The Family Biz Show Ep 5: Family Business Consultants Cry Themselves to Sleep at Night

Episode 5: Transcript

Mike: Welcome, everybody, to the Family Biz Show. I'm your host, Michael Palumbos with Family Wealth and Legacy in Rochester, New York. We're pretty excited with our guests today. And at the same time, I'm going to tell you right off the bat, I'm nervous. When people tell you, “Mike, this will be the easiest interview you ever do”. That's when you start shaking. So Jeff and I have known each other for a while now, and work together with a client and have a great working relationship. I'm really excited to have you here. Jeff. Ira, Jeff speaks super highly of you. And we have traded emails, but never really gotten to meet each other. So this is pretty exciting for me.

Ira: Great. Awesome. Great to be here.

Mike: And just looking at your bio, and the things that you've been involved in through the years. Just amazing. So, I really appreciate you spending time with us today.

Ira: Thank you.

Mike: I'm going to just kind of open up the ground rules a little bit. What excites you about failing to work with family businesses?

Ira: Okay, well, nice to have me here. I grew up in a family business. My earliest memories were helping in my family store, which became the oldest children's clothing store in the United States. I worked there since I was a little kid and ran it for almost 20 years, with my parents. One of my proudest achievements in my life of family business was that I wrote three plays about family business, and one of them was about my 17 years of working with my father. And we presented that all over the world, including while back in Katelon. And I ran a program called “The Family Business Center of Pioneer Valley” that's in Western Mass. I passed the torch last October. And now I'm doing consulting and so on. But my one claim to fame as a family business consultant is that I can take really careful notes with action plans and agreements, even as I'm breaking up a fistfight that has happened.

Mike: Oh, I love it. Thank you. We appreciate you being here. Ira. Jeff.

Jeff: All right, believe it or not, I have recovered from my family. Working with my mom and dad, we had a commercial printing business in New York City. That was my family's business and another smaller business in New Jersey. I really didn't love commercial printing. And I really felt like working with my father, if we continued that, that we weren't going to have a father son relationship anymore. And I decided to go my own way, you know, something you see in family, businesses, families who really encourage or strong-arm someone to be in the business that doesn't want to be there. And really, if somebody doesn't have the passion for it, it's best not to sort of push them into it. Or that you see people allow the next generation into the business when maybe they don't have the skills to really contribute. Those are two big things I found in my case. I just wasn't interested. There was no drama, I went my own way. It was the best thing I ever did for my relationship with my dad.

And for my own career. I went into sales and marketing separate from the family business. I worked in consumer products and technology. I had a really good run at a young age, but I felt like something was kind of missing for me. And there was something about family and family business that was still kind of calling me. So I went back to graduate school, and I studied family and group dynamics. I got trained as a family therapist, I went through full psychoanalytic training, and 25 years ago that makes me feel old. I started a private practice really in psychotherapy, talk therapy. And just by coincidence, some of my clients had businesses and I got to know them in a really deep way. You know, they were coming to me for marriage counseling or because their teenager was out of control. But I got to know them in a really deep way and I got this really great insight into how the family dynamics and the emotion affected business and financial decisions and how owning something that was intended to go from one generation to the next affected the family relationships. So the family relationships and emotions affecting the business and owning a business affects the family. And I thought there's something that I could do here that's different than what a shrink therapist does, but also different from what a CPA or MBA type consultant does. That was 25 years ago, and now I spend most of my time just consulting to families where family dynamics and emotions and relationships intersect with, you know, figuring out who's going to run a business, who's going to own it, what are we going to do with this? What are the roles and responsibilities? So sorry, if that was long winded, I told you, Mike, Ira and I can talk.

Mike: Go ahead Ira.

Ira: But I just want to point out that if you get a group of family business consultants together, they will wander into the question of what's your field of origin, because they do come from CPAs that were frustrated, lawyers that were frustrated, psychologists that were frustrated.

Mike: Advisors that were frustrated.

Jeff: A lot of frustration, is that the key word there?

