An International Perspective on Effective Leadership

It does not matter where in the world a family business is located, according to Deniel Banks of DW Banks Company, Inc, one thing all family business leaders have in common is that they want easy-to-use tools to help with succession planning.

As a result of seeing this trend around the world, Banks developed a checklist as a meaningful way to stimulate business leaders thinking and starting important conversations with family members.  He says the checklist has an international perspective integrated in.

“Ten Principles for Family-Owned Business”

  1. Make dreams a reality – What are your own dreams?  Your family’s dreams?  You customer’s dreams?  Answer these questions and align these dreams with business and family strategies.
  2. State principles and goals clearly and allow your children to develop their own goals for personal happiness and success regardless of whether they end up in the family business or not.
  3. Distribute leadership, empower others, and offer mentoring and coaching when necessary.
  4. Follow criticism with encouragement.  Be ready to apologize.
  5. Lead the family by example.  Apply some of what you do best at the office while at home.
  6. Know yourself.  Be clear on your leadership strengths, your beliefs, and your values.
  7. Encourage your next generation family members to take action and do what’s right.  Be persistent in communicating ideas and listening to theirs.
  8. Respect and honor differences.  Learn from other cultures and create an environment the embraces the diversity in people and ideas.
  9. Collaborate by moving from “position power” and hierarchy to building “relationship power” locally and globally.
  10. Foster a broad perspective and give something back.

Banks said he likes to ask his clients to circle three of the ten items that they want to focus on most in their own business to move towards 21st century leadership and a global perspective.

Insight into Surviving the Sale of a Family Business

Bruce Werner, currently managing director of Kona Advisors LLC, spent 12 years at the family busniess, Werner Holding Co., in a variety of senior positions before the family made the decision to sell.  Werner gave tips and insights from his own personal experience into how he survived the business sale and life afterward in an interview with Lauren Wolven, J.D., a partner at Horwood Marcus & Berk Chtd in Chicago, featured in the Estate Panning Journal.

Werner had eight main tips to offer:

  1. Be honest about priorities and values.
  2. Develop a personal strategic plan.
  3. Invest in friendships.
  4. Understand that wealth works in step functions.
  5. Realize how the family business experience situates oneself in the job market.
  6. If early retirement is chosen, consider the impact on family members.
  7. Get used to the everyday inconveniences.
  8. Enjoy the ride.

Werner said the decision of his family to sell the business evolved over three years and was not as difficult as it can be for some families because, although the company was private, in many aspects it was run like a public company.  After the sale, eight of the ten insiders, Werner included, continued to work for the company.  He said before they even got into sales negotiations, the insiders had discussed what would change about their positions and perks after the sale and had already come to agreements, making this part of the transition much easier as well.  He feels it is important for people to understand things will change if they stay with the company after the sale.

Werner’s first tip during a transition is to be honest about your own values and priorities.  He explained that it is important to really consider for yourself and your family that the trade-offs that come with a sale are made in the pursuit of happiness, family harmony, money, or whatever your priorities may be.  He said it is also crucial to have a long term plan personally after the business is sold.  Werner advised others to ask questions like: Do you really want to run another business?  Would you rather pursue a hobby or charity?  If you are entering young retirement, will it be fulfilling?  Make sure you have an idea of what to do now that you no longer have the business.

Werner said he feels cultivating outside friendships is important during a transition period like this because you need someone to help guide you and talk things through.  Also, work relationships are lost in a job transition, and other relationships can fill a void.

Finally, Werner also addressed the issue of what it is like to deal with a new liquid wealth and going back to work.  He said the initial step-up in lifestyle is easy, but for him there was never a question of whether he would go back to work.  Even during his time of sabbatical, he had an office outside the house so his children would have an example of good work ethic.  The family business experience proved to be an advantage and a disadvantage it certain situations.  Werner said some employers stay away from former business owners for fear that they will be too independent or difficult to manage.  In the end, Werner said he needed to figure out how his unique skills can apply in a different, changed market.  He recommended the help a career counselor to aid with this process and decision.

The Family Employment Policy

In any family business, conflicts and disagreements can erupt between family members for any number of reasons, or for no reason at all.  One of the most predictable reasons for conflict can come from the termination of a family member.

Many family business advisers spend their career helping families patch up their differences.  This reactive approach is needed unless family business leaders are able to place more emphasis on prevention.  Prevention tactics will not eliminate all conflict, as people will always disagrees and terminations can be hard on everyone, but it can help to keep the “family factor” more in check.

