JULY 2020

HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS ter specific roadblocks that emerge away from direct operational involve- family businesses become a more dis- from the family system itself. ment creating a different family tant reality, and the risk is real to lose Complexity is built into the system demography: a vast majority of own- engagement. by the overlapping of the family, own- ers, a group of board or council mem- How to set your family ership and management subsystems bers, and maybe a handful of operators. 3 Key Steps for Designing as shown on the Three-Circle Model With this migration, the risk of own- an Effective Family developed by Tagiuri and Davis at ers becoming disengaged grows with Development Program ownership group for success Harvard Business School: the distance from the business. Some Crafting a plan to develop the fam- The quality of the decisions a family system makes depends of the owners lose the direct contact ily human capital is a key success- a great deal on the individual and collective capabilities of its their predecessors used to have with factor for families in business6. It owners. Engaging effectively and productively as family owners management and operations. The allows them to communicate with requires continuous training and development. the whole ownership group on the different roles family members can Family Case scenarios of Family Businesses play, the competencies required, and the available learning paths. It also reduces opacity and the risk of AUTHORS The Ownership Blindspot thoughts and efforts are dedicated to The Lur Saluces family was the owner of conflicts within the family by pro- Business families naturally invest the development of the larger commu- Château d’Yquem in Bordeaux. One of the viding objective criteria for assess- in professionalizing their manage- nity of owners and to the acquisition Ownership Management family member, the Count Alexander de Lur ing capabilities. HONORA DUCATILLON ment group, often without real- of non-financial skills, e.g. interper- (Business) Saluces, was managing the business, but the Developing a family talent sys- Head of Family Office Services izing that their ownership group sonal skills. family shareholders outside the business felt tem requires a tailored effort. One size Pictet requires as much attention. All too often, the role of owner is not despised and left out and were not satisfied doesn’t fit all, and each family will have Honora Ducatillon helps wealthy According to a 25-year survey of well circumscribed and understood, by their dividends. Little by little, they begin to its own priorities. A framework such as families and their advisors address 3,250 instances of generational wealth probably because of commonly spread Source: Tagiuri and Davis, 1982 rebel and LVMH took advantage of the situa- a competency system can only come to the complex challenge of manag- transfer from the Williams Group, misconceptions: tion to buy back the majority of the business’ life in a family if it truly reflects both ing family wealth across genera- only 3% of the failed wealth transi- • Being an owner is a status you shares. This was the end of a family business the needs and the aspirations of the tions. Her main areas of expertise tions were due to poor legal, tax or acquire automatically being born This system implies: dating back from 1593. family members. are family governance (designing investment advice. 97% of the failures in a family of wealth, not some- This uniqueness must be respected an organization for communica- were in fact attributable to the family thing you study or apply for; • A multidimensionality of relation- and even nurtured. It is what makes tion and decision-making within itself: due to a lack of family mission, • Being an owner does not require ships (each member of the system William Randolph Hearst was the first “my family” and “our business” so the family), succession and next an inadequate preparation of heirs or specific skills and abilities, as you wears several “hats” at the same newspaper magnate of the United States. He unique and that is why “I care” so generation education. a breakdown of family communica- can delegate tasks to managers time and successively); believed that the business should be run by deeply about it. One should strongly tion and trust1. (other family members or external • An heterogeneity of stakes and professional managers and not family mem- resist the temptation to borrow a bers. In his will, William barred his five chil- NICOLAS HOLLANDERS Families spend on average $1 mil- professionals); stakeholders (each circle implies a framework that has been developed lion annually to protect and grow • Ownership structures such as different perspective and role); dren from running the family business and by another family or for others and Partner their assets for every $100 million of trusts protect the family wealth • Different and potentially conflict- set-up a board of trustees to own and run it assume that it would be an adequate Lansberg Gersick & Associates assets they own, whereas they only from incompetent family members ing rules and criteria (each circle has instead (the family maintained a minority of response in your own family. Nicolas Hollanders is part of a spend $30,000 per year on the devel- and family disputes, the wealth his own value system); votes). William also inserted an “in terrorem team of global family business opment of the next generation2. Only being managed by professional • Parallel succession planning clause” according to which any heirs challeng- advisors. He has advised compa- 14 % of Next Gens are considered very trustees. requirements (each circle requires a ing the will could be disinherited. Despite good nies and families in the fields of prepared to become good stewards of continuity plan). business results, 40 years after his death, the 2. Identify 3. Design shareholder strategy, governance, the family legacy3. Owners Face Complex family was still in court fighting over the direc- 1. Set the needs and personalized executive recruitment, selection Most families are in business not Decision-Making When the boundaries between tion of the family trust4. stage priorities learning paths and executive succession, family only through their family enter- The complexity of the family busi- the three circles don’t exist or are too Define the Define which Define how the talent assessment, philanthropy, prises, but also through their family ness system puts its owners in blurry, several risk factors enter into ownership competencies competencies and continuity planning. investments (often supervised by a thorny situations, which they have play, such as: Founded by Kam Shui-fai in 1942, Yong Kee roles and the must be can be family office) and their social impact to solve by carefully weighing inter- • Nepotism (favoring family ties over became one of the most famous restaurant in competencies developed in acquired initiatives (often led by a family phil- ests. The way they handle the una- objective criteria); . Following the passing away of the they require your family and in which order founder, his two sons each received 45 percent anthropic foundation). In all these voidable trade-offs they face has a • Insularity (being detached from of priority of the holding company owning the business, Summary: shared family projects, transitions huge influence on the future of the external influences and losing whereas his daughter received 10 percent. The Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 1. Acting as a competent family owner happen at two levels: management family and its businesses. touch with reality); founder believed that the two brothers would requires a complex blend of specific and ownership. Families in business face the same • Sibling rivalry; work together and take care of their little sis- skills. While it is not uncommon for one institutional and market challenges • Intergenerational issues; or a few “high potential” family than non-family firms (disruption, • Financial disputes; ter. It was found later on that one of the brother 4 “Family wars : classic conflicts in the family and how to deal 2. These skills are not inherited, they must with them”, Grant Gordon and Nigel Nicholson, Kogan Page members to be trained to be the next globalization, digitalization, political • Prince Charles Syndrome (the now had secretly acquired the shares of the daugh- 2008. be learned. generation of executives, much less instability, etc.), but they also encoun- generation not wanting to let go). ter to obtain the majority over the company. 5 “The Family Business map, Assets and Roadblocks in Long- Term Planning”, Morten Bennedsen (INSEAD) and Joseph 3. Your family can greatly benefit from The complexity of the family system A bitter dispute between the two brothers P.H. Fan (The Chinese University of Hong Kong), Palgrave Macmillan 2014, p. 141. building a tailored talent development 1 tends to increase over time as through ensued. The ownership division had weakened Roy Williams and Vic Preisser, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values (Robert D. Reed 6 Publishers 2010). “Educating Family Business Owners: The Fundamental program for owners. succeeding generations, the role of the control of the company and heightened the Intervention”, Ivan Lansberg & Kelin Gersick, Academy of 2 “Investing in the Family Through a Family Learning Committee”, Family Office Exchange, 2019 FOX Foresight, Chicago, IL, page 2. some family members inevitably shift risk of family conflicts5. Management Learning & education, 2015, Vol. 14, No 3, 1-14 3 The Global Family Office report 2019, Campden Research, p. 78.

HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 21 HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 2 ter specific roadblocks that emerge away from direct operational involve- family businesses become a more dis- from the family system itself. ment creating a different family tant reality, and the risk is real to lose Complexity is built into the system demography: a vast majority of own- engagement. by the overlapping of the family, own- ers, a group of board or council mem- How to set your family ership and management subsystems bers, and maybe a handful of operators. 3 Key Steps for Designing as shown on the Three-Circle Model With this migration, the risk of own- an Effective Family developed by Tagiuri and Davis at ers becoming disengaged grows with Development Program ownership group for success Harvard Business School: the distance from the business. Some Crafting a plan to develop the fam- The quality of the decisions a family system makes depends of the owners lose the direct contact ily human capital is a key success- a great deal on the individual and collective capabilities of its their predecessors used to have with factor for families in business6. It owners. Engaging effectively and productively as family owners management and operations. The allows them to communicate with requires continuous training and development. the whole ownership group on the different roles family members can Family Case scenarios of Family Businesses play, the competencies required, and the available learning paths. It also reduces opacity and the risk of AUTHORS The Ownership Blindspot thoughts and efforts are dedicated to The Lur Saluces family was the owner of conflicts within the family by pro- Business families naturally invest the development of the larger commu- Château d’Yquem in Bordeaux. One of the viding objective criteria for assess- in professionalizing their manage- nity of owners and to the acquisition Ownership Management family member, the Count Alexander de Lur ing capabilities. HONORA DUCATILLON ment group, often without real- of non-financial skills, e.g. interper- (Business) Saluces, was managing the business, but the Developing a family talent sys- Head of Family Office Services izing that their ownership group sonal skills. family shareholders outside the business felt tem requires a tailored effort. One size Pictet Wealth Management requires as much attention. All too often, the role of owner is not despised and left out and were not satisfied doesn’t fit all, and each family will have Honora Ducatillon helps wealthy According to a 25-year survey of well circumscribed and understood, by their dividends. Little by little, they begin to its own priorities. A framework such as families and their advisors address 3,250 instances of generational wealth probably because of commonly spread Source: Tagiuri and Davis, 1982 rebel and LVMH took advantage of the situa- a competency system can only come to the complex challenge of manag- transfer from the Williams Group, misconceptions: tion to buy back the majority of the business’ life in a family if it truly reflects both ing family wealth across genera- only 3% of the failed wealth transi- • Being an owner is a status you shares. This was the end of a family business the needs and the aspirations of the tions. Her main areas of expertise tions were due to poor legal, tax or acquire automatically being born This system implies: dating back from 1593. family members. are family governance (designing investment advice. 97% of the failures in a family of wealth, not some- This uniqueness must be respected an organization for communica- were in fact attributable to the family thing you study or apply for; • A multidimensionality of relation- and even nurtured. It is what makes tion and decision-making within itself: due to a lack of family mission, • Being an owner does not require ships (each member of the system William Randolph Hearst was the first “my family” and “our business” so the family), succession and next an inadequate preparation of heirs or specific skills and abilities, as you wears several “hats” at the same newspaper magnate of the United States. He unique and that is why “I care” so generation education. a breakdown of family communica- can delegate tasks to managers time and successively); believed that the business should be run by deeply about it. One should strongly tion and trust1. (other family members or external • An heterogeneity of stakes and professional managers and not family mem- resist the temptation to borrow a bers. In his will, William barred his five chil- NICOLAS HOLLANDERS Families spend on average $1 mil- professionals); stakeholders (each circle implies a framework that has been developed lion annually to protect and grow • Ownership structures such as different perspective and role); dren from running the family business and by another family or for others and Partner their assets for every $100 million of trusts protect the family wealth • Different and potentially conflict- set-up a board of trustees to own and run it assume that it would be an adequate Lansberg Gersick & Associates assets they own, whereas they only from incompetent family members ing rules and criteria (each circle has instead (the family maintained a minority of response in your own family. Nicolas Hollanders is part of a spend $30,000 per year on the devel- and family disputes, the wealth his own value system); votes). William also inserted an “in terrorem team of global family business opment of the next generation2. Only being managed by professional • Parallel succession planning clause” according to which any heirs challeng- advisors. He has advised compa- 14 % of Next Gens are considered very trustees. requirements (each circle requires a ing the will could be disinherited. Despite good nies and families in the fields of prepared to become good stewards of continuity plan). business results, 40 years after his death, the 2. Identify 3. Design shareholder strategy, governance, the family legacy3. Owners Face Complex family was still in court fighting over the direc- 1. Set the needs and personalized executive recruitment, selection Most families are in business not Decision-Making When the boundaries between tion of the family trust4. stage priorities learning paths and executive succession, family only through their family enter- The complexity of the family busi- the three circles don’t exist or are too Define the Define which Define how the talent assessment, philanthropy, prises, but also through their family ness system puts its owners in blurry, several risk factors enter into ownership competencies competencies and continuity planning. investments (often supervised by a thorny situations, which they have play, such as: Founded by Kam Shui-fai in 1942, Yong Kee roles and the must be can be family office) and their social impact to solve by carefully weighing inter- • Nepotism (favoring family ties over became one of the most famous restaurant in competencies developed in acquired initiatives (often led by a family phil- ests. The way they handle the una- objective criteria); Hong Kong. Following the passing away of the they require your family and in which order founder, his two sons each received 45 percent anthropic foundation). In all these voidable trade-offs they face has a • Insularity (being detached from of priority of the holding company owning the business, Summary: shared family projects, transitions huge influence on the future of the external influences and losing whereas his daughter received 10 percent. The Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 1. Acting as a competent family owner happen at two levels: management family and its businesses. touch with reality); founder believed that the two brothers would requires a complex blend of specific and ownership. Families in business face the same • Sibling rivalry; work together and take care of their little sis- skills. While it is not uncommon for one institutional and market challenges • Intergenerational issues; or a few “high potential” family than non-family firms (disruption, • Financial disputes; ter. It was found later on that one of the brother 4 “Family wars : classic conflicts in the family and how to deal 2. These skills are not inherited, they must with them”, Grant Gordon and Nigel Nicholson, Kogan Page members to be trained to be the next globalization, digitalization, political • Prince Charles Syndrome (the now had secretly acquired the shares of the daugh- 2008. be learned. generation of executives, much less instability, etc.), but they also encoun- generation not wanting to let go). ter to obtain the majority over the company. 5 “The Family Business map, Assets and Roadblocks in Long- Term Planning”, Morten Bennedsen (INSEAD) and Joseph 3. Your family can greatly benefit from The complexity of the family system A bitter dispute between the two brothers P.H. Fan (The Chinese University of Hong Kong), Palgrave Macmillan 2014, p. 141. building a tailored talent development 1 tends to increase over time as through ensued. The ownership division had weakened Roy Williams and Vic Preisser, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values (Robert D. Reed 6 Publishers 2010). “Educating Family Business Owners: The Fundamental program for owners. succeeding generations, the role of the control of the company and heightened the Intervention”, Ivan Lansberg & Kelin Gersick, Academy of 2 “Investing in the Family Through a Family Learning Committee”, Family Office Exchange, 2019 FOX Foresight, Chicago, IL, page 2. some family members inevitably shift risk of family conflicts5. Management Learning & education, 2015, Vol. 14, No 3, 1-14 3 The Global Family Office report 2019, Campden Research, p. 78.

HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 1 HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 32 • Managing the process of selecting in a respectful and constructive way, Values and ethics board members; and defining what level of informa- This last competency is about the • Defining the framework and bench- tion they should receive as owners. ability of everyone to align his or her marks for risk and performance own personal actions with the shared Step 1: Set the Stage management; 2. Define the competencies required norms of appropriate behavior within • Monitoring and challenging the for these roles the family. This requires defining how Building a competency system is achieved by: board’s activity; Based on our research, teaching and the family values translate in practice • Preparing the transitions at the own- advising enterprising families around through examples of “what good looks 1. Identifying the key ownership roles; ership and management levels; the world, we believe that five clusters like” as well as “what not good looks like”. 2. Defining the competencies required for these roles; • Fostering the ownership group cohe- of capabilities are essential in every Just think of a large cousin consor- 3. Combining roles and competencies in a matrix. sion, glue and engagement; family governance system. tium: as the family grows and spreads • Managing the natural growth of the into multiple households, chances ownership group through appropri- Contextual intelligence are high that the interpretation of ate structuring and mechanisms; Contextual intelligence is about know- the family values start diverging. Cre- • Evaluating the need for outside ing and understanding the past, the ating clarity across the family about 1. Identify the key ownership roles financials (especially the return and capital; present and the future plans for the these norms is utterly important. It is key to start by identifying the dif- dividend they can expect), might • Planning strategically for the future family and the business. Such knowl- ferent ownership roles: on one hand suddenly try to intervene in the of the business; edge is the foundation for helping fam- 3. Combine roles and competencies to avoid blurriness, overlaps, gaps, family business when it faces finan- • Building capabilities for success in ily members to understand in which to design your competencies matrix and counterproductive interferences, cial difficulties. members of each subsequent genera- context they operate. It encompasses Different roles in the family system and on the other hand to promote • Governing owners (members of the tion therefore nurturing the human, the history of the business and the fam- are likely to require different compe- accountability. Board or the Family Council) who intellectual, financial and social ily, the milestones and turning points tencies. Or if different roles require For the purpose of this article, we might have worked previously in the wealth of the owners’ group. of the past and finally the ambitions for the same competency it might be at will focus our analysis on the “gov- business as executives may tend to the future. a different level of proficiency. The “Owners from the ernance roles”, leaving aside the role apply the same rules and principles To ensure their ownership’s inter - capabilities that owners need to de- of the “operating owner” who actively they were used to and drag the epi- ests are preserved, owners must find Business acumen velop actually increase with the level next generation who manages the business via an executive center of decisions to their new role, the right balance between delegation Business acumen refers to the ability of responsibilities they are going to aspire to repre sent their position. not always realizing that the new and engagement: providing substan- to understand and interact with busi- assume in the system. peers in the governance Four roles can be identified: governance in place requires them tive direction, speaking as one clear ness data and situations effectively. Skills and capabilities in a family system might have • Chairperson: running the owner- to adjust. voice, avoiding to step on the shoes of This is not so much about “knowing” system can be build up in a progres- ship governance; • Conversely, owners from the next the executives of the company, finding but rather understanding the signifi- sive way, starting from a common little visibility on the • Governing owner: representing the generation who aspire to represent the right incentive system to align their cance of the information and how they ground for all the owners, to which oth- competencies that this owners; their peers in the governance system interests, challenging their decisions should guide owner’s decisions. No er competencies or a different level of new role will require from • Engaged owner: stewarding the might have little visibility on the owner needs to be an expert in every intensity will be added to effectively business; competencies that this new role will facet of the family business. But some function in higher levels of the gov- them to be successful.” The five clusters of capabili ties in fami ly • Investing owner: passive role. require from them to be successful. decisions, at least the important ones ernance system. governance system regarding for example new ventures, A competent “governing owner” is At the individual level, each owner At the collective level, the ownership 1.Contextual debt, acquisitions and disposals are first and foremost a competent “own- should be clear about the responsi- group is responsible for: Intelligence 2.Business Acumen likely to require owners approval. How er” with all its attributes, comple- bilities and expectations his/her role • Articulating and communicating can we equip these owners with the mented with additional skills. Like- Knowing and Ability to understand entails. the owners’ vision and values; skills and frameworks needed to make wise, a potential chairperson should understanding the and interact with Common ambiguous situations • Designing the governance of the past, present and business data and a truly informed decision they will be a competent “governing owner” include: family business to ensure there are future plans for the situations effectively fully endorse? with some additional capabilities. • Investing owners, who are usually checks and balances ; family and the business Let’s illustrate this with two of passive and mostly care about the Practicing governance the five competencies we described 3.Practicing Practicing governance is first about above; interpersonal skills and prac- Gouvernance 4. Interpersonal Skills knowing where decisions are to be ticing governance: THE FOUR MAIN GOVERNANCE ROLES Understanding and Communicating, made in the system. But is it also about Governing Engaged Investing navigating the roles, collaborating, and the ability to understand the different Interpersonal skills Chairperson Owner Owner Owner (passive) processes and rules managing conflict roles and to navigate the processes and To be an engaged owner includes the for decision-making effectively the rules for decision making. ability to articulate your own view- Description Leads the Serves in governance Not in governance Emotionally detached throughout the points. Many owners still strug- governance (e.g. boards,councils) or management but and mostly cares entreprise cares deeply about about economics Interpersonal skills gle with talking to a large audience, enterprise Managing relationships in the family even if only composed of family mem- Strategy Leads Frames and Understands Accepts 5. Values & Ethics business is a key element. Quite sur- bers. Making sure that every voice is Contributes Culture Leads Leads Contributes Understands Aligning personal prisingly, very few families invest in heard implies for the family the com- actions with shared developing the interpersonal skills mitment to help each family mem- Governance Leads Leads Supports Accepts norms of appropriate of their members, whether it’s about ber acquire minimal communication Engagement Higher Lower behavior communicating, collaborating or even skills.

Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 managing conflicts effectively.

HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 43 HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 4 • Managing the process of selecting in a respectful and constructive way, Values and ethics board members; and defining what level of informa- This last competency is about the • Defining the framework and bench- tion they should receive as owners. ability of everyone to align his or her marks for risk and performance own personal actions with the shared management; 2. Define the competencies required norms of appropriate behavior within • Monitoring and challenging the for these roles the family. This requires defining how board’s activity; Based on our research, teaching and the family values translate in practice • Preparing the transitions at the own- advising enterprising families around through examples of “what good looks ership and management levels; the world, we believe that five clusters like” as well as “what not good looks like”. • Fostering the ownership group cohe- of capabilities are essential in every Just think of a large cousin consor- sion, glue and engagement; family governance system. tium: as the family grows and spreads • Managing the natural growth of the into multiple households, chances ownership group through appropri- Contextual intelligence are high that the interpretation of ate structuring and mechanisms; Contextual intelligence is about know- the family values start diverging. Cre- • Evaluating the need for outside ing and understanding the past, the ating clarity across the family about capital; present and the future plans for the these norms is utterly important. • Planning strategically for the future family and the business. Such knowl- of the business; edge is the foundation for helping fam- 3. Combine roles and competencies • Building capabilities for success in ily members to understand in which to design your competencies matrix members of each subsequent genera- context they operate. It encompasses Different roles in the family system tion therefore nurturing the human, the history of the business and the fam- are likely to require different compe- intellectual, financial and social ily, the milestones and turning points tencies. Or if different roles require wealth of the owners’ group. of the past and finally the ambitions for the same competency it might be at the future. a different level of proficiency. The To ensure their ownership’s inter - capabilities that owners need to de- ests are preserved, owners must find Business acumen velop actually increase with the level the right balance between delegation Business acumen refers to the ability of responsibilities they are going to and engagement: providing substan- to understand and interact with busi- assume in the system. tive direction, speaking as one clear ness data and situations effectively. Skills and capabilities in a family voice, avoiding to step on the shoes of This is not so much about “knowing” system can be build up in a progres- the executives of the company, finding but rather understanding the signifi- sive way, starting from a common the right incentive system to align their cance of the information and how they ground for all the owners, to which oth- interests, challenging their decisions should guide owner’s decisions. No er competencies or a different level of owner needs to be an expert in every intensity will be added to effectively facet of the family business. But some function in higher levels of the gov- The five clusters of capabili ties in fami ly decisions, at least the important ones ernance system. governance system regarding for example new ventures, A competent “governing owner” is 1.Contextual debt, acquisitions and disposals are first and foremost a competent “own- Intelligence 2.Business Acumen likely to require owners approval. How er” with all its attributes, comple- can we equip these owners with the mented with additional skills. Like- Knowing and Ability to understand skills and frameworks needed to make wise, a potential chairperson should understanding the and interact with past, present and business data and a truly informed decision they will be a competent “governing owner” future plans for the situations effectively fully endorse? with some additional capabilities. family and the business Let’s illustrate this with two of Practicing governance the five competencies we described 3.Practicing Practicing governance is first about above; interpersonal skills and prac- Gouvernance 4. Interpersonal Skills knowing where decisions are to be ticing governance: Understanding and Communicating, made in the system. But is it also about navigating the roles, collaborating, and the ability to understand the different Interpersonal skills processes and rules managing conflict roles and to navigate the processes and To be an engaged owner includes the for decision-making effectively the rules for decision making. ability to articulate your own view- throughout the points. Many owners still strug- entreprise Interpersonal skills gle with talking to a large audience, Managing relationships in the family even if only composed of family mem- 5. Values & Ethics business is a key element. Quite sur- bers. Making sure that every voice is Aligning personal prisingly, very few families invest in heard implies for the family the com- actions with shared developing the interpersonal skills mitment to help each family mem- norms of appropriate of their members, whether it’s about ber acquire minimal communication behavior communicating, collaborating or even skills.

Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 managing conflicts effectively.

HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 54 Same is true for any owner in the Practicing governance governance role; being able to artic- An engaged owner should be able to ulate and express clearly your view- explain the family constitution and point is obviously important. But at understand principles of stewardship, this level communicating is not enough delegation and agency. Step 2: Identify needs it is also about collaborating. Collabora- The chairperson should be able to tive skills go beyond communication identify gaps in the governance sys- and are about the ability to find com- tem and propose remedies. He should and priorities mon ground and develop proposals also be able to know when to initiate Building your family “heatmap” is achieved by: that integrate all the viewpoints. discussion about evolutions in the Finally, the chairperson of any gov- family and business governance. 1. Identifying familial development needs; ernance instance should obviously 2. Ranking the needs; be able to communicate and collaborate 3. Visualizing the priorities through a “Family Talent Heatmap”. effectively with his audience. Next to this, his or her leadership skills and ability to resolve conflicts will make the difference. A consulting process should be initi- Finally; the process might offer some ated with the whole family to identify unexpected learnings. The voices of needs and priorities. It serves three the now generation and the next gen- impor tant purposes. First, family eration will be equally heard. Like- Example of indicators: practicing governance time and resources are usually lim- wise, some other groups in the fam- Initiates discussion about ited. Deter mining priorities through ily, for example those who live outside evolutions in the family and consult ing with the whole family of the country or study abroad might Chairperson business governance, identifies is therefore important. Next, giv- express very different needs. gaps, and proposes remedies ing each family member the oppor- Engaging with all the owners about Understands and respects the respective roles and tunity to reflect on his or her skillset their development needs sends a Governing responsibilities of the Family Assembly, the Family and expressing (or not) a desire to be strong signal. It shows that their con- owner Council, and the Executive Team trained and devel oped in this field is a tribution to the system is important very strong fac tor of engagement. Engaged Able to explain the Family Constitution, understands principles owner of stewardship, delegation and agency

Investing Attends the Shareholders General Meeting and knows when/what is voted on FAMILY PRIORITIES owner NOT VERY IMPORTANT IMPORTANT CRITICAL Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 IMPORTANT “An engaged owner 0.00 0.50 1.00 1.50 2.00 2.50 3.00 should be able to explain Competencies Matrix the family constitution 1. To respect the decisions taken by the governance bodies and understand principles Investing owner Engaged owner Governing owner Chairperson 2. To understand the current situation of the business (products, markets, organisation) and of stewardship, delegation Contextual “Engaging with all its objectives for the future and agency.” intelligence the owners about their 3. To avoid competitive attitudes within the development needs sends family; focus on the problems to be solved, not Business on the people you are talking to acumen a strong signal.” 4. To know how to manage one’s own emotions in communication 5. To practice active listening and respect the Practing opinions of others; to be able to discern the real governance needs of others through the emotions observed 6 To know and understand the importance of key business development indicators Interpersonal skills 7. To be able to express oneself in a structured way, both orally and in writing

Values and 8. To take an active part in discussions ethics 9. To know and be able to explain the Family Constitution Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 10. To understand the systems of representation and election to the various councils Importance for the family Source: Lansberg Gersick, Pictet Wealth Solutions, 2020

HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 65 HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 6 Step 2: Identify needs and priorities Building your family “heatmap” is achieved by: 1. Identifying familial development needs; 2. Ranking the needs; 3. Visualizing the priorities through a “Family Talent Heatmap”.

A consulting process should be initi- Finally; the process might offer some ated with the whole family to identify unexpected learnings. The voices of needs and priorities. It serves three the now generation and the next gen- impor tant purposes. First, family eration will be equally heard. Like- time and resources are usually lim- wise, some other groups in the fam- ited. Deter mining priorities through ily, for example those who live outside consult ing with the whole family of the country or study abroad might is therefore important. Next, giv- express very different needs. ing each family member the oppor- Engaging with all the owners about tunity to reflect on his or her skillset their development needs sends a and expressing (or not) a desire to be strong signal. It shows that their con- trained and devel oped in this field is a tribution to the system is important very strong fac tor of engagement.

FAMILY PRIORITIES NOT VERY IMPORTANT IMPORTANT IMPORTANT CRITICAL 0.00 0.50 1.00 1.50 2.00 2.50 3.00

1. To respect the decisions taken by the governance bodies 2. To understand the current situation of the business (products, markets, organisation) and “Engaging with all its objectives for the future the owners about their 3. To avoid competitive attitudes within the family; focus on the problems to be solved, not development needs sends on the people you are talking to a strong signal.” 4. To know how to manage one’s own emotions in communication 5. To practice active listening and respect the opinions of others; to be able to discern the real needs of others through the emotions observed 6 To know and understand the importance of key business development indicators

7. To be able to express oneself in a structured way, both orally and in writing

8. To take an active part in discussions

9. To know and be able to explain the Family Constitution 10. To understand the systems of representation and election to the various councils Importance for the family Source: Lansberg Gersick, Pictet Wealth Solutions, 2020

HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 76 and that the family wants all the indi- PERSONAL DIMENSION vidual voices to be heard. Development «I really know very little about this. I need to do something about it.» Priority 1. Identify family development Step 3: Design personalized needs Room For «I think I have some good basics, but I am certainly not proficient. Development I would be interested to develop this.» A survey of the perceived family devel- opment needs should first be sent to all «I am not an expert, but I think I have what it takes to fulfill my responsibilites learning paths Proficient family members. Such survey should and understands what’s going on.» contain both proposals (a list of compe- «This is one of my specialties; I can certainly be a trainer/teacher for others, Role Model tencies inspired by the five clusters we even in other families.» The last step in the process will be to having a customized education ses- discussed above) and an ample space for Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 design a curriculum. sion where the family will learn to each respondent to suggest other skills Competencies can be developed in a apply some financial fundamentals or capabilities that would be important variety of ways. Some can be acquired to the accounts of its very own busi- for the system. through teaching and study, some ness will deliver so much more. through observation and experiential One family we worked with was learning, and some through coach- struggling to identify the key busi- 2. Rank the needs FAMILY TALENT HEATMAP “Educating owners is a Once all the answers will have been ing and mentoring. Some learnings ness indicators that owners should mul ti-year process, it is a compiled and curated in a long list, 1. To respect the decisions will happen through virtual means, monitor on a regular basis. A work- another survey round will be organ- taken by the governance some others would commend in per- shop was organized with the board marathon, not a sprint!” bodies ized. Each family member will be son attendance. of directors to go over the different asked to rank these different skills When designing a curriculum, one metrics that the board was using for 2. To take an active part in along two dimensions: should not try to put too much on the its own work. While reviewing these discussions • Family dimension: how important program. Educating owners is a mul- indicators board members explained is this skill for the family system as it 3. To understand the current ti-year process, it is a marathon, not their meaning and the way the evolu- stands today? situation of the business a sprint! tion of these indicators would influ- • Personal dimension: how important and its objectives for the The most important aspect is that ence their decisions Having under - is the development of this skill for me? future any initiative truly resonates with stood these, the family then decided 4. To avoid competitive its audience. Attending a financial to take a subset of the most impor- Many families tend to underinvest in non- The family priorities chart above attitudes within the family analysis course might be useful. But tant indicators and developed its own technical or non-financial education. Others shows which competencies are per- scorecard that would be shared at reg- suffer from a strong imbalance in develop- ceived by the family as most impor- Role Model Proficient Room For Development Development Priority ular intervals with all the owners. ment efforts between the “high potentials” tant to achieve success. The graph Source: Lansberg Gersick, Pictet Wealth Solutions, 2020 As mentioned above some fam- and the larger community of owners. illustrates a simple example of a fam- ily members may already be highly We believe that a competency system can ily that has been polled across a long skilled in some areas. This is a great truly help families define their priorities for list of competencies, and which ones opportunity for family members to the education and development across the come out as most important. In this generously share their knowledge whole ownership group. With some little instance, the long list comprised a and experience with others, again external help, every family can engage in total of 32 possible competencies, out fostering engagement of all. But the process. of which 10 emerged as “very impor- 3. Visualize the needs through a there is more: next to the “usual sus- Such a system will provide a language that tant for the family”. “Family Talent Heatmap” pects” in the family (like the brilliant is understood by all and engages every fam- While this ranking shows us The combination of the two rankings ones that have the highest degrees ily member to participate actively in the the overall importance the fam- (what is important for the family and from prestigious universities abroad) system. Carefully designed and tailored ily attaches to theses competencies, what is most needed for me) will be Conclusion: this is also the occasion for the family to the specific situation of each family, it it doesn’t tell us much about how integrated in a graphical representa- 1. Education is critical for good decision. to uncover talent in other areas. has the power to generate excitement and skilled the family feels across these tion that we call the “Family Talent 2. Education is a factor of engagement. One of the families we worked with engagement. dimensions . Heatmap”. This Heatmap allows to had a nurse working in an intensive 3. What resonates best is not a standard The process of developing the framework For that, we turn to the second visualize quickly where the family care unit. While her technical capa- approach, but what is unique to your offers family members a welcomed oppor- ques tion where we dive into the per- should focus its efforts and how it bilities weren’t an obvious resource family. tunity to reflect on how their system is func- sonal rankings, i.e. understanding should establish its priorities. for the family, it appeared that she tioning and how they project themselves how each member of the family will As you can see in the graph, the fam- 4. Simple tools and some guidance can help had been highly trained in commu- within the system. posi tion him or herself in terms of ily feels skilled for two competencies a great deal. nication especially with colleagues, devel opment needs. (1 and 3), but expresses a strong desire patients under stress, and their rela- After all, we should remind ourselves this As an example, for the “personal to work on two others (2 and 4). All tives. She enrolled herself as a trainer very simple principle: the quality of the deci- dimension” one can use a scale of 1 to four are critically important, but two for the family in helping them sions a family system can make, irrespec- 4, where (1) would be the expression of emerge as a priority in terms of devel- develop their interpersonal skills tive of its vision and structure, depends a a pressing desire to be trained or edu- opment needs. Accordingly, the fam- To find out more, please contact your Relation- based on some of the simple frame- great deal on the collective capabilities of cated and (4) the feeling of high profi- ily should put those two on the top ship Manager or your Pictet Representative. works she had been trained with. As the owners to bring it to life. And embarking ciency, including the volunteering to of its list, leaving the two others for a one can imagine the family now looks on a tailored talent development adventure teach others in the family. later stage. www.group.pictet/wealth-management very differently at her! might well be a very wise investment.

HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 87 HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 8 Step 3: Design personalized learning paths

The last step in the process will be to having a customized education ses- design a curriculum. sion where the family will learn to Competencies can be developed in a apply some financial fundamentals variety of ways. Some can be acquired to the accounts of its very own busi- through teaching and study, some ness will deliver so much more. through observation and experiential One family we worked with was learning, and some through coach- struggling to identify the key busi- “Educating owners is a ing and mentoring. Some learnings ness indicators that owners should mul ti-year process, it is a will happen through virtual means, monitor on a regular basis. A work- some others would commend in per- shop was organized with the board marathon, not a sprint!” son attendance. of directors to go over the different When designing a curriculum, one metrics that the board was using for should not try to put too much on the its own work. While reviewing these program. Educating owners is a mul- indicators board members explained ti-year process, it is a marathon, not their meaning and the way the evolu- a sprint! tion of these indicators would influ- The most important aspect is that ence their decisions Having under - any initiative truly resonates with stood these, the family then decided its audience. Attending a financial to take a subset of the most impor- Many families tend to underinvest in non- analysis course might be useful. But tant indicators and developed its own technical or non-financial education. Others scorecard that would be shared at reg- suffer from a strong imbalance in develop- ular intervals with all the owners. ment efforts between the “high potentials” As mentioned above some fam- and the larger community of owners. ily members may already be highly We believe that a competency system can skilled in some areas. This is a great truly help families define their priorities for opportunity for family members to the education and development across the generously share their knowledge whole ownership group. With some little and experience with others, again external help, every family can engage in fostering engagement of all. But the process. there is more: next to the “usual sus- Such a system will provide a language that pects” in the family (like the brilliant is understood by all and engages every fam- ones that have the highest degrees ily member to participate actively in the from prestigious universities abroad) system. Carefully designed and tailored Conclusion: this is also the occasion for the family to the specific situation of each family, it 1. Education is critical for good decision. to uncover talent in other areas. has the power to generate excitement and 2. Education is a factor of engagement. One of the families we worked with engagement. had a nurse working in an intensive 3. What resonates best is not a standard The process of developing the framework care unit. While her technical capa- approach, but what is unique to your offers family members a welcomed oppor- bilities weren’t an obvious resource family. tunity to reflect on how their system is func- for the family, it appeared that she tioning and how they project themselves 4. Simple tools and some guidance can help had been highly trained in commu- within the system. a great deal. nication especially with colleagues, patients under stress, and their rela- After all, we should remind ourselves this tives. She enrolled herself as a trainer very simple principle: the quality of the deci- for the family in helping them sions a family system can make, irrespec- develop their interpersonal skills tive of its vision and structure, depends a To find out more, please contact your Relation- based on some of the simple frame- great deal on the collective capabilities of ship Manager or your Pictet Representative. works she had been trained with. As the owners to bring it to life. And embarking one can imagine the family now looks on a tailored talent development adventure www.group.pictet/wealth-management very differently at her! might well be a very wise investment.

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HOW TO SET YOUR FAMILY OWNERSHIP GROUP FOR SUCCESS 109