Mike: Like, you know, I think it comes back to the fact that, you know, in, in the field, when we start to do this stuff, whether you're the accountant, the attorney or the financial advisor, from the technical standpoint, you're only trained on the technical pieces of this. Jeff and I met each other through the Purposeful Planning Institute, and you know, one of the things that we learned from that arena is that wealth is more than money. You know, wealth is the value of the family, wealth is, you know, the knowledge that needs to be passed down. And in that family, all by itself is pretty darn complicated. When, without a business, my wife's family does not have a business that they own together. And that family is complicated all by itself. And so now if you decide to take family and business and mix them together, sign me up for physicist first, I think. I think it might be easier to understand sometimes than that.

Jeff: If you're a purposeful planner, I think you have rocket science and brain science and all that as part of the job.

Mike: Thanks. So you guys, you know, we're tossing around what do we want to talk about what you know, what is the what's on our mind? And the title of this is why family business consultants cry themselves to sleep at night. And I you know, my reaction was, there is no way I'm putting that out there. But then I said, “Wait a minute, this is Sam Lov. And Sam Lov came up with what family businesses can learn from Metallica. And it was one of the best presentations I've ever seen. And a really good way to. So I, I wanted to trust you and just dive into this. Where does that title come from for you?

Jeff: Just to go back a bit to what we were just talking about. You know, for a long time, it was only the technical aspects that were focused on. And I'd say really, the last 30 years, but really 10 or 15 years that the family dynamics, the relationship part has been included with the accountants and the attorneys in the wealth managers. And for a long time, it was all technical. And people believe that if you just did the right trust, or the right operating agreement, everything would be fine. And we know now that you really need to take a look at relationships and communication and personality styles. And I agree that family is difficult all on its own. Every family has some struggle or tension. Its just natural. When you combine a family with, you know, leadership and ownership and management of a business that maybe has been in existence for a generation or two, or even if it just started and you're hoping it goes on for a generation or two. That's a level of complexity that really is a job of its own. So, where your average non-family business has to start a business and do all the things businesses need to do to be successful. The family business has to do all the business things plus manage this family Interplay which gets super tricky. Ira, you have a thought about it.

Ira: Yeah, I just consulted not just but near you, Jeff, just to give it away a little bit to siblings in business that their hostility was so thick that I said, “Both of you write down the answer to this question. So you can't change your answer. Would you rather win a million dollars, or your sibling lose a million dollars?” And one of the two said, “What kind of brother would I be if I wanted my brother to lose a million dollars?” The other one said like me, “I would rather you lose a million dollars than me get a million dollars”. What accountant, attorney or psychologist has a ready answer for that?

Mike: None. None whatsoever and that's what makes it interesting and fun and why we dig into it I you know just like the To view was in business with my father, and started in Syracuse, New York, he was in Rochester, that was the one of the saving grace is that even though we were in the same field, and we were working together, we were in different cities and different offices. When we moved back to Rochester to be in the Rochester office it was tough. He just wanted to do things differently than my vision. I started to talk about, you know, this purposeful planning and you know, you really need to be digging into this, dad, he just would shake his head. “Well, we do that anyways”. So, it's, totally, totally understand that there's different ways. And you have to Jeff, you taught me a long time ago, each generation has to choose whether they want to work together or not.

Jeff: I'm sorry.

Mike: No, go ahead.

Jeff: So yeah, ideally, each generation has to make that choice. But often the senior generation, whether it's the founder, or if it's the second generation, have an idea about the third enter generation about how things should go. And so while I believe that each generation needs to sit down and say, “Do we want to do this together? Do we want to split up?” Often, there's pressure from the generation before about what they think should happen. And the rising generation or the younger generation wants to sort of please the older generation. And so right there, it's just one of the many things that kind of keeps family business consultants up at night. Because if you have someone whose dream is to have their kids and grandkids working together, but the kids and grandkids don't necessarily have the interest or don't like working with each other, maybe they love the business, but they only like half of the family members that they have to own with. I mean, right there, that's not a simple thing.

