Next Steps for Family Businesses – Vulnerabilities Exposed…
By Cindy Radu
What vulnerabilities has Covid exposed in your family enterprise? And what are you going to do about it?
In April I was invited to participate on a global STEP Insight Panel on the topic of “How have you and your clients reacted and adapted to the global pandemic?” STEP Journal Issue 3, 2020 was released June 26 with eight practitioners weighing in on this question. Here is the full text of my response.
“Family businesses are juggling a lot of balls with the rapid and crushing blow of the current pandemic. The predominant focus in early stages has been to respond to three priorities: the health and well-being of family and staff; mounting liquidity concerns; and lack of or out-dated wills, personal health care and financial decision-making documents. Conversations about how to support community and maintain human connection while in physical isolation have also been at the forefront.
Some families are hungry for information and support; others are more internally focused on survival mode. While there are endless dynamics at play, there appears to be a correlation between how well a family responds to current time sensitive, fluid conditions and how developed certain skills are. These skills include: how the family brings in, disseminates and processes information; the ability to have challenging conversations; processes already in place to identify priorities and potential solutions; and the ability to make, communicate and implement difficult decisions with grace.
My role as a family enterprise advisor has adapted to the urgency and fear associated with this situation. Listening without judgement can provide relief from chaos. Offering an objective perspective can help bridge the gap for those used to operating with more predictability. Connecting families with relevant resources and facilitating a high degree of collaboration among advisors presents families with timely, targeted options. All these steps bring confidence to break through the inertia of uncertainty and choose a path forward.
Inevitably the present situation will expose and exacerbate vulnerabilities in family business systems. There will be an opportunity to step back from urgency mode and properly address these vulnerabilities. For example, families who didn’t “get” governance pre-pandemic may now be motivated to explore a range of topics including: the importance of regular family meetings with robust agendas, having a crisis management plan in place, and the benefits of having independent board members. Family enterprise advisors who can adapt to client needs and offer a unique skill set will be well placed to assist family businesses as we move into the next phase of our new reality.”
(Note: STEP Journal version was abbreviated due to editorial limits.)