Saturday, November 7, 2009
excitement to frustration
Business family members get very excited when I tell them the benefits of keeping the family and business united. They understand the significance of proper governance mechanisms as in the context of a well run businesses. For instance, we had our annual training programme at the ISB for family business titled "Perpetuating The family Enterprise" (PTFE) recently. Prof John Ward (the GURU) and I co-directed it. Everyone was very enthusiastic about the possibilities of achieving peace and harmony. The same thing happened when I was interacting with a visitor yesterday, a third generation member of a highly diversified business family. He has been trying to convince his cousins about the need to bring governance in their conduct across family and business relationships. After two years of efforts, his family has decided to hire a consultant to help them with the drafting of a constitution and share holders agreement. They are also excited about the possibilities now.
Often, what many of them do not realise is that the peace and prosperity that I mentioned above do not come easily. There has to be complete buy-in from members about the fruits of creating and practicing governance. Since formalisation of such discipline in practice comes through shared values in the family context, there has to be convergence in thinking among all. Since family members particularly men, are constantly concerned about business performance, family governance related matters do not get any priority in thinking. The best way to begin to get over this inertia is to get one or two volunteers, preferably from younger generation to ensure that meetings of key family members take place regularly to discuss and decide on matters of high criticality about which people are dissatisfied. I have noticed that such inertia is due to lack of exposure and background in conducting such meetings. People tend to avoid such discussions and find excuses to postpone. I believe the only way is to collectively resolve that we would overcome the inertia and learn to bring family governance the way we do in the business context. Let the entrepreneurial spirit drive in family meetings too.