Creating and having a “Family Employment Policy” is one major step in the direction of conflict prevention.  The original reaction of many heads of a family business is say that the family employment policy is the same for all employees.  However, it is important to have a separate policy for family members because many times the only qualification someone has is a blood or marriage relation.  These employees can be unproductive, sometimes overcompensated, and bad for the company.  By having previously set conditions for family members, similar issues can be avoided from the start.

A written family employment policy lays out specific employment conditions for family members such as recruiting, hiring, promotion, qualifications, prior experience, compensation, and termination.  Not having a written document for family employment often leads to exception making and different interpretations of how family situations should be handled.  If it is stated in a previously agreed upon document exactly why a family member is being terminated, it can help avoid some of the tensions and conflict.

What goes into the development of a good family employment policy?  Number one, the input of family members.  People will tend to support what they helped create.  Also, creating a family employment policy can be a way to communicate to all the family the values and philosophies of the business.  For example, it may mandate that in order to remain at the company, family employees must maintain positive and respectful relationships will all other co-workers.  One important thing to communicate is that being a member 0f the business is a privilege, not a birth (or marriage) right.

Sibling Rivalry

 Fighting siblings at home is annoying and tiresome, as any parent will testify.  But sibling rivalry in a business can often be downright destructive.

When looking at siblings working together, it is important to consider more than the financial, operational, or strategic points of view.  It is crucial to understand the deeper issues that can reside between siblings and how it could impact the long term success of any business.

Sibling rivalry comes from jealousy and the desire to receive more love and approval from the parents.  These issues can resurface in everyday business where siblings work together and perhaps compete with one another.  This can lead to irrational business decisions, a lack of respect for each other’s input or decisions, resentment of accomplishments or differences, unclear responsibilities, failure to be accountable to one another, and contribute to a negative and/or unproductive work environment.

Siblings are rarely able to deal with their issues, even if they are bringing the business down, without others stepping in.  The issues must be fully understood and communication is critical when working out the issues.  A lack of communication and understanding between each other can be a big cause of problems.

Some Simple Rules:

  • Clarify boundaries between family members (responsibilities, direct reports, hierarchy, voice, etc.)
  • Set up a forum and process for conflict resolution
  • Open communication between family members, even those not working in the business
  • Have agreed upon, distinct roles and responsibilities for each sibling in writing
  • Establish clear compensation policy
  • Create a clear, documented succession plan

 When working well together, siblings can bring a lot of value to the company due to built up trust, shared history, and a sense of loyalty.  It is, however, important to plan in advance with clear, documented roles, responsibilities, and other guidelines and also to be able to identify and promptly resolve instances of sibling rivalry in an open format before there is any damage to the relationships or the business.

Should You Go Into the Family Business?

The decision of whether or not to go into the family business is important to you, the family and to the business.  It’s crucial that you make the decision based on what would lead to achieving your personal goals in life.  It is also important that the business has leaders and employees who are truly dedicated to progress and success.  There are some major questions to ask yourself when considering whether or not entering the family business is truly the right decision for everyone involved.

Deciding if it’s the best decision for you:

  • Is it the appropriate stage in your life to make this commitment?
  • Does entering the family business support and further your dreams?
  • Are you joining the business because it’s what you want, or what others want?
  • Will this hinder or support everything else you want to do in your life?
  • Does the business fit with your own personal resources and are you prepared for the responsibilities of the job?
  • What will you have to learn and do in the future to make this a success and are you committed to this learning?
  • Are you excited about focusing your energies towards this endeavor as opposed to something else?

Deciding if you are best person for the business:

  • Is there a viable opening available in the organization?
  • Are the resources available at the business to invest in your personal development and career progress?
  • Will you have the political support required for success?
  • Are you the best fit for the business’s needs and goals, or is there someone else who could do the job better?
  • Does your joining the company allow you and others in your system to progress and move on with their lives or does it hold them back?

In the end, working in a family business can be both more challenging and rewarding than seeking outside employment. You must weigh the pluses and minuses to make sure this is the best decision for you, the family and above all, the business.  If your talents, education and experience dovetail with what the business needs and you can work well with your family and existing management, it will more than likely be a good decision.  If not, there are plenty of other opportunities.