Mike: I want to say the field of behavioral economics, which is a mixture of psychology and economics, they come out with a few findings that people are notoriously terrible at predicting how they're going to feel about anything in the future. Right. And, also very hypocritical, you don't live up to your expectations and you're not consistent with your own values. I think it's helpful for every generation to say, what are our values? And how are we going to live with them? If we believe in fairness, meritocracy transparency, what are our policies going to be because down the road, you're inevitably going to get three siblings who love each other. And then their seven children are in business together. And one of them is an only child. So he owns a third then the other one had four children. So they each own a quarter of a third. If you have not figured out what are the criteria for you to make decisions about that stuff. You're in trouble.

Ira: Yeah, right. So sometimes simply having you know, at the sibling level, simply having fewer children or having one child, while your brothers and sisters have a bunch of kids, depending on how the estate planning goes, whoever has the fewest children wins, they could get a third of the business, while seven other cousins are fighting over their chunk of it. And there's no simple answers to any of this. I recently was on a call with a potential new client, a husband and wife, they both came from family businesses, where the families and the businesses fell apart. It was really tough stuff. And they called me because they were both entrepreneurial. They started and or bought 15 or 16 restaurants in the greater Philadelphia area, they had three kids in their 20s. Everything was fine, as far as they could see what they really wanted to avoid. What happened in both of their families. They didn't want to see this happen again. They were natural entrepreneurs. And they really wanted me to answer the question. “Two of our kids are in the business. We have one kid who's a wealth manager actually in California, not in the business, do we give her ownership?” And they want me to answer the question. I said, “There's no way I can answer it, I can help you answer it. I can look at the pros and cons of giving that child ownership not giving them ownership. But there's a lot of tough decisions. There's no easy answer.” And they were hoping an attorney or some expert could tell them how to do it. The bottom line is you have to sit down and look at all the scenarios and look at the pros and cons and then bring the family together to say, “Here's the choices. Here's how it could play out. How do we feel about somebody owning and not working there? Do they get paid? Do they get dividends? Do we plug all the money back in the business? If we plugged the money back in the business, the two siblings who work there would get salaries and paid and maybe bonuses. And the other sibling has a piece of paper saying you own a third of something but you're not getting paid while your siblings are possibly getting wealthy working there.” I mean, just to mention a few of them. There's no easy answer. You got to bring the family together and say, “What is this about? What do we want out of it? What's our family's definition of fair?”

Mike: And also, for it to be the place as Jim Collins said, it's a cliche now in Good to Great, “You need passion, the talent and the ability to make money. You should make a case as a family member because there's a place for you in the business that should not be a safety net. And, you know, if I'm a really talented next generation person, and I see that my family's business has only led in the near do-wells. Well, one thing is I know I could go in and probably just be the most competent person there. But do I want to run that Ship of Fools? Or should it be an opportunity for the best and the brightest?

Jeff: Right, right? Or you mentioned the word meritocracy. We could spend hours just on that, and you really hit on it there and Mike us where the title came from. I love what I do, I love working with families. And it's kind of tongue in cheek, what keeps us up at night. But it's also not tongue in cheek, it's serious in that, you know, we see families who are asking us for help, but often they want some sort of help in a certain kind of way. And they don't want to look at some of the factors that are really causing their pain. And this meritocracy thing is huge.

I've seen situations where the child of the founder, is making $300,000. Meanwhile, the founder is taking out loans on his house to pay taxes that the business isn't making. Why are you paying your son $300,000 and you're, you know, putting your house on the line? It doesn't make any sense. You have to look at whether your kids deserve to be there? Or your grandkids or whoever's a family member? Do they deserve to be there? And how do you decide who deserves to be there, and who doesn't, there's lots of situations where maybe someone in the family is kind of competent, but for the same money you're paying them, you could get somebody who has a lot more experience.

