When a family office is established around an operating business, it’s not uncommon for some siblings to opt out of the day-to-day operations. Yet these siblings often retain a vested interest and receive distributions based on decisions made by those who are running the show. At times, this dynamic can create a sense of exclusion and disengagement among nonoperating family members.
So how can family offices ensure that all siblings feel heard and included in decision-making? There are several strategies for breaking down silos and fostering a sense of unity and collaboration within the family enterprise.
Start by educating
Sometimes misunderstandings arise from a lack of awareness. That’s why all family members should familiarize themselves with the fundamentals of the business. While each sibling might have grown up with a high-level vision, that person's knowledge may diverge from there. For instance, key aspects like business units, key employees, dividend policies and other major decisions may be old news to those immersed in the enterprise — but feel confusing or opaque to others.
By providing an open forum for questions and feedback, family members can gain a deeper understanding of the business and its operations. In creating such a discussion forum, some families elect to bring in a third-party facilitator to lend a fresh perspective and ensure that all voices are considered. This can lay the foundation for a sense of unity, transparency and collaboration within the family enterprise.
Root it in values
After level-setting, it’s important to acknowledge that different agendas may be at play. Put plainly, a sibling (or a significant other) who does not participate in the family business may have very different motivations, concerns and responsibilities than one who is an owner currently employed by the enterprise. To help dispel preconceived notions and appreciate one another’s priorities, siblings should be encouraged to share what’s important to them.
For instance, siblings who may not participate in the business may assume that the sibling who is running the enterprise thinks he or she deserves a larger share of the spoils. Conversely, the sibling who is running the business might think his or her efforts are underappreciated and may envy the siblings who partake in the profits without the added weight of responsibilities. Openly sharing values and viewpoints can go a long way toward creating a more collaborative and unified family enterprise.
Align your mission
A growing, shared business can be a catalyst for families to organize and establish a framework to communicate with one voice. With values leading the way, governance can provide structure, allowing voices to be heard while offering strategies for working together and building trust.
A family mission statement is a great place to start. Just as companies have mission statements, families and family offices can have one, too. Drafting a mission statement gives family members the chance to create and communicate a shared vision and purpose for the family. Crafting the mission statement and regularly reviewing it at family gatherings can strengthen family bonds, provide a sense of meaning and identity, and establish the standards by which each family member should live and be held accountable.
All in the family
Consider the Roy family in the HBO series “Succession.” Upon their father’s passing, the eldest daughter assumed control of the operating business, which is poised for substantial growth. Her two married brothers are not involved in the business but are receiving distributions. Concerned with how best to involve them, the eldest sister agrees to craft a family mission statement as part of embedding a family office within the enterprise. She viewed the family’s mission statement as a way to lay the groundwork and drive the practical actions within the broader family governance structure. She could also see it informing and directing trusted advisors (e.g., investment, legal, trust and tax) as they advise on growing and preserving wealth for future generations.
Before diving in, the family initially engaged in a values exercise to articulate the guiding principles that each held most dear. This two-way communication enabled the siblings and their significant others to share their own values. From there, they pinpointed where everyone’s principles overlapped — and where they didn’t.
Once these differences were reconciled, it was time to put their stamp on a family mission statement. To do so, each sibling sat down with his or her respective partner to capture a brief description of the family’s fundamental purpose, answering the overarching question: “Why do we exist?” Other questions they contemplated included:
- What are the things we value most about our family that make it special?
- What are our family’s greatest strengths and weaknesses?
- What impact do we want to have in our community and the world?
Through this process, the eldest sister learned that her brothers were content to remain “silent partners.” While they admired their sister's business savvy, they didn’t share her enthusiasm for the business and didn’t want to insert themselves in its day-to-day affairs. Instead, the siblings agreed to a semiannual assembly or retreat that mixed fun family activities with education and business discussions.
How siblings can strengthen their family enterprise
Through governance — and engaging in a dialogue around shared values — the family tackled preconceived notions on both sides, established a shared mission statement and laid the foundation for regular family meetings. While several meaningful decisions remained outstanding, establishing more open communication in a structured environment provided a path to enhanced governance.
Formal governance structures, based on shared values and a common mission, can inform how the family office fits into the overall structure while helping balance the needs of both the family and the entity. As a result, this formalized framework for decision-making and communication can reduce conflict and increase the likelihood of continuity for all aspects of the family enterprise.