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Derrick Nielsen
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
2004-06-01 11:37:00
Family business succession plans
ANSWER: This month's response will be the third and last part of the answer to your question. In April, we discussed obstacles you might face in a joint partnership of your grandfather's company. May's answer took a look at three models for shared leadership that have been successfully used in family businesses. This month we will look at some of the successful ways siblings, spouses, parents, and even non-family managers have dealt with shared leadership positions.TIPS FOR SIBLINGS•  Make an effort to better understand the different "hats" that each family member wears -as an owner, a family member, and a part of the business.  • Discuss expectations with your siblings and your parents as openly and thoroughly as possible.  • Create a shared vision for the future of the business and the family with your siblings.  • Create the appropriate family business structures, especially an outside Board (legal or advisory) and a Family Council.• Agree upon a code of conduct (or code of communications) to guide public and private interactions.  • Plan for the next generation of owners, recognizing that the structures, processes and policies appropriate for them may be different from those that you have used.TIPS FOR PARENTS OF SIBLINGS• Separate out unconditional love and acceptance for your children with a job in the business.• Don't force your kids into the business.  • Put forward the business' best face at home right from the start, including discussions at the dining room table.  • Assume that the business will evolve into a partnership, thereby avoiding promising to one child "that this will all be yours someday".• Remember that what is equal and what is fair may not always be the same.• Be up front with your children regarding your plans for the future and involve them in planning for the next generational transfer.• Remember that what has worked for you and the business during your leadership might not work in the next generation.  Help your kids find out what will work for them and the future needs of the business.• Deal with each child directly. Don't divide and conquer or get involved in disputes that they should settle on their own.• Be patient, letting the next generation make mistakes that are necessary for them to learn.  Provide counsel when asked, rather than continuously.• From their youth, promote your kids' partnership skills, such as listening, communicating, and managing conflict.• Provide opportunities for children to prove their abilities to you, other employees, their siblings and - not least - to themselves.  Consider what educational experiences, training and outside work experience might be necessary in this regard.• Respect your children's choice of spouse and work to make them feel welcome in the family and informed about the business.• Plan for your retirement, including your financial independence from the business, and stick to it.  Cultivate meaningful activities away from the business.TIPS FOR SIBLING SPOUSES•  Expect culture shock when entering your new family and its business.  • Appreciate the challenge that your spouse faces in his or her attempt to work in the family business.  • Don't over-function for your spouse.  Listen to his or her problems with empathy and understanding, but allow them to act for themselves in working out the issues with others.  • Show an interest in the family's business, while remembering that your questions and thoughts need to be raised in the appropriate venues and at the right time.• Work to develop friendships with individuals in the family.TIPS FOR NON-FAMILY EMPLOYEES• Seek to understand the family business system and the different roles that family members play in that system.• Don't get drawn into sibling rivalry.• Don't play one sibling off another or go behind his or her back.FINALLY, when we first considered your family business question in April, we suggested you consider the question posed by Cain:  "Am I my brother's keeper?"   Reframing the question, you as a family business owner might ask, "Am I my sibling's keeper?"  The short answer is YES if you want your sibling partnership to work.  Remember:  Founders can create a business, start a family and even make their kids equal owners, but they can't unilaterally make their kids effective partners.  Siblings will have to choose to work with each other and define their own partnership if they are to run a business together harmoniously and effectively.
 
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