I understand the desire to have your family members in the business. But you have to look at the business consequences for paying somebody a salary that could go to somebody who could do a much better job. And then you're also starting just a culture in the family of family first business second. And when the business has rough times, and you're not doing as well as you could be, or family members are relying on other family members who can't really do their job so well, that resentment grows, the is a recipe for guaranteeing conflict between family members and really ruining the business. So, it's hard to say to some family members, we don't think there's a place here for you. And there's all kinds of ways that you can be fair to them in other ways if you want to be generous, but when generous generosity turns into every family member gets a place. So that's one of the things that keeps me up at night, because I see so many situations where people are over their head, getting paid lots of money. And you can just see the tension between the family members,

Mike: Ira?

Ira: And I would just say, “Are you the most qualified person to be in any role in the company?” When I ran the family business center, the first most years was a UMass. So, I had to go through a hiring process through the state and affirmative action organization. And they said, “You'll get this job, but somebody would beat you out who's identical to you if they are a woman, a person of color or a union member”. And I thought that's ridiculous. But I think in a family business, if you're the most qualified person in the world, and then somebody else is just as qualified as you and they're a family member. That's affirmative action for families. That's how I think a family member should get hired if they are the most qualified person in the world. Or if there's a tie for their family member? Yeah,

Mike: If you think about the formula of how this all comes together, Generation One, the person that starts the business is just like every other business, they're out there hustling, doing what they're supposed to be doing. And their children watch mom and dad grow the business. So, they've captured the values, they've captured the work ethic, they see, you know, a lot of those things happening. And when you start to think about now we're going from generation to generation three, you know, the communication and talking about, you know, Dad's values, and when, you know, in talking about, you know, grandparents values, you have kids potentially coming from different households, if you've got, you know, a brother and a sister that are running the business today, passing it down to their kids, right, it starts to get really complicated. And I go back, and you know, nobody talks about communication and what are the questions that need to be answered? Families can figure this stuff out, right? They just need to know what questions to ask.

I'm a big fan of family councils and people say like, why do I need to get my sister in law and my 14 year old because it is a discussion to be had of what does it mean that our family owns a business and you can look at many things including how to get along with cousins you know, they say that you will this is Darwinian actually is like, you will kill a sibling to protect yourself but you'll kill a cousin to protect a sibling you'll kill a nephew to protect them. And you really need to think about how am I going to get along with other people in this family and when you get them started as teenagers and working together. They're also doing philanthropy together. And also talking about decisions that you've made. When I look at one of the smartest family businesses, I've ever come across crane paper, they print the current, they make the fabric actually, that US currency in several countries. They started in 1801. They are so knowledgeable about everything that has ever happened in that business. By the way, Paul Revere was their first customer in 1801. And they say, “Well, this is like in 1939, when this happened”, and they and they really go through a very almost like Tom moody examination of how to solve a problem. That's necessary.

Ira: Nice.

Mike: Yeah, that's, it's smart thinking, but it's not typical, I would say, and for the families that are doing it, you know, you can see what happens, you know, as they're putting themselves together, and making decisions as a family, you can, you know, it's it's like a symphony, everything coming together in the right spot. We talked about what keeps you up at night, what are some of the most rewarding things that have happened for you, as you're as you're doing this work?

Ira: I had one where there was a lot of conflict between a parent-in-law and a child in law. And they both would argue that the other one was more abusive to their spouse slash daughter. This would be like a form of and I finally got them to the point where they sang at the end, “Friends, friends, friends, we will always be” that was the only time that they actually sang a song of victory to me, a lot of times it's small wins. A lot of times, it's me helping the family see that? We're not really in the lucky sperm club. You know, we don't get along that well. We really need to fake it till we make it or not work together. And so I would say live happily ever after for conflictual families. That's too rare of an event in my life. I think just to fix little problems are more the way it goes.

Mike: Nice. Jeff?

Jeff: Good question. The majority of clients that come to me and the families that come to me have some level of conflict, and often it's, it's somewhat very heated. And that's unfortunate. More and more in recent years, as there's more education out there forms like this. Dan van der Vleats, who's on the call, and there's a family business center at Cornell and Iran, one in Massachusetts, there's places to go, where families are getting educated. And more and more in the last seven to 10 years, I'm seeing families reach out before things get crazy, like the restaurant family that I talked about earlier, who reached out to say, “Everything's great, but we want to avoid, you know, the mess that we saw in our family”. So, you know, the most rewarding thing is when families reach out when everything's going fine, maybe the second generation is just coming in, or maybe the first and second generation are going really strong, because it's parents and kids, and they have a way of working together. But now the third generation is coming in, and they reach out to try to just have the conversations so that they can avoid the typical pitfalls that inevitably arise.