WealthPoint Acquires Interest in Financial Modeling Platform

Press Release: 09-03-2010

Media Contact:  Marissa Hopkins,

WealthPoint, LLC, a leading provider of succession, legacy, and life insurance planning to high net worth clients throughout the United States, has acquired a one third interest in a comprehensive financial modeling platform.  The planning tool was developed over the past several years with the input and experience of certified public accountants, chartered financial analysts and corporate controllers.  “We took all of this experience and incorporated it into the most powerful and flexible analytical tool available today,” said WealthPoint design analyst and platform founder, Drew Velasquez.

In today’s competitive and often uncertain economic environment, business succession, estate and personal financial planning have become more important than ever. However, in most cases, planning of this magnitude goes unattended due to the complexity and time required to adequately analyze and execute a plan for the future.

The modeling software is a sophisticated tool to be used by clients and their advisors to make complex planning and decision making easier. “The client will be able to make complex planning decisions with confidence,” said WealthPoint Managing Director Ryan Barradas. “It helps clients navigate through the keep or sell decision making process, decide the right time to transfer equity and/or control in business interest, transfer excess wealth and manage cash flow.  It takes a holistic and multidisciplinary approach to planning for both business and personal assets.”

“Throughout my 36 years of practicing law, I have always looked for a tool like this,” said Jim Ryan, an estate and trust law specialist with Frazer, Ryan, Goldberg & Arnold LLP, who was given a demonstration of the software.  “Instead of guessing, it uses sophisticated projection technology to show the client likely outcomes.  It will be very helpful to me, my clients and anyone who does what I do.”

“I have seen many programs in the past that have attempted to do the same thing, but never one that provides the depth of information and knowledge, along with the flexibility to change assumptions on the fly.  It’s built on an excel platform that allows it to be quite nimble and customizable,” Jim Ryan said.  “And more importantly, clients understand the results and gain a clear understanding of their options immediately. This software has been carefully designed with detailed attention to the tax, legal, debt, financial and personal issues related to any comprehensive estate, business succession or financial planning process.”

Future plans for the software include an addition of a web platform to allow for efficient communication between the client and advisor team, project management capabilities to assign tasks, a secure place to store important planning documents for review and a private blog for advisors to propose plan designs and changes.

About Drew Velasquez

Velasquez is the head of the WealthPoint design team. He began his career in public accounting in Seattle while specializing in the issues that affect corporate and personal income taxes, ownership transition, value realization, strategic management and tax structures of closely held businesses. He has personally consulted with hundreds of clients regarding strategies ranging from simple estate documents to negotiating on behalf of clients for the sale of a business. This diverse background allowed him to develop a proprietary consulting and planning software tool that has become the cornerstone of making informed strategic decisions for both privately owned companies and their respective shareholders.

Dealing with the Press During Family Crisis

Family feuds can be thrilling to the public, especially if the family feuding owns a prominent business together.  Reporters may come knocking if they get wind of division, trouble, or even tragedy within the family or business.

It is important not to be caught by surprise and say something that might later be regretted when a reporter calls due to do not being prepared.  This is why it is important to think about crisis communication before it is needed.

First, owners should know that they do not have to speak to reporters.  A reporter’s job is to get information, so the reporter may make you feel as if you must return phone calls or talk to them, but this is not true, no matter how adamant he or she may be.

Second, there are communication professionals that can help handle the press in times of need.  Communication experts can act as a liaison between the owner and reporters, releasing statements and answering questions.  If the business is large enough, it may already have a corporate communications department to which questions can be forwarded.  Also, there are specific crisis communications experts who can manage press during a crisis situation.

Some acceptable answers if owners do choose to engage a reporter, but are faced with questions they are uncomfortable answering are:

  • I prefer not to speak about that at this time.
  • That is a personal and private family matter.
  • That information is confidential.
  • I have no comment.

Also, if speaking to a reporter, assume everything said is “on record.”  It is better to be safe than sorry by thinking something said is “off the record” or “background,” only to see it show up in print later.  If you do not want certain information to go public, then do not mention it.

It is important to know when the story is scheduled to run so owners can be sure they are not caught unaware by the article.  Sometimes it may the run next day, other times not for a week.  For those quoted, it is good to know when others will be reading about the event and possibly asking more questions.

Finally, it is important to know who else a reporter spoke to about any situation.  Good reporters aim for balanced reporting and will try to get multiple sides to any story.

Marissa Hopkins, Communications