 | Derrick Nielsen specializes in helping clients manage the conflictual issues inherent in family businesses. He has worked with siblings and cousins to create structures, systems and policies that help them work together effectively as owners and managers. Derrick has assisted companies improve their governance systems through the formulation of strategic and operational plans, the creation of Owners' Charters and Family Constitutions, the facilitation of Family Council meetings and retreats, and the introduction or enhancement of Advisory Boards or legal Boards of Directors. In addition to his client work, Derrick coordinates Legasus Group's research and development efforts. He has shared the Legasus approach to the family business system in a number of public seminars, private workshops and published articles. Derrick's diverse background includes two years on Desmond Tutu's Truth and Reconciliation Commission, a year teaching in a South African high school, and a year tutoring American Politics at Oxford University in England. He has a B.A. from Georgetown University and is currently completing his Ph.D. dissertation for Oxford University. Derrick can be reached at (316) 681-0444 or by e-mail at dnielsen@legasusgroup.com |
Business Consulting
2004-04-01 13:37:00
Family business succession plans
ANSWER: Remember Cain and Abel - the biblical story of one of the most legendary feuds between brothers? The story is one of jealousy, conflict, and anger and ends with the famous question - "Am I my brother's keeper?" You may have seen a seminar entitled "Cain and Abel, Inc." which focuses on avoiding the potential pitfalls siblings in business have to face and highlighting ways to build successful partnerships. According to a recent family business survey, 68% of family businesses are considering moving to joint leadership structures in the next generation. While many "business experts" preach against the use of co-CEOs and other joint management structures, many family businesses are actively considering having siblings share leadership in the next generation. What can be said about these Sibling Partnerships? Are they destined to repeat the story of Cain and Abel, figuratively if not literally? Are they likely to be consumed with fights or sibling rivalry to the detriment of the business and their personal relationships? Not necessarily, but there are significant challenges.Although all family businesses face challenges, the Sibling Partnership may be the most intense and challenging form of family business ownership. Let's see why:The business is often the founder's "other child". It bears the personal imprint of the founder and no small amount of blood, sweat and tears. The inherited business is generally more than a commercial interest; it is a personal and professional legacy of the founder.Parents often stay involved in the business even after they have passed on a controlling stake in the business. This is especially true when the retired owners' financial well-being is still tied to the business' performance. Siblings who work together in the business have a long personal history of interaction. No one understands each other's weaknesses and hot buttons better than a sibling. Work relationships between siblings often have a personal edge that relationships with non-family members do not. Sibling partners are usually confronted with the involvement of "outsiders" for the first time - in the form of spouses and in-laws. The interjection of new family members can have a substantial effect on family culture, personal relationships and group dynamics.As ownership passes to a group of siblings, the number of family members that directly or indirectly relies on the business for support increases dramatically. While families may grow exponentially, businesses tend to grow linearly. Siblings face a significant challenge in keeping the business growing to provide for increased family needs. Ironically, many of the characteristics and qualities that make so many controlling owners successful lead to significant problems in sibling partnerships. Sharing power and authority in a business is a very different task from running the whole show. The shoot-from-the-hip, impulsive and charismatic qualities of many founder-entrepreneurs will not work for a group of siblings. New norms for decision-making and consensus-building must be developed for a sibling partnership to work effectively.There are a number of models that should be considered as starting points to help siblings discover what arrangement may work for them. What works for a particular sibling group may be a variation on one of these themes. Some of these options will be covered in next month's edition of the Q&A Times.