So when people do that kind of work early, it's super rewarding. But I've also been in some really, really tough spots, with a lot of heavy conflict, like Ira, I've had to break up fights, or get in the middle of two people who are trying to punch each other. And when families like that are able to sit down, take a few deep breaths, really take a look at what's going on, and just sort of listen to each other with some level of respect. And then they find a way to work together, that's just an amazing feeling.

Mike: Go ahead Ira.

Ira: I do have to add one problem that gets solved easily where the one, oftentimes it's one person who comes to you first complaints, and you need to say, I work for the good of the family business, I am not your agent, even if you sign the checks. There's been numerous times that the person that hired me, I discovered later, was the problem and sometimes needed to be fired. There was one where there were two brothers and one was just complaining to me in the beginning, how disrespectful the brother is and how unprofessional the brother is. And then when it really came to them talking to each other, the brother who was disrespectful said, “You mean, I should dress nicer and stop cursing with customers?” “Yeah, that would solve the problem?” “Yeah”. And they solved the problem that day he started dressing nicer and stopped cursing. So you never know.

Mike: That's it's all fun stuff. We talked about family council; we've talked about communicating and values. And I want to just reiterate because I think a really important aspect of this is that inside of a family as we move from one generation to other values do change, the world has changed around us. And we've been through different things. And values can't just be on, you know, the family doctrine. It's like walking into a business, where they have the values written up on the wall and as you as you're looking around and watching, like, “These values are not alive and well, in this business right now, this is not how they're doing it”. And so, I really would, you know, wanted to make sure that it's clear that picking the values and talking about them between generations, and making sure that they're alive and well in the family right now, so that you're living the values, and people can see them. Would you agree that that's, you know, important, and anything that you'd like to add to, you know, that either one of you? Ira?

Ira: I”ll go. So, my father spoke in expressions in English and Yiddish and little cliches. And, you know, it's not like he didn't know how to talk except for cliches. But he had these little values that I would need to live up to, he had one that was a Yiddish expression that was in English was, with one asked, “You can't be in two places”, we had a one-unit retail store in a town that was going down the tubes. And I was like, let's open a second store, and get it going and then close this place. He just wouldn't go with that, you know, no matter how much I questioned his value, he had this thing.

Another one that's popular in family business, “You need to be twice as good to get half the credit”. Like, why is that true? I am working really hard. And I want to be recognized and appreciated. I don't need a parade. But at least you know why twice as hard. It's, it's good to just challenge your assumptions that you might be walking around with, that your great grandfather told you once.

Jeff: Yeah. I agree that the values of the family and making sure that they're there day to day, especially if the founders are still around, or if the founder, maybe you've gotten into the third or fourth generation, the founders are no longer around. But in either case, whether it's coming directly from the founder, or it's been instilled in the subsequent generations, that everyone has a sense of the history and of the business and the family and what the key values were, and they're really being lived, and people are walking the walk. It's a beautiful thing, and to see someone in the third or fourth generation, say, “You know, I know, you know, my grandfather, my great grandfather, my father, or mother or grandmother, who started all this, it was really important that we always did right by the customer, no matter what. And if we made a mistake, we fix it. And that's crucial for us.” When people live, when families are living it, it's a beautiful thing to see.

I have this deck of cards that has different values listed on the cards, I don't know if you can see them. But one of the key things that I do with families is to really get them to think about values, and what's important to them. But I would say this, and in the world that Ira and I and Mike are in it's not unusual for family, business experts or consultants to do these sorts of values, exercises. But it's very easy to pay lip service. So you can walk through some exercise and check some boxes and say this is what's important to us and plaster it on some plaque, you know, when you walk into the business, and it's a complete waste of time, if you're not really walking the walk.

