Professionalising the Family Business helps it to work better, and more profitably, without losing its soul
Professionalising the Family Business – Overview
The professionalising process is designed to make family businesses more efficient, profitable, and businesslike, without losing their family feel and values.
We contrast this with corporatising the business, which converts large family businesses into large corporations, and usually involves a public listing. In the process the business loses most, if not all of the more attractive aspects of being a family business.
The family may be contemplating professionalising the business for any number of reasons, including: to achieve best practice status and benefits; to obtain additional finance; to increase its value in readiness for a sale or major restructure; as part of a succession process; or to increase competitiveness – for survival and/or profit.
Whatever the motivation, when any leadership team worthy of the name raises its commercial aspirations, it’s usually clear that the only way they’ll increase their profits and sustainable business value is through organisational and productivity improvements.
We help to plan the Professionalisation Process, and then facilitate its implementation through collaborative and empowering team building.
There’s usually a fair amount of personal skills development required, mainly in human, rather than technical areas. These include leadership and management training and the practical and cultural requirements for building trust and high performance teams.
An “aligned” family supports its business interests, as those business interests support the family. When everyone is aligned they have clarity about where they’re going, certainty about how they’re going to get there, and commitment to making the journey together.
Business professionalisation teaches family members working in the business to work together better as a team (of owners), by building the respect and trust that lies at the foundation of every high performing team.
We work with working and non-working family members to build better alignment in the family over its business interests. We use this exercise to build better relationships within families over a shared item of focus.
Meetings involving two or more staff members are a fundamental component of business operations. They provide opportunities for staff members to get together, work things through, develop solutions, make decisions, and generally leverage the combined knowledge and expertise of the team.
Regular, properly structured meetings inject discipline and purpose into businesses and form an essential part of the professionalisation process.
Many family businesses are surprisingly unskilled when it comes to running meetings, and some are even worse at collaborative problem solving and making good decisions. This is readily established through staff interviews at the commencement of an assignment.
So having established that the business (and/or the family) is not good at making decisions, the last thing we want to do is have them make important decisions before their skills have improved. This requires training on: communication; problem solving and decision making, team building and meeting processes, to develop essential skills.
From these we can develop a set of FamBiz Pty Ltd Meeting and Decision Making Rules for the business to adopt and implement.
Business Analysis and Project Planning
Unless there’s a specific request or a clear need to consider them, we don’t perform detailed reviews of business financials as part of our professionalisation process. Broad indicators of current performance, provided by executives entitled to express their opinions, are accepted as adequate inputs for our planning purposes.
Instead, working with family and staff, we review how the business actually functions to determine whether it has appropriate and adequate structures and systems in place. We’ll then assess whether it has the right people (including family members), in the right roles, doing the right things – and doing them as well as they need to be done.
This usually leads to the modification or setting up of new management functions and structures; upgrading some (or many) business systems; and improving some, or many, operational processes. This produces greater role clarity for both family and non-family employees – the result of developing detailed job descriptions and specific KPIs, including measurable performance targets.
When it all comes together, the changes help the business to operate more efficiently and profitably. They also make it easier to encourage, manage, monitor, measure and respond to the contributions of both family and non-family employees, on an objective and non-personal basis.
Improved focus, clarity and professionalism also support business continuity and succession planning, as they all help to prepare the family, and the business, for eventual ownership, management and leadership transitions.
Professionalisation Process Stages
1. Background Factfinding – information gathering on the business itself including: leadership, management and key employees; plus any commercial, financial, organisational, systems and ownership issues that need to be addressed.
2. Business Analysis and Plan – assess the outcomes from Stage 1 and, in consultation with family owners, create a Professionalisation Project Plan to suit.
3. Problem Solving – resolve critical current commercial and operational issues (if any) to allow everyone to focus on future needs.
4. Clarity – Values, Visioning and Goal Setting (workshop). Ownership / Leadership team works out what it wants to do with the business, why it’s doing it, and how to do it and then engages managers and other key staff in refining the plan.
5. Strategy Plan – develop a Strategy Plan (big picture) and a supporting Business (Operational) Plan covering all major aspects of the business: detailed objectives, milestones, timelines, resources, responsibilities and accountabilities. Everybody in the leadership and management teams must understand and commit to these plans.
6. Business Structures (1) – Bodies: establish / formalise / develop appropriate formal bodies to provide enhanced business leadership, governance and management:
- Board of Directors (strategy and governance).
- Advisory Board (strategic advice and support for the main Board).
- Senior Executive Team (inner circle).
- Executive Management Team (whole of business and divisional operations).
7. Business Structures (2) – Strategies, Plans & Agreements: increase the level of clarity and formality in the organisational structures of the business, especially:
- Values, Visioning and Goal Setting.
- Strategy Plans.
- Business Plans.
- Succession Plans.
- Organisational Structures.
- Job descriptions and Role Clarity, including: individual roles, titles, authority, responsibility and accountability.
- Operating policies and procedures, for all critical aspects of the business, and especially those relating to HR.
- Programs for increasing knowledge and skills.
8. Systems and Skills – throughout the process we reinforce decisions made in meetings and workshops by designing, adopting and implementing appropriate systems to help minimise costs and risks by getting things done more efficiently.
We also ensure that everybody has the skills and confidence they need to perform their allotted tasks well. If anything is lacking we can usually teach, model and help to develop the necessary skills.
Coaching and mentoring often become an essential part of the professionalisation process, not least for next generation family members, because many family businesses, and family business leaders, don’t have the time, ability or inclination to offer them in their normal “lean” operating mode.
9. Commitments – as with the family, this is summed up in the mantra: “execute, or EXECUTE!” To build a high trust, high performance culture there must be a “can do, will do” attitude infusing every facet of the business. Culture should be self-monitoring and largely self-supporting. That requires high levels of individual responsibility, supported by explicit and adequate delegated authority.
Trust is built, over time, by honouring commitments made (it’s all about performance). It’s destroyed far more quickly by failing to keep your word, and by disappointing people (especially family members) by not living up to promises made or expectations that have been nurtured over time.
We help to entrench commitment and increase trust at all levels in the business through good communication, supported by regular team and operations meetings, backed by business and individual performance reviews and appropriate policies and procedures for recognising commitment, effort, merit and results – and rewarding them accordingly.