Are you a family business coming out of a crisis? We can help.
[Read time: 5 minutes]
Families are complex. Family businesses even more so. Throw underlying family dynamics, longstanding-assumptions and familiar narratives into the business-mix and it may be that a genuine consensus on the future of a family enterprise has not actually been achieved. This can be hugely detrimental to an organisation, particularly in times of crisis when it is essential that customers, employees and suppliers hear a clear, united voice emanating from the business.
We are an award winning full-service law firm that takes real pride in the fact that we put ourselves in the shoes of our clients and we have a wealth of experience in advising and documenting individual governance structures that best suit the needs of each family business. To be able to do that, however, each client needs to have agreed on the look and fit of their "shoes".
Business values and succession planning
Each family business is unique, with different (and personal) values, objectives and business ideals. As a result, there are many considerations for family-owned businesses in connection with their governance structure to ensure these values, objectives and ideals evolve and survive, particularly through times of challenge and change.
The most common concern we hear from family businesses, is how best to protect a family-owned business in times of succession planning. The move from one generation to another within a family-owned business brings a complex balancing exercise into play between the interests and expectations of the exiting generation and the ideas and challenges of the new.
COVID-19 has brought about a dynamic shift in the way that most organisations do business and this has encouraged a review of the constitutional arrangements of some family-owned businesses. We have seen, first hand, how those organisations that had effective remote working and IT infrastructure already in place have navigated COVID-19 with greater success than those that did not. Marketing has become about an active presence on social media, as the traditional methods of on-boarding new business have become obsolete, and we have seen family businesses diversify into digital mediums. These changes, generally speaking, play to the strengths of the more tech-savvy younger generations, bringing about a (often-accelerated) change in the leadership of such businesses.
Corporate governance and family businesses
An update to the corporate governance of any family business is based upon the fundamental premise that all of the individual family members involved are in agreement and that, in reaching that agreement, they all had the opportunity to openly discuss the evolving needs of their business. But what if that is not the case? What if a few family members dominate the boardroom? Has everyone had equal airtime when considering potential changes? How can the voices of the succeeding generation compete with or (more preferably) complement the voices of the experienced generation for the benefit of the business?
How can we help?
We pride ourselves on our innovative approach to legal services and we are pleased to be able to recommend options and methods that dovetail with such an approach to our clients. The following are a few examples of activities or resources that we regularly recommend to improve communication techniques at board level.
An innovative board workshop
One innovative way to ensure that all voices are heard when finalising succession plans, or other complex governance changes, is a LEGO® Serious Play® (LSP) workshop. These are run by executive coaches internationally who create bespoke workshops to spark innovation, creative thinking, empathy, and communicative debate.
Participants of an LSP workshop are given various questions. They answer by building a LEGO® 3D model. The methodology works because of a variety of underlying psychological effects. For example, the building process eradicates any unspoken assumptions: any ideas and values that are not genuinely held by an individual (but are consciously or subconsciously imposed on them by other family or board members) are highly unlikely to make it into their build.
Each attendee is given equal airtime to talk about their 3D build and to share and develop their ideas. This levels the playing field to the benefit of the board's overall success (societally, certain demographics can be more or less domineering in board and business meetings). The advantages for a family-owned business (or any business) are clear; all members are given regular and equal opportunities during the course of the workshop to focus their minds on the changing needs of their family's organisation - and to model and openly debate those ideas using LEGO®. This, in turn, maximises the likelihood of the participants reaching a genuine consensus and gaining board-wide investment as to how best to proceed.
Seek the help of a professional consultant or coach
We are well connected with a number of family business consultants and professional coaches who would be readily able to help a family-owned business analyse its strengths and develop a strategic route out of the current pandemic.
We offer a formal mentor scheme to entrepreneurs and early stage businesses as part of the Michelmores [MiVentures] initiative but we can also make ad hoc business introductions (and often do) enabling business families to hear about the experiences and achievements of others.
Everyone at Michelmores is actively discouraged from working in a silo. We see the benefits of collective thinking and encourage our clients to learn and benefit from the experiences (positive and negative) and achievements of one another in the same way.
The appointment of an NED
A more commonplace strategy is to appoint a non-executive director temporarily to the board. Someone with experience within other family-owned businesses and the relevant sector is often able to offer insight, independence and objectivity to bring about a tactical steer for the benefit of the business.
We have made a number of introductions that have led to the appointment of NEDs and, in turn, the successful progression of the business.
If you would like any more information regarding any of the topics raised in this article, please do not hesitate to contact Chloe Vernon-Shore.