So I agree, Mike, it's super important. I think it's an essential foundation. There's a big difference between saying these are important and doing something different, or really kind of weaving it into the fabric of the family of, of generations through the way that the older generation behaves. And through the stories that each generation tells about the history of the family and the business.

Mike: Yeah, when we're working with a family, one of the things that we like to do is an exercise called actions to live by. And so that we get people talking about how we make sure that these values are seen by everybody in the family, our employees, our customers, or vendors, that they're alive and well. And that we're living, by actions, not just talking about them. So,

Ira: Sometimes you give a talk at a rotary, and they'll give you this coin that has their fourfold test on it, is it? Is it the truth? Is it fair to all is it you know, whatever their values. It's good to have a checklist like that. So if a family agrees in the beginning of a meeting, we believe in transparency, and then it comes out that the father just regularly takes a million dollars from the company and gives it to the daughter, the son can say or I can say is that transparent, like explain how we're living our values.

Jeff: I agree that when you really do the values thing as a family and you buy into it, it's not some pie in the sky thing. It actually helps you with your toughest decisions. Here's a big decision: We're having a tough time with COVID. Do we sell the business if it's even possible? Do we walk away? Or do we try to turn it around? Whatever it might be, you can sort of look at the values and also the stories that go with those values and say, “This is what's happened in the past”. And this is what we said is important to us. And it should help you even avoid conflicts. If everybody buys into the value.

Mike: You brought up COVID I think it's unavoidable to not talk about that right now. I know my family, my parents are stir crazy, and they're now allowing some of the grandkids into the house. And I'm not quite sure whether it's the right thing or not. My daughter invited us down to see their new place. And I'm dying to hug my grandson. One of the things you know, I think, when we talk about those younger generations, that going through COVID. And what we're dealing with right now might be a really good time to talk about the family's stories. And there have been other struggles. This is not the only one for us. This is different, but for anybody that's been in business for a while, this is a great time to solidify what's going on and pass on that story. What are some methods that you've utilized in, you know, in passing the story? And how important is it to you to do that right now, especially with the younger generations that might not even be in the business?

Jeff: Yeah, there's great research about sort of emotional health and resilience in the younger generations, that comes from family stories, specifically, telling stories of where things went well, and also telling stories of sort of hardship and difficulty. If you just talk about the stories, when things went well, the rising generation thinks it was easy. If you only talk about the thing, things that went awry, they think it's impossible. But there's really interesting research that shows that when you tell these stories over time of the ups and downs, and the things that went well, and the things that didn't go well, it really gives a sense of resilience, and emotional health and self-esteem to the next generation.

There's also an article I can send to you, Mike, if you want to send it to people, it was in the New York Times about these researchers, the same researchers, and they came up with something called “20 Questions” or something like that. But they came up with 20 questions that you can ask somebody in a family, you know, where did your grandparents meet? What was your father's first job? Things like that. And the more of those 20 questions that a child can answer, the more that they know, it's one of the best predictors of happiness. And the theory is, when you really understand your family, you feel like you've got a whole team behind you. And you understand the family, you feel like you're part of it. And it's not just sort of fun stories, it actually is like a structure supporting the rising generation as they grow up. And it's really pretty interesting. So now's a great time, especially if you have time on your hands, to be able to share those stories with the younger generation, with a business or without.

Mike: Great.

Ira: I would, I would just add two things. One is that I was talking to a friend of mine yesterday. He's also a family business consultant. And he was predicting, and I agree with him, there's going to be a lot of people joining their family business who have lost employment elsewhere and need a place to go. I also think that there's going to be a lot of people quitting their family business.

My son in law is a lawyer and was saying that there's a lot of inquiries into divorce already. The divorce rate has skyrocketed in China, after a couple of months of this. The other thing is in terms of your values and looking back, I went to a workshop by this guy, Ari Weinzweig, who owns a Jewish deli in Michigan, Zingerman's. That's like the place to go. That's where Obama ate when he was in Ann Arbor. And he does an exