Many families I work with constantly struggle with building engagement. They have trouble getting family members to come to family meetings. They can’t get people excited about the business, or enthusiastic about their ownership. Sometimes this is because when they succeed in getting a little bit of engagement; they don’t know how to sustain it. They don’t know what to do with it, or how to encourage the family to deepen their involvement.
I can’t tell you how many families I know who gather feedback from the family, but nothing is ever done with it. I think that’s such a killer when it comes to building engagement. People can’t understand why they can’t build engagement, and it’s because all the excitement has been squashed out of them. Family members feel like they’ve spent their time responding to a survey or participating in a policy discussion without anything to show for it.
The most interesting thing you can ask someone is what they think. And once you’ve seen a family member light up because you asked them what they thought, it’s very important to take that excitement and build on it, because you may never get the opportunity again. To do that, you have to show them that their opinions were honored and carefully considered when a recommendation or policy was put together.
Why does engagement matter?
The reason why families need to build engagement is because if you don’t maximize the family’s emotional connection and enthusiasm for the business, people start looking at their ownership in the family business as a pure financial play. The family business should be a performing company, but if you are in a family business just for a pure financial play, your goals and objectives begin to more closely resemble those of a publicly-held company. You’re thinking on a very short horizon, not focusing on making long-term strategic investments in the company, in the employees and the community.
Family engagement is critical to the overall success of the company.
How should you build and sustain family engagement?
Sustaining family engagement once you’ve got a small spark going is not difficult, but requires consistent follow-through from family leaders. Here’s what you should keep in mind.
- Define what the family can influence
When you’re asking the family to get involved, it’s crucial to be clear about what kind of involvement is appropriate and constructive. Have conversations around what the family can influence, and what the family can provide guidance or advice about when it comes to the business, the board and the family.
It’s up to the leadership to determine what those boundaries are. For example, you may have family members who want to influence the performance of the business by giving business advice. Unless they are working in the business operations, that’s an inappropriate role for a family member. It’s being a backseat driver. The family needs to keep their hands out of the business if they are not in operations.
The key important factors that the family can influence are the values of the business, and the risk tolerance, at a very high level. A lot of times the family can also influence the culture, which is very meaningful. When a family is a good partner with the business, they have a huge amount of influence in terms of retention and recruitment of top talent.
The family should really be focused on managing the intersection between the family and the business, so that there’s no over-reaching and the family is very responsible and cognizant of their role in the family business. They’re making an effort to be orderly in their interaction with the company.
- Foster consistent and open communication
Once you’ve had your conversation around what you can actually talk about, it’s very important for there to be consistent and open communication. Consistency is as important as openness. There should be an opportunity for a two-way conversation, not just from leaders to shareholders, but a true dialog where people can ask clarifying questions, but not over-reach into things they are not in a position to influence.
When family members are consistently engaged in a positive and open conversation about the family business, they will receive an emotional return from the business that goes far beyond their financial return.
- Do your homework
In order to effectively lead a conversation, you should never start a debate without having done additional research beforehand or without bringing additional information into the conversation. Read books and articles, talk with other family businesses, or hire a consultant to broaden your own understanding of how other family businesses have handled the topic at hand. This advance preparation will help you look at the issue from all sides, so you can avoid making people with dissenting opinions feel excluded.
The process itself, even as it’s getting you to an expected conclusion, is about building engagement. You’re asking people what they think, providing them with a process for talking about it, and a process for providing feedback. It’s a great way for people to feel heard and included in the conversation even if they’re not in the room where the decision is being made.
- Use formalized processes for gathering feedback
The best way to have a two-way dialog is to make sure that the family has a platform for decision-making that is very consistent and inclusive. This may mean assembling a task force, a standing committee to regularly review a policy, or conducting a survey of the broader family.
The important thing is to make sure that many family members are invited to discuss whatever topic you’re looking at so you can broaden the decision-making sphere. Make sure you’re not stacking the deck with people who are on your side. You want the task force to be a broad cross-section of the family, including those people who may have an issue with what you’re trying to do.
When you’re trying to make a decision that will affect the entire family, you want to make sure you’re addressing the interests of the whole family, not just those who are in the room. You never want to get into a situation where people are feeling ganged up on.
One of the biggest problems with a family business is that people fall into predictable roles. No matter what topic the family has a discussion about, you know who is going to be for it and who is going to be against it. You know what their reasoning is going to be, because you know them so well. Don’t let this predictability discourage you from involving people with vastly different experience and opinions. In fact, making these people feel heard may encourage them to broaden their opinions and stop expressing the same viewpoints over and over.
- Acknowledge all contributions
When you’re ready to make a recommendation, shop it around to other family members before putting it in a formal written document. It’s imperative that individuals expect their ideas will at least be considered when leadership is putting a recommendation together.
Sometimes people have ideas we can’t incorporate, but I always go back and say, “That was a really meaningful comment. We can’t incorporate it here but we’re going to come back to it.” And then, of course, you have to actually follow up on that idea later, as you’ve promised to do. That just makes all the difference.
Without engagement, the family can easily drift away. Each successive generation is less close, and sees the family business as something burdensome that binds them to people with whom they have nothing in common.
But by defining clear boundaries about what the family has the power to influence, having open and clear communication, and using people’s feedback to influence the outcome of major decisions, it is possible to build engagement. This will build enthusiasm around the business and enthusiasm around participation in the family itself.
The first priority of people in leadership roles should be to create opportunities for the family to feel like they are valued participants. It’s not just an investment you want from them. They are actually contributors to the long-term success of the business, and huge influencers over the path the family will take for generations to come.