Five Essential Strategies for Family Business Advisors

Those of us who work as advisors for leaders in a family business-- wealth advisors, attorneys, and business psychologists-- know that advising is a complex and rewarding process.  Family systems are always complex. I think we have an obligation to serve those systems. 

As an advisor, understanding the unique dynamics between individuals, their decades of challenges, and their opportunities for the future is crucial to providing ethical, actionable recommendations. Just this week, when I closed a family meeting session over Zoom, one Next Generation owner said, “We need to meet more often.  Dad’s succession plan is pretty good, but I want to make sure that we meet some of these metrics on time.”

So here are five strategies that can help you support and nurture family business leaders and foster their long-term success.

One: The Power of Robust Assessment

Assessment lies at the core of effective family business consulting. Unfortunately, it is often overlooked or undervalued. To truly understand the needs and strengths of a family business, advisors must move beyond gut instincts and embrace comprehensive assessment tools. You would never go to a physician who didn’t assess your vital signs.  You would never hire an attorney who skips the discovery phase.  So why skip the need for assessments in complex family systems?

When you leverage objective assessments, such as this 360-degree leadership assessment, then you can provide valuable insights into individual and organizational dynamics.  We know what behaviors strengths, weaknesses, hidden talents or gaps are causing conflicts.  We know direction and intensity.  We also know that 360 assessments designed for family business leaders are the most valid form of feedback, for any leadership team or aspiring next generation person. 

Two: Bridging the Gap between Generations

Advisors play a crucial role in facilitating effective communication and collaboration between different generations.  Family business leaders face the unique challenge of succession planning and the transition of leadership from one generation to the next.  Those leaders do not always say what they are thinking.  Sometimes they have long memories about that time when Aunt Sally said something critical about their daughter. Other times they just don’t know how to find the words that avoid emotions, judgements, or conflicts. Those are coachable skills... and a large part of my advising engagements. 

Older leaders typically want to protect their assets and perpetuate a legacy.  The younger generation typically wants to innovate or add their mark on the business.  Without skillful advisors, those ancient generational conflicts will typically lead to conflicts. 

Here are the ground rules that I often use:

When I facilitate family meetings, I often use ground rules to make sure that people listen to one another, and “assume positive intent in others.”  Ground rules help many families.  Advisors need to foster open dialogue, encourage active listening, and promote understanding among family members.  We must be adept. At root, all advisors need to assess, recommend and serve family systems.  

Three: Cultivating a Culture of Flourishing

Flourishing is not just a goal for profitability or financial growth or family continuity.  In fact, the word “Flourishing” is a focus for business psychologists like me who know that Gen Z leaders want support for mental health concerns.  Unlike older family members, they do not have any negative stigmas about discussing anxiety, depression, drug abuse, or domestic violence.  As advisors, we need to partner with experts who can provide those skills for our family systems.  Leaders of all ages want to flourish, just as plants want to grow.

There is abundant research on how to flourish. That psychological research stacks into 5 buckets, the PERMA model, which focuses on positive emotions, engagement, relationship, meaning, and achievement. For more details, contact me. I used the PERMA model in my PhD research. Here is one way to visualize how advisors and family leaders create flourishing family businesses.

We all make decisions to say and do something because of our values.   Sometimes we regulate our behaviors. Other times we make mistakes and “stick our foot in our mouth.”  As an advisor, I often ask myself, “How am I encouraging this family system to cultivate a culture that values continuous learning, curiosity, and humility?” Then I change what I say and do, like any behavioral psychologist. I know that advisors have an obligation to serve our clients well. 

Four: Embracing Technological Advancements

Technology, including artificial intelligence (AI) and automation, is transforming numerous industries. Family businesses are no exception. That fact means that now- if you truly want to provide as much value as possible to the families you serve- advisors also have an obligation to help family business leaders recognize the opportunities presented by technological advancements. For instance, there was never an event called the “Industrial Revolution.”  There was an Industrial Evolution.  In the same way, we are always embracing ongoing technological evolutions. 

There is no evidence that any technology or innovation will ever lead to job losses. That is a myth. Throughout 4,500 years of recorded human history we always embraced new tools. Today, we are embracing the next evolution of digital tools for some jobs and tasks. We can never replace the need for human creativity, humility, and care for others. When we embrace new technology wisely, family business leaders can thrive in the next digital evolutions.

Five: Nurturing Social Capital and Relationships

Family businesses thrive because of their focus on strong relationships and social capital.  They are 60% of the GDP in the US, and they lead to over 65% of new job creation.  In my opinion, advisors have an obligation to strengthen those relationships.  Here are two examples of the paradoxes we can embrace:  We all need to model confidentiality and promote open communication channels, at the same time.  We all need to promote trust and develop a shared sense of purpose and commitment to values, at the same time.  When our clients create supportive ecosystems that value collaboration, family businesses can leverage their social capital to weather any challenges, attract top talent, and build enduring legacies.

If any of these strategies are not your area of expertise, then you need to ask, “How do I build my team of advisors to serve my clients better?”  We all need a list of experts.  If you’d like a copy of my list, just contact me.  As one client told me this morning, “I know that if you cannot do this scope of work, that you will recommend 2-3 great people who can serve our family succession.”  That’s an example of a tremendous endorsement.   

I used the word “obligation” several times because I regard this work as a critical service.  We have the responsibility to make a lasting positive impact on the resilience of family-owned enterprises, and we can help those leaders create bright, promising futures for the next generation of leaders.

For details see www.AssessNextGen.com, www.Action-Learning.com or www.theFBCG.com today. Then contact me.   

I’d like to know how you are applying any of these five essential strategies.