Fam­ily unity = struc­ture + poli­cies + ac­count­abil­ity

Sun.Star Cagayan de Oro - - Business - EN­RIQUE SO­RI­ANO

THERE is ab­so­lutely no doubt that lead­er­ship, com­pe­tence, shared val­ues and a strong sense of vi­sion will en­sure the sur­vival and con­ti­nu­ity of any fam­ily-owned busi­ness.

When a fam­ily shares a clearly ar­tic­u­lated pic­ture of the fu­ture, they have the foun­da­tion for mak­ing de­ci­sions re­lated to the use of re­sources, se­lect­ing mem­bers to carry out re­spon­si­bil­i­ties and setting guide­lines on how the fam­ily will move for­ward. When fam­ily mem­bers un­der­stand that they are all try­ing to achieve the same ob­jec­tives, re­spect and rec­og­nize their in­ter­de­pen­dence, they will nat­u­rally take bet­ter care of their re­la­tion­ships.

Ev­ery at­tempt to pro­mote fam­ily unity re­quires the in­tro­duc­tion of a gov­er­nance process that ev­ery fam­ily mem­ber must em­brace, and real and ef­fec­tive gov­er­nance means go­ing through the fol­low­ing process us­ing the three crit­i­cal el­e­ments, namely S.P.A.- -struc­ture, poli­cies and ac­count­abil­ity.

Treat­ing the fam­ily in a more for­mal, or­ga­ni­za­tional way can feel a bit strange at first. And based on ex­pe­ri­ence, it usu­ally takes a year or two for the fam­ily to grow into a more struc­tured way of in­ter­act­ing.

But the value of go­ing through a gov­er­nance process is demon­strated in the pocket suc­cesses many fam­i­lies have achieved by sim­ply hav­ing a sys­tem cov­ered with ac­count­abil­ity. They have learned that in dis­cussing is­sues that can be sen­si­tive and raise com­pli­cated feel­ings, a lit­tle struc­ture is a fam­ily’s best friend.

To con­tinue my wish list for the New Year, I want to re­it­er­ate the im­por­tance of an au­then­tic, com­pe­tent board or ex­ec­u­tive com­mit­tee (ex­e­com). Af­ter wish num­ber three about succession (see my pre­vi­ous ar­ti­cle), I am high­light­ing be­low the re­main­der of my wish list:

Wish No. 4: An au­then­tic, work­ing board or ex­e­com can make a big dif­fer­ence

Hav­ing a real work­ing board/ex­ec­u­tive com­mit­tee should be in ev­ery busi­ness owner’s musthave list. I do not know of any busi­ness en­ter­prise that be­came sus­tain­able with­out the over­sight and di­rec­tion of a board com­pris­ing ob­jec­tive and im­par­tial de­ci­sion mak­ers. Even not for profit or­ga­ni­za­tions have a work­ing board.

For fam­ily-owned busi­nesses, an au­then­tic board is a pow­er­ful an­ti­dote to avert the next gen­er­a­tion curse, punc­tu­ated by the Chi­nese ver­sion, “From peas­ant shoes to peas­ant shoes in three gen­er­a­tions,” and high­lighted by an even more strik­ing Mex­i­can ver­sion, “Fa­ther-mer­chant; son­play­boy; grand­son-beg­gar.”

It is there­fore im­por­tant that fam­ily mem­bers be ac­quainted this early due to the fact that fam­ily dy­nam­ics (un­con­di­tional love, equal­ity) nat­u­rally en­com­passes man­age­ment (per­for­mance, mer­i­toc­racy) and own­er­ship (stew­ard­ship mind­set) in­ter­ests. Ini­ti­at­ing a board com­pris­ing a mix of fam­ily and non-fam­ily mem­bers can ac­cel­er­ate the gov­er­nance process with less emo­tion.

Wish No. 5: Direc­tors or ad­vi­sors must be highly qual­i­fied with proven in­tegrity

Ap­point­ing non-fam­ily direc­tors or ad­vi­sors in the board or ex­e­com far out­weigh the con­cerns that own­ers feel when ad­ding them to their boards. It is not un­usual for own­ers to re­sist hav­ing non fam­ily mem­bers, and the rea­sons are high­lighted be­low: · Own­ers have no ex­pe­ri­ence hav­ing non-fam­ily mem­bers par­tic­i­pate in the de­ci­sion mak­ing process.

· Fam­ily mem­bers can­not dif­fer­en­ti­ate how to sep­a­rate own­er­ship and man­age­ment.

· There is the per­cep­tion of busi­ness lead­ers that by hav­ing non-fam­ily mem­ber in the board or ex­e­com, they may end up giv­ing up con­trol · There is also the is­sue of shar­ing con­fi­den­tial in­for­ma­tion with out­siders.

· The per­ceived cost of hav­ing to com­pen­sate the mem­bers of the board, and; · The ig­no­rance of fam­ily mem­bers on how a real board or ex­e­com op­er­ates.

My ad­vice is to ini­ti­ate real change this year. Be­lieve me, hav­ing a board or ex­e­com is a great way to jump­start gov­er­nance.

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