Family Firms and Independent Boards

There is something about those of us who prefer freedom to security, and who build businesses with freedom to enjoy our work as a foundation stone. We don’t want folks looking over our shoulders, and we often translate that to mean we don’t want boards, and we certainly don’t want independent board members. It’s not uncommon to hear privately held company owners and CEOs talk about the painful experiences of trying to put advisory or governing boards together or to realize the benefit. What is uncommon is for those same owners and CEOs to recognize the problem may just have been centered in their inadequate recruitment, preparation and participation.

A highlight of this year’s CEO Summit at Convene, was a presentation by David C. Bentall, who shared the painful story of a substantial, family-owned business empire torn apart by the very people who grew it, blind to their own deficits until it was too late. Bentall has now devoted himself to helping other family-owned businesses manage their succession with greater aplomb. His book, Leaving a Legacy: Navigating Family Business SUCCESSion, is an excellent guiding resource, especially for family businesses moving into a second generation of leadership and beyond.

A centerpiece to it working well, according to Bentall, is a compensated, governing, well-prepared and independent board. This is very different than recruiting cronies and family members exclusively.  And…when such a board is in place, regular and high-priority meetings among family members, and their spouses, are also a must.

Pushing for this often brings the rolling of eyes and verbal protests. And yet, the burden of proof rests on the protestor. In lieu of following these best practices, how are they living as a steward of the company they are building? How can they claim to be so wise when they keep foregoing the laying of the long-term foundation to guide a company beyond their leadership?

Legacy is not a bad word.

During my tenure of working with Christian business owners, I’ve noticed that the topic of legacy rouses some tension in our conversations. There seems to be three mind-sets towards the concept of legacy:

• We do not acknowledge our life experience as worthy of sharing,

• We feel it is prideful to admit our impact on others,

• We avoid the subject of our mortality.

Ironically, these responses are egocentric; the object of the aversion is oneself. Perhaps if we look at legacy as our responsibility, as an act of service and obedience, we would hold a different view.

There is great worthiness in discovering our calling and inspiring others to find theirs. We should acknowledge that we are works-in-progress, striving to become the masterpiece that has been in God’s plan “since before we were conceived”. As we transform into our unique God-given character, our life experiences convey stories of hope, obedience, perseverance, and faithfulness. Worthy of sharing.

For certain, we can demonstrate false humility if we are pride-filled about our accomplishments and circumstances, taking all of the credit for who we are. When we acknowledge our dependence on God for everything we have and everything we achieve, particularly how God uses us to influence others, there is no selfish motive.

Finally, there is a duty involved with legacy. It is our responsibility to perpetuate our traditions, values, tribal knowledge, and life experiences. Think of these things that have been lost in your own family; the legacies that were not stewarded well to the next generation. Think of the things you need to preserve.

If you recognize how God works through you, and in turn respond in part, it is His legacy. There is no unworthiness there, there is no pride in that, and for certain there is limited time to convey it. There is a unique story being written in you, about you. That is a legacy worth sharing.

Success = Quantity + Quality

Do you ever wonder how people define success? In my experience, and probably yours, it’s usually by “quantity” numbers – profit, sales, assets, real estate, etc. Whereas all these are valuable indicators we seem to equate success with growth in size and profit. But do we loose perspective when we only look at these numbers? What about the “quality” numbers that deal with relationships, loyalty and significance. I don’t want you to think that I’m not interested in financial success. Profitable growth allows for us to fulfill our business and personal goals. However, I learned early in my career that we need to add numbers relating to customer and employee sense of connectedness into the success equation. But those aren’t as easy to define or quantify. That may be one reason many stick with the meaning of success as financial profit.

Years ago I had that privilege of working with Nobel Prize Laureate Milton Friedman, Economist at the University of Chicago. He is famous for his quote, “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase profits.” I remember thinking it sounded rather harsh but I had the opportunity to speak with Dr. Friedman and I found, thankfully, his definition of resources included the more variable assets of empowered employees and loyal customers.

One of my favorite business leaders is Bill Pollard, former chairman of ServiceMaster. In his book, Serving Two Masters? Reflections on God and Profit*, he says, “Profit is a tool for accomplishing our end goals of honoring God and developing people. As we manage with economy and care for those producing the profit, we recognize profit as a virtue of accountability, not a vice of self-aggrandizement.” There it is – profit and numbers can become a way to prove our human success rather than a way in which to serve our clients, associates and God’s plan for our businesses.

But the quantity factor is not only misused in business. Pastors regularly get the question, “How big is your church? How many members do you have? How many staff do you have?” So success in ministry is evaluated by “how many” rather than “how well”. Some see church growth by the numbers in the pews rather than the spiritual maturity and growth of those people.

So how do we include the less-tangible numbers of how well we serve our associates and customers into the success equation? It isn’t easy but here are some suggestions.

I would start with a baseline survey for customers and work associates that would ask emotive questions describing their reasons for working with you or purchasing your services/products. If the answers are given in a linear number scale you will be able to use this as the foundation. Follow-up surveys on a bi-yearly basis or other significant timeframes will give you the ability to put both quantitative and qualitative information into your success formula. There are other successful methods used to do this and I hope you will research the options that fit your circumstances the best.

The bottom line – don’t just think quantity – think quality. Both are necessary numbers to make a balanced equation of success.

*Serving Two Masters?, by William C. Pollard, Ó 2006 by the ServiceMaster Foundation. Published by HarperCollins Publishers.

The Only Legacy That Really Matters

2016 is a banner year for me – it is the year I technically become a senior citizen – at least in the eyes of the government. I have to admit that I’ve enjoyed the “senior discounts” for quite some time at movie theaters and other venues – but I still cringe when I ask for it. Putting my vanity issue aside, I have begun to think about what it means to reach this milestone. I have been asking myself, “Does wisdom really come with age? Do I deserve more respect as my hair thins and turns gray? How should my priorities change – if at all? And of course – is it appropriate for me to buy slim-style jeans?

But the most important question I’m asking is, “What is the legacy that I’m leaving?” It’s funny, I never really thought about that question when I was in my 30s or 40s – but sometime around my late 50s I started to think about it. Now I’m wondering why it took me so long. I think that if I had asked that question earlier I would have made some major adjustments in my portfolios when it was easier and when it might have made a bigger difference.

You are probably thinking that I’m speaking primarily about finances – that’s what most people think about when we talk portfolios and legacies. But actually I’ve come to realize that there are many portfolios that make up our legacy – and financial is not the one that makes the biggest difference.

It is my spiritual portfolio that makes the biggest difference in my legacy. It drives all the rest – financial, family and social.

If we look at our legacy as the inheritance we leave to our family, friends, colleagues and business associates then it’s put in the right light. Our legacy not just what we leave behind but what others inherit from it.

The Bible has a lot to say about inheritance – some about property and possessions but a lot about eternal inheritance. When we look at the heart of all of them we see that they are built upon Jesus’ legacy to us. So ours should be built upon God’s foundations – not our own.

If I place a high priority on being a servant to others, then those people I serve inherit my legacy of kindness and helpfulness. Alternatively, if I am selfish with my time, money and devotions then others will inherit my legacy of self-centeredness and narcissism.

And what makes this so important is that what we inherit many times determines how we develop our own legacy. That alone gives us a good reason to prioritize the foundations of what we leave behind.

2016 is not just a milestone for me – it can be one for all of us. You don’t have to be turning 65 to rethink the priorities of your spiritual portfolio. In fact, do yourself, family, friends and business associates a favor – do it now. Start this year with a reassessment of your portfolios that will make up your legacy – one that will have an eternal difference for all who inherit the gifts you have been given according the the only legacy that really matters.