Family Firm IN FOCUS

Hello everyone, welcome to the new episode of

family firm in focus, where we discuss with

advisors, with family businesses, different aspects of family

businesses, what could be the learning aspects and

the main vision behind this platform is to

facilitate family businesses and the advisors, those who

are facilitating family businesses.

So today my guest is very senior advisor,

my mentor, he is an author as well,

he is host as well, and most of

the times he is also being serving as

a guest as well, like in our case

today, and he is continuously contributing to his

writing.

Along with that, he is a faculty member

of FFI, the leading institute of family business

advisors and FEA, which is the family enterprise

exchange Canada.

Along with that, he is a coach as

well, and most importantly, he is coming from

second generation family business.

So I would like to welcome Steve, warm

welcome to you Steve, thanks a lot for

your time.

Thank you, I'm honoured to be here with

you and look forward to our discussion.

Great, wonderful.

So Steve, first question, coming from a second

generation family business background yourself, how does it

contribute to your advisory practices?

Yeah, that's a really good question, because I

know a lot of people who do this

kind of work who were not lucky enough

to have grown up in a family where

they were part of this.

And it's hard for me to, you know,

hold that against them.

So some people manage to do this work

really well, despite the fact that they haven't

grown up in this.

But I would say I've never done the

numbers, but probably half or so of all

the advisors that I know that do this

kind of work with families have some kind

of lived experience.

Either they were actually working in their family's

business, or there was one earlier on of

their ancestors.

There's often people are attracted to this work,

because something went wrong in the transition of

a family business somewhere in their family tree.

And they're curious about that.

Like, oh, I got into this because my

mother got, you know, written out of the

family business that her brother ended up taking

over.

And so people come to this work from

a number of different backgrounds.

Some of them, it's just some professional training.

I, you know, I was trained in the

business circle stuff to learn to take over

my dad's business.

And then we sold that when I was

still in my 20s.

And it was only much later that I

discovered this world of serving families with these

transition challenges that I realized that my lived

experience of what I grew up with, plus

I married into a business family as well.

And I saw how my in-laws handled

the transition of the business.

And they had a liquidity event as well

and how they handled that.

And learned from a couple of different examples.

And it always serves me well.

And I have to make sure that I

never commit the error of assuming that, well,

my family was like this.

So therefore all families are like this because

there's no family that's like mine and there's

no two families that are the same.

So every time people like me walk into

a family situation, we're always starting with a

clean slate and trying to figure out who

all the players are and how they relate

to each other so that we can help

them with the challenges of transitioning a business

from one generation to the next.

Even though we are coming from second generation

or third generation family business and serving as

an advisor and in the capacity of advisor,

we cannot say that every experience is going

to be same.

So we have to be really clearly focused

on that.

Keep ourselves open, how to advise.

That's a good offer out of this.

Moving on, we have seen, like including myself

and when we go through various conferences and

workshops, there is a question being highlighted that

those who are founders, those who are entrepreneurs

themselves, they have taken up the risk.

They know the business well.

They know the fundamentals behind the sector in

which they are working.

Then they come up with the question, we

are so senior, we have so much experience.

Why should we take on board any advisor

who is coming out of the family and

what kind of help we are going to

get out of it?

What do you think about it?

So you're bringing me back to my father

and the way he was with respect to

advisors and he joined a group called CAFE

back in the 80s, the Canadian Association of

Family Enterprises.

He said, you know, we go to these

meetings and people say things that these experts

come.

Now, these experts, I didn't realize at the

time that I was going to be one

of these experts someday, but they said stuff

like, you shouldn't hire your children right out

of school.

You should get them to go and work

somewhere else first, but we're not going to

do that.

So he didn't listen to those advisors.

Then he heard them say, you should have

family meetings and you should have an outside

person come and facilitate those family meetings.

Well, he called a family meeting, decided he

didn't need the part about having an outsider

facilitate.

We had a family meeting.

