The focus for this installment of  “Dear Dr. Merlot” is Family Governance.

Family Governance policies are the first step to create boundaries between the family and the business.   The specific question we will cover from Loyd’s book Family Business Heartburn Relief: Answers to Gut-Grinding Family Business Questions is:   How do the opinions of others apply to governance?

Before jumping into the featured question above:

What is Governance?

Simplest description: Set of guidelines, boundaries, processes, and/or procedures for how the family interacts with the business and the business interacts with the family.

Business owners often ask us, “Who should have Governance policies.”

Agreements preclude disagreements. Suppose you have the possibility of a friend or family member interested in the business. Governance policies are essential to keep business, business, and family; family.

Now to Loyd’s commentary on the topic: How do the opinions of others apply to governance, ” which is one of many questions featured in Family Business Heartburn Relief.”   Loyd says, or Dr. Merlot depending on Loyd’s mood:

Control is fact; governance is perception. Control is power; governance is an art form, a process for making others feel like they are contributing to the decision-making process. You cannot have effective, harmonious governance in a family business unless you solicit and at least play the game of considering the opinions of family members and key managers who have an ownership interest or have paid their dues, earned your respect, or are working hard to earn your respect. If you want to rule, don’t worry about the opinion of family and key managers. If you want to govern, ask questions and prepare to listen.

Some thoughts As the leader of your family’s business:

You set the tone.

You act as role model behavior for how to treat one another, which attracts or repels talent to be a part of the team. Also, the tone you set either nurtures creativity and teamwork or creates an “I’m Gonna Look Out for ME” environment. There are many examples of leaders out there – GOOD LEADERS & BAD LEADERS.

What do you want to create? You have the power to motivate and inspire #familybusiness #successionplanning As you considering the opinions of others, listening to understand is an extremely powerful tool. Listening allows you to relate and creates more Win-Win-Win environments.

Now, back to Loyd’s answer to the question: How do the opinions of others apply to governance? from Family Business Heartburn Relief:

That being said, allow me to reflect upon the obvious. It is safe to assume that you are not the “burning bush,” the all-knowing source of wisdom and everything right. Fact is, you are mortal like the rest of us and prone to error, mistakes, misjudgment, and even revolting stupidity. Your goals are probably like mine: make more right decisions than wrong ones, fall forward. Regardless of how cute those goals may sound, as you well know, falling hurts. Running a business without a net is a bitch. Consequently, if Dr. Merlot would say, don’t be an egocentric, blunt object, consider other opinions before you make an important decision.

Some thoughts As the leader of your family’s business:

Again, as a great coach kept asking me one day, What Do You Want to Create? You have a choice.

Option 1: You can rule with an iron fist, which will create compliance. However, your people will eventually either leave the organization or nod with the agreement and do it the way they want anyway.

Option 2: You can govern and resource the opinions of others. Taking in a diversity of opinions can be difficult to sort through. Especially trying to sort through opinions that will benefit the group versus the individual and navigate communication.

Ask for Help! Resource an experienced family business advisor. A third-party perspective that is emotionally removed from the environment can help you see the trees from the forest.



Family Dynamics and Family Governance

Family and Business alignment is hard to find when business issues liven up family dynamics.

However; with proper process, governance policies, and mutual respect built over time, a Family Business can thrive through multiple generations. Click the following links for more drill-down resources on  Family Dynamics and Family Governance.

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