professionalisation Within The Business I’ve often spoken about the importance of professionalisation in sustaining a family business through generations. Family firms, particularly those within the first or second generation where the founder is still involved in the business, tend to be more casual than their non-family counterparts. The problem is that this informality often leads to a lack of strategic or succession planning, and can limit the business’ access to outside expertise and capitalisation. Professionalising a business doesn’t mean giving up the values and identity that makes a family firm strong. Quite the contrary: professionalising means making better use of internal resources, separating ownership from management, and creating strategies for the future of the business, among many other things. We teach our clients to associate professionalisation with taking their businesses to the next level of growth. Final Thoughts… Family businesses tend to go through predictable patterns of growth and development, and the barriers discussed here are natural parts of running a successful firm. If you’re feeling isolated or frustrated as a business leader, it can be enormously helpful to reach out to other members of the family business community for support.

Honest and clear communication is so critical to family business success. Here we highlight a few of the hot spots that can spark trouble in a family business and how to avoid them. 1. Be mindful of non-family employee relationships One of the major pitfalls that family businesses can fall into happens when they hire non-family employees. It’s critical to the health and success of your business not to create a sub-class of employees who are not family. Treating non-family employees differently or handing out special favours to family can be serious de-motivators and set a terrible example. Worse, employees who feel that promotions or future success are out of their reach because they aren’t part of the bloodline aren’t likely to stay long. Some common mistakes that you want to steer clear of are: Letting family work from home but requiring non-family employees to show up to the office. Giving family members extra perks like use of the company car. Having different vacation or medical leave policies for family members. Having different hiring and promotion practices for family members. 2. Don’t abuse family relationships The other side of the family/non-family coin is expecting more from relatives than you do employees. Who would you call to work overtime when the business needs it? If you regularly expect family employees to work extra (unpaid) time, then you may be mistreating your family members. Every growing business routinely confronts the need for more hands in the kitchen; it’s unfair (and potentially harmful to family harmony) to always expect the family to shoulder the extra burden. It’s also not uncommon for overtime to fall disproportionately on certain members of the family. Whether it’s the unmarried child who gives up her weekends or the eldest sibling who always seems to put in the extra hours, these unspoken expectations may reflect underlying family dynamics that can blow up in harmful ways. Avoid creating family strife with these tips: Explicitly negotiate overtime expectations with your managers and employees. Split overtime among multiple members of the family so it’s not always the same people pitching in. Document extra hours so that it’s clear who has done what (and when new employees need to be hired). 3. Love, honour and respect your ‘co-preneur’ Couples who run businesses together face an especially challenging balancing act. On top of raising a family and navigating the natural shifts in a relationship over time, business-owning couples also have to handle the added stress of running a business. Every couple needs to find its own way to stay sane and stay happy within a co-preneur relationship. Some couples take responsibility for different parts of the business so that they aren’t working too closely together. If you can’t separate work and family time completely – and most couples can’t – it’s critical to set some ground rules. For example: Discuss job roles and expectations as the company grows. Don’t drive to and from work together. Work in different spaces or alternate days at the office. Set a daily deadline after which no work will be discussed at home. Schedule time for your relationship so that you don’t lose the love. Find a neutral person (such as an advisor or counsellor) to vent with. 4. Leverage formal structures like family councils and family retreats If you’re always working in the business, you’ll never find the time to work on the business. The same goes for family. Though members of a family business may work and play together, they often find it hard to make time to discuss the tough topics. The problems might be logistical in nature: it’s hard to get everyone together. Or it might be difficult to keep the family group on track in wide-ranging discussions. Creating a specific (and safe) place to discuss major business issues and air grievances will help clear the air and keep small problems from boiling over into crises. The goal of a family council or retreat session isn’t to handle daily business affairs, but to address macro issues like strategy, governance and family affairs. Council meetings and retreats are an opportunity to get together as a business-owning family and address the big-picture issues. In our experience, families have used councils and retreats to address issues like: What’s next for the business? How will future capital needs (expansion, succession, retirement, etc.) be satisfied? Who will take over the business? How is ownership vs. employment determined? What is our vision for family wealth? What is each family member’s individual plan for success in the business? How can we resolve a conflict that has arisen? Bottom line: Family businesses bring together all the joy, shared vision and stress of a family. Over time, we have identified many of the common pitfalls that can await unwary family business leaders. Keeping these tips in mind can help you avoid these common mistakes and keep your business focused on success.

Let’s take a look at some of the emotional aspects associated with the growth of a family firm and the journey from the kitchen table to the boardroom table. Most family businesses have humble beginnings. Someone has an idea or sees an opportunity and decides to give it a go. What usually follows is a lot of hard work and ups and downs, until the business meets that inescapable fork in the road called ‘Decision Time’… do we keep the business going or fold it and do something else? While there are many that take the decision to fold, there are also many that go on to succeed beyond the wildest expectations of the founders. As both the family and the business grow, they stop being separate entities and merge into one. The family is the business and the business is the family. The Kitchen Table Forum. More Tea Anyone? During the organic growth of a family business, the kitchen table metaphorically becomes the forum for decision-making on all the factors that need to be addressed. I suspect that author Joseph Conrad was talking about family business when he said “… a sane view of life is, after all, elaborated mainly in the kitchen.” To me, this is the classic expression of the very ethos of family business. The ‘kitchen table forum’ is emotional, informal and, truth be told, an effective way to run a business until it reaches a significant critical mass. So, just when management is thinking that the ‘kitchen table forum’ is working well, the day arrives when another inescapable fork in the road comes along… called ‘Where to from here?’ Here’s how you can recognise it: The founders of the business are pulling back and playing a less hands-on role. The business has reached a critical mass that requires serious management because competitive market forces demand higher levels of production, product quality and marketing efficiency to ensure continued success. Family members have been introduced into various roles including management. Younger family members are looking to the business as their future and you need to take steps now to make sure they get the education and training to equip them. Human resources have become vitally important and retention schemes are needed. Innumerable issues such as funding, R&D, taxation, compliance and so on demand attention and you are more and more looking to outside consultants for assistance. Know the feeling? Going to the Boardroom Table. One Step at a Time. The first step I take with my family business clients in the journey from the kitchen table to the boardroom table is by assisting in the creation of a Family Council. The purpose of a Family Council is to channel family decision making more effectively by bringing clarity, formality and accountability to the decision making process. The majority shareholders, usually the founders, have to take the decision to create a Family Council and decide who’s going to be on it. Of course I assist them in its structuring, but at the end of the day it’s their decision. Then, once the Family Council is functioning smoothly, it is often time to consider the formation of a Company Board to gain input and contribution from highly skilled and experienced professionals across a number of disciplines. The key points in forming a Board are: The Family Council chooses and appoints the board members. It’s critical to first define the roles that Board Members can play to provide maximum benefit to the business, and then choose the right people to fill those roles. The Family Council gives direction to the Board on its strategic goals, its business and community philosophies and its plans for succession. This clear direction enables The Board to function efficiently with the clear goal of satisfying the brief they have been given. It’s all part of being a fully integrated family business. A Family Council and a Company Board are parts of the jigsaw puzzle that makes up a fully integrated family business. All decisions, whatever they are about, must be part of an integrated plan which is totally comprehensive and gives a clear and co-ordinated pathway to the immediate and the future. They say a journey of 1000 miles begins with one step… so, if you have reached that “Where to from here?” fork in the road, I recommend that the first step should be the formation of a Family Council.

Excellent family governance has played a key part in successful family firms for generations, and there are three vital ingredients. Its easy to lose direction when implementing Family Governance for businesses, find out three vital fundamentals that need to be kept in mind when doing so. Excellent family governance has played a key part in successful family firms for generations, as best practice for family businesses it puts in place procedures for a the family to work together as a team within the business environment and has clear structures to minimise and avoid conflict prior to it occurring. As families and businesses grow, development of family governance structures becomes critical to effectively managing the family wealth and legacy for successive generations. Our experience shows that families can use effective family governance to preserve their wealth and pass values on to successive generations. The benefits to families of establishing and promoting formal governance structures are clear. Our clients have experienced increased opportunities to enhance communication between family members, reduce conflicts through formal structures, educate the next generation of leaders, preserve the family legacy, and build a shared vision for the future. 1. Giving Each Family Member a Voice Family governance is, at its core, nothing more or less than joint decision-making. Informally, families practice governance every day and this process is simply designed to formalise those processes and give family members a forum in which to express opinions and their vision for the future. One of the first questions that come up in this process is that of identifying who qualifies as family. We often encourage families to include extended family members in the process, even down to the teenage members of the family. We’ve found that even family members who are not active in the business make important contributions and families benefit from their insight into family values and the impact of the business on the family group. 2. Defining the Family Mission & Values One of the most important first steps that we take with our clients is that of crafting a family mission statement that helps the family articulate its purpose, establish shared goals, and identify shared values. One of the major benefits of this process is that it provides an opportunity for each family member to share his or her vision for the family. A rich and fruitful discussion is one of the goals of this process and the final objective is the creation of a mission that is aligned with your family’s values and will serve as a guiding compass when the path to success grows clouded. 3. Implementing Governance Structures Families are complex and a number of governance structures have evolved, ranging from simple Family Committees to multiple levels, including Executive Committees, Family Councils, and Assemblies. Part of our role as advisors is to educate clients about the different structures available to them and lead them through a process of determining which entities will help them achieve their goals. Frequently, the formality and number of structures needed is a function of family size; it’s not uncommon for families to turn to Family Councils to decide broad family issues of succession or philanthropy while limiting sensitive business issues to Executive Committees or Family Boards. A key issue when evaluating different governance structures is the need to separate the business from the family. The business of family includes planning family meetings, promoting shared values and philanthropy, and nurturing the intellectual and patient capital of the family. The family business focuses on managing the financial capital of the firm as well as ensuring the long-term viability of the business. A strategy is only as good as your family’s adherence to it. In order to reap the benefits of a family governance system, it’s vital that family participation be encouraged. It’s also important for structures to retain enough flexibility to change with the needs of the family over time. "As you embark on the next stages of the journey with your family, consider these essentials and make now the time that you build a sustainable governance strategy for the future success of your family."

With Christmas approaching, accrued holiday entitlement is becoming a ticking time bomb liability for many employers, according to Nick Hine of employment law specialist Hine Legal, particularly as employers cannot pay in lieu of accrued holiday except on termination of employment. Many employers who have furloughed their employees during part or the whole of this pandemic will likely find that many employees will have accrued a large amount of holiday, which they have not been able to take or wanted to take during the pandemic. and for many that leave year will end in December. This is despite the Working Time (Coronavirus Amendment Regulations) passed in March 2020 which permitted the carry-over of the first four weeks of annual leave in to the following two years where it was not reasonably practical to take it in the leave year as a result of the effect of the coronavirus. The government guidance included a number of factors as to whether this was to be applied and as a result it is likely that those carry over rights only apply to keyworkers whose roles involved essential activities in responding to the pandemic. This is supported by the fact that furlough workers are permitted to take and be paid in full for holiday during any furlough period. Many employees who are not key workers will now therefore have accrued a large amount of untaken holiday within the leave year. So, what are the employer’s options? According to Nick Hine, “Many employers do not realise that they can require employees to take holiday provided they give twice as much notice as the holiday they require the employee to take.” Therefore, even if the employee has been furloughed, employers can require employees to take holiday during the furlough period provided they give the adequate notice and the government will fund part of that holiday liability. “This can include during any notice period which can save the employer having to pay twice. If on furlough the employer has to top-up to full pay during that period.” Nick Hine recommends that employers take the following approach to this build-up of annual leave: 1. Calculate how much accrued annual leave employees have for the remainder of the holiday year. What will this liability cost? 2. With Christmas approaching considering, what leave you could require the employee to take and it may well be worth discussing with the employee so that you can potentially use the Christmas period to reduce this annual leave liability (assuming this fits in with the business plans). 3. If the employee is not going to be able to take the annual leave do you agree that the employee (unless the contract provides for this) can carry over a certain number of days into the new leave year provided it is taken by a particular date, for example, 31 March 2021. 4. If you cannot agree with the employee what holiday they will take, then serve notice on the employee requiring them to take holiday. Blocks of weeks are probably most sensible. 5. Discuss with employees their holiday plans so that you can manage the ongoing liability and plan how to reduce it. Nick Hine concludes, “Many businesses are already stretched with the impact of Covid-19 and lockdown and employment and personnel issues have been high on the agenda. With Christmas approaching employers need to consider how they could potentially alleviate the headache of this annual leave liability and we advise that they do this immediately.”

The transition from one generation to the next is a delicate time for Family Businesses. Studies from across the world have highlighted the fact that more than 70% of all family businesses fail to transition into the second generation. Of the ones that do, more than 90 percent do not make it to the third generation. It is only an elite 3 percent that make it to the fourth generation or beyond. One of the key reasons for this high mortality of Family Businesses centres around succession, or the lack of it. Traditionally, we have heard of Family Businesses splitting because the many inheritors could not arrive at a consensus on choosing a leader of their business in the next generation. Large and diversified groups in India like the DCM, Birlas, Dalmias, Modis could not survive beyond one or two generations due to this very reason. However, there is a new problem around succession that is being experienced these days by the Patriarchs of the Family Owned Businesses. This is the problem of the Unwilling Inheritors! Sonu Bhasin explains more. Joining the Family Business is not the default option any longer for the new generation of Inheritors. These Inheritors are educated at the best institutions around the world, are well travelled, have a wide world-view and high ambitions. Unfortunately, for many of them the ambitions centre around making a name for themselves away from the Family Business. Mr. Bansal owns a large and successful machine-tools manufacturing business and he has a problem of the Unwilling Inheritor. A first-generation Family Business Owner, Mr. Bansal ensured that his son, an only child, had the advantage of the best education that money could buy. When the son, Rohan, wanted to go to the US for his MBA Mr. Bansal readily agreed. It was after Rohan returned to India after graduating that Mr. Bansal ran into an Unwilling Inheritor. Rohan, fresh from the US, found the idea of running a machine-tools manufacturing business not suited to his aspirations. He balked at the thought of spending time on the shop floor and, instead, wanted to dabble in e-commerce. All advice and admonitions of Mr. Bansal fell on deaf ears and Rohan, as we speak, is trying to find a business model that works. Mr. Bansal is not a lone example of such a Patriarch. There are many like him who find that there are no takers for the business set up by them. Here are three points that patriarchs need to keep in mind: Start Early : Most Patriarchs want their children, the potential Inheritors, to focus on their studies and hobbies during their growing up years. The Inheritors, as a result, have little or no connect with the Family Business. It is only when the Inheritors are in the late teenage years that the Patriarchs switch gears and want them to start learning about the business. Smart Patriarchs understand the value of an early-connect and ensure that even as young children, the Inheritors spend time with them in the business. Pooja Jain of Luxor and Amit Burman of Dabur both remember their late school years when they would be encouraged to spend time at the factory/office. As a result, when it came to joining the family business they were ready for it. Ease the Inheritors into the Business : An Inheritor who is willing to join the family business can be easily overwhelmed by the sheer responsibility of the task. He (the Inheritor is usually the son) is likely to be in the mid-twenties when he begins his initiation into the Family Business. In his enthusiasm the Patriarch runs the danger of heaping too much onto the young Inheritor’s plate and thus, scaring away the Inheritor completely. Like any other new employee, the Inheritor needs to be taken through a structured Induction Programme. Giving a young Inheritor the corner-office will be counter-productive not only for the young man himself but also for the business. Stop being a Control – Freak : Patriarchs would be well advised to give wiggle-room to their inheritors once they do join the family business. Phrases like ‘you don’t know what you are doing’ or ‘don’t tell me how to run my own business better’ or even ‘you are still a child so behave accordingly’ will be totally counterproductive. If the patriarchs are serious about inducting their inheritors into the business they need to first have a talk with themselves and gauge if they, really, can give up some control.