We went away for a weekend in 1985.

The next family meeting didn't happen until 2006.

So if you're doing the math, that's 21

years later.

That is not the recommended interval between family

meetings.

And we only had that other one because

he was diagnosed with cancer and felt like,

oh boy, we have to have a family

meeting.

So advisors that come from outside, I understand

the reluctance of the all-knowing entrepreneur who

founded the business, who knows the business.

What I suggest is that those founders, yes,

they are experts in the business, but this

is more about, I intervene more with the

family and how the family relates to the

business.

And another mistake they often make is, okay,

well, we'll bring someone in to deal with

us, but only with the people who are

working in the business.

So if there are three children and only

one is in the business, the founder will

say, no, just deal with the ones in

the business.

And it's all the stuff of the family

members that are not part of the business,

where often there are problems.

And so my attitude is when I deal

with family, I deal with the whole family,

whether or not they are employees in the

business, they are stakeholders, they may be future

owners, they need to be involved in the

discussions about the business.

And you have contributed a lot in a

term called professionalizing family business.

I was going through one of your resource,

which has a video as well, and that's

a written article as well.

So your video explains there are five different

ways to professionalize family business.

And at the third point I stopped and

I was going through that terminology, which says

upgrade your advisors.

It's not that upgrading your employees or your

board of directors, it's upgrade your advisors.

Can you please shed some light on this

point?

Yeah.

So what happens a lot is that an

entrepreneur will start a business and they'll have

an accountant, they'll have a lawyer, they'll have

someone that helps them get started when they

have a very small business, but they become

friends with these advisors.

And then fast forward 10 or 20 years,

the business sometimes has grown enormously and the

needs of the business of what that business

needs.

Now, when it started with three employees, and

now it's 300 employees, the challenges that that

business faces are usually a lot different.

And oftentimes that accountant or lawyer or whoever

was dealing with smaller businesses is not equipped

with the education, with the connections, with a

large enough firm to deliver all the services

that the family needs.

So sometimes it's really hard because they become

friends with these people.

And it's not about, well, I have to

fire you, buddy.

It's like if you need a lawyer for

more specialized things, ideally you should be able

to reach out and find people that can

advise you at the level that you need

it based on where the business has grown.

Because too often what happens is these key

advisors that become dad's buddy, and now he

just relies on those same people he's been

relying on and there's no fresh thinking and

they don't necessarily have what it takes to

advise the family and the business to get

to the next level.

And so that can sometimes hold the business

back.

For example, digitalization or getting on board the

artificial intelligence system, you need to have upgraded

lawyers or upgraded people, those who can learn

about the intellectual property.

They can protect your intellectual asset as well.

So this kind of example could be.

Again, referring to the same video or the

article as well, it also highlights the importance

of creating board of advisors.

That means you are asking family businesses to

have different people coming off from different disciplines

and creating a board for advising.

How does it work for families?

Well, so what often happens is when a

business grows to a certain size, they will

start talking about having a board of directors.

So a fiduciary board of directors that have

full responsibility to guide the company.

Most smaller family businesses as they grow, that

leaping to a board of directors with fiduciary

responsibility is kind of too big of a

leap for most of them to take.

So what often happens is people like me

will say, why don't you start with a

board of advisors?

Those advisors, they're people from outside the business.

They come to meetings, quarterly meetings, usually they

get paid for coming.

They're not just dad's golf buddy and his

accountant from 30 years ago.

It's you actually go and find people who

have experience in a related industry or people

who have a business of a similar size

or stage.

And you can bring people around to have

other people besides what typically happens is it's

dad and it's the two, the two next

gens.

And they are trying to decide things as

a small group.

And often there is tension between the generations

of a family and to have outside people

with an independent perspective is a very good

thing.

So for example, when I came back to

my family business with my MBA, my dad

was, well, I'm not going to have a

board of directors, but all of a sudden,

as he moved up to chairman and had

hired an outside president, the idea of having

a board of advisors and having other people

supervising me as I was coming into a

role to eventually take over, that was actually

appealing to him because he would still be

in control, but he would have other voices

at the table to help to mediate some

discussions about the future of the business, but

hopefully good qualified people that actually have something

to add to help the business.

Wonderful.

So when we look at this and you

have written that this is one of the

single most, I would say biggest step to

professionalize, is there any reluctance in going ahead

with this step?

Like it does belong to founders?

There's always reluctance.

I think one way to overcome that is

to do it in small steps.

So if an ideal board of advisors would

have, you know, four or five outside advisors,

you don't necessarily want to start with trying

to assemble four or five.

I would suggest starting with two.

I wouldn't want one because then that's just,

it doesn't feel the same.

But I would, if I were working with

a family that said, let's start this, I

would say, let's identify two people and let's

sort of beta test what meetings would look

like and what an agenda would look like

to get everyone used to the fact of

what's going on.

And then assuming that goes well, start to

add, okay, so what other profile of what

type of a person would we also want

to add and where can we find such

people?

So that let's say that full board of

advisors with four or five outsiders, that might

be in place maybe two or three years

later.

That's how I would probably recommend someone do

it.

And if you start them, if you choose

the first couple well, that so things things

go in a way that the founder likes,

the chances are that continuing will be something

that happens.

If it doesn't go well, then they're probably

going to kibosh the whole thing.

That's a big challenge when it doesn't go

well, then there could be more reluctance coming

out of it.

Yes.

Yes.

It's the same thing with when, you know,

sometimes I meet with a family and they

tell me what their story.

And I say, you know, you should, you're

going to have to have a family meeting

to discuss this.

And just those two words, family meetings sometimes

scare them because, you know, they had a

family meeting two years ago, five years ago,

10 years ago, and something didn't go well.

And now they've been scared of even trying

to have a family meeting.

The same thing could happen with having an

advisory board.

Oh, we tried that.

It didn't work.

We're not going to do that.

Well, perhaps you tried it in a way

that was a little bit clumsy and didn't

work out.

And maybe we could, you know, plan it

a little bit better and do it in

a way that has a higher likelihood of

success.

Yeah.

Coming from the same question, when these board

of advisors are being, they are hired, if

I'm not right.

So they are not taken on board as

the independent board of directors, just to attend

a meeting and you will be paid for

the meeting.

They will be hired as an employee.

Is it correct?

No, it's not.

It's not an employee.

It's a professional relationship in the same way

that you would hire an accountant or a

lawyer or someone else, but it's important that

it be paid.

So often people think, well, I'll just get

some of my buddies come, they'll do it

as a favor.

And when it's not paid, it's not taken

seriously enough and it doesn't have the gravitas

that you want this board of advisors to

have.

Ultimately, you want this board of advisors to

be a group of people that all the

key employees in the company are respecting and

listening to and wanting to get their input

on.

So I always suggest to aim a little

bit higher in who you're trying to get

and be willing to pay the people a

quarterly amount for coming to the meetings.

But they're not employees, but they're paid.

They need to be paid to show up

so that it is taken seriously by them

and by everyone else around them.

Because if you just had, oh, here's some

volunteers, some of dad's friends are coming and

they're going to sit around one evening and

talk about the business.

It doesn't have what it needs to be

taken seriously.

And it's an important enough step that it

makes sense to do it that way and

do it right or not do it at

all.

It's not going to add any value.

You're not going to make it a part

of a compensation.

Yes, you're going to get out of it

what you put into it.

And if you choose not to put enough

into it, you're not going to get enough

out of it.

You have mentored numerous advisors, including myself as

well.

How would you advise that advisors should upgrade

themselves?

What is the key role of advisors considering

the fact that we are discussing the role

of advisors in the family?

So how would they should upgrade themselves?

So I've had this question a lot over

the years.

And I don't like to be too directive

of telling people you must do this or

you should do that.

But I can tell you what I did.

And so I did this program, FEA Family

Enterprise Advisor in 2013.

And that's where I discovered this world of

advising families on their business and wealth transitions.

And the first thing I said was, oh,

okay, this is big.

I think I want to do this, but

I don't know that I have the skills

to do this because I was trained.

I have an MBA.

I have a CFA, Chartered Financial Analyst.

I have all the things from the business

circle, but now I was moving into what

I call the family circle.

And I wasn't convinced that I was well

-equipped enough for that.

So I remember saying on the first day

of that Family Enterprise Advisor program, wow, I'm

going to have to do some more training

and conflict resolution skills.

And then somebody said, yes, and coaching.

And so that got me down the road

of taking coaching courses.

And that was the biggest game changer for

me because coaching, the biggest thing about coaching

is learning how to listen without judgment.

And that is so important, the listening skills

that you need.

So many advisors come from the technical side

as accountants or lawyers and what I call

STEM.

And now they're moving over into an area

where it's more liberal arts.

It's more about the way you are and

the way you communicate with people and how

you listen to them.

And do you have empathy and are you

able to, do you have the emotional intelligence

to sit in a room of family members,

which I am often doing where they're all

family members and I'm the only outsider who's

not part of the family and learning to

be able to sit in that room and

add value and facilitate a conversation is not,

they don't teach you that in accounting school

or banker school, right?

So there are things.

So I did coaching courses, facilitation courses.

I started learning about family systems theory.

I really immersed myself because I want to

do this job well and you never stop

learning.

And the best practice though, is to be

in there in the room with families, but

you have to show up in the right

way.

If you come in to a family meeting

with, Oh, I'm going to tell them what

to do.

It doesn't always work so well.

It's more about being with the family and

helping them figure their own stuff out and

making sure that they listen to all the

voices in the room, which is not the

same skillset as what many people trained in

that get them attracted to this work.

So that shift into the more social part

of it, the more relationships, the emotional part,

it takes some work.

Some people come at it very easily and

others, it's a lot more difficult to learn.

But what I did learn about myself, and

I only realized that a few years ago,

my dad was a great entrepreneur and he

could not do what I do because his

attitude was, he knew what to do and

he'd tell you what to do.

And that worked for him in his business.

But what works for me to be able

to sit with the family and listen to

people are all the traits I actually got

from my mother and my mother's side of

the family to be able to sit with

people and listen to them and respect them

and try and draw them out and work

on coming to solutions together.

So I was lucky that I had a

mother that I inherited some of this from

and allows me to do this well.

I am imagining that family is sitting in

a room and an outsider advisor, like you

mentioned yourself is there.

So it must be a challenging task, right?

That everyone has to speak and everyone is

expecting that the advisor, the person who is

actually moderating the whole session, the family meeting

or something will listen, right?

So what kind of situation would that be?

I've been in some really interesting situations where

people start screaming at each other and people

start swearing at each other.

And sometimes it's really challenging to not overreact.

So I have an expression that I like

is it's counterintuitive, but it's don't just do

something, sit there, which is the opposite of

what you normally hear at sometimes the tendency

to overreact.

But for me, and I actually had this

happen in a meeting just a few weeks

ago where it got heated between a rising

gen and a parent and it needed to

emerge, it needed to be said.

And so I had to let it happen.

But then the trick is how do you

now put the pieces back together and get

the meeting back on the rails and still

continue to do what you were there to

do?

And some people are very uncomfortable.

I've heard stories about people who walk into

a family and they're from a culture where

people yell at each other all the time.

And if that advisor is not comfortable with

that, they might immediately think, oh my God,

this is the end of the world.

But really that's just how this family deals

with each other.

So understanding what's normal for the family takes

a little while, but you need to be

prepared for things that, you know, I always

say, I walk into a room, I don't

know what's going to happen, but I trust

myself.

And some people describe it as a skill

that's like surfing.

Like I'm confident on the I don't know

what wave is coming, but I know I

have confidence in myself to be able to

navigate it.

Now it's not always perfect and sometimes a

really big wave comes and knocks you off

the surfboard and then you get back on

and hopefully you can still keep riding it.

But it's really interesting work and it's not

for everybody.

So I advise people who take the FEA

program, I'm a project team advisor.

They go, they get put in a team,

all the people in the cohort, and they

have to go find a family and do

a project.

So a couple of years ago, I advised

the team and when the project was over,

one of the people on the team said,

I'm so glad I did this, I'm never

going to do another family meeting again.

I learned that this is not for me.

And I said, bravo, congratulations, because I much

prefer the people who recognize, I don't want

to do this, compared to some people who

say, oh, this is easy, I'm going to

go and I'm going to start to do

this.

And if you're really not well trained, you

can actually go into a family and not

do damage, but really not help them.

And so I hesitate to get people to

say, yeah, just bring anyone in to come

and facilitate your family meeting, find out if

the person has experience and knows what they're

doing first.

Oh, Steve, getting to my culture background, where

I come from, we cannot say anything in

front of our elders, right?

And perceiving myself conducting this kind of meeting,

and after the meeting, the younger generation comes

to me and say that, sir, it was

not possible to say something against my elders,

but I have a different point of view.

How will you deal with such a situation?

That is a challenge.

And I was on a webinar once in,

I believe it was the Philippines.

And what happened was, and the person who

invited me said, there are families out there,

and where the parents with two generations are

watching the webinar together.

But the way they dealt with questions was

you could text your questions into the moderator,

and then the moderator would ask the question

of me and the other guest.

And it's because it's, I understand, yeah, it's

really hard.

It's an extra challenge.

It really is.

And all I can say is, when I

started this work, I really thought that the

bulk of the work would happen when I'm

in the room with the whole family.

And what I realized after doing this for

over a decade, that's part of the work.

It's an important part.

But the one-on-ones that I do

with each family member in between those meetings,

or the extra meetings that I do with

the parents to help them hear some of

the messages that I'm hearing from their rising

gen, but not saying it with the rising

gen in the room, or the meetings that

I have with just the rising gen without

the parents, so they can feel open with

me, then my role is sharing information in

a way that's neutral and in a way

people can hear each other.

And sometimes I'm the one delivering part of

the message, because people don't feel they have

a voice.

But I always try to get the people

to voice things themselves.

And I also have to be sensitive to

the culture where that is a real huge

burden to come out and say something that

appears to be against the parents.

So there's so much work that happens between

the family meetings.

And that's where a lot of the progress

happens.

And it's getting both generations to trust me

enough to share with me and to listen

to me.

Wonderful learning experience which you are sharing, Steve.

Thanks for that.

Getting to the conclusion, Steve, I was going

through your website and in the last there

is a statement written, stop working in your

family business and start working on your business

family.

That is the secondary title of my first

book, Shift Your Family Business.

And I thought I was being clever, and

I still think I am, because it really

highlights two things.

One of them is there's this whole thing

about people that are so busy working in

their business that they're not working on it.

And so often that's founders.

They're so busy playing a key role.

And it's only when they realize they need

to leave those roles to people so they

can get out and work on the business

rather than doing the nuts and bolts of

what the business is doing.

So that's a well-known thing from books

from decades ago where they talked about working

in the business, working on the business.

But then the other thing that really struck

me is just the difference between, is it

a family business where the noun is the

business and the business happens to be owned

by the family?

Or are we talking about the business family?

Are we talking about a family and the

important part of the family?

And so what I wanted to encourage people

to do, and I still do, is stop

thinking about the business first, think about the

family first.

There comes a point in time often in

the founder's life where the business has grown

to a certain size.

And now I think that some of those

founders should shift their focus and stop thinking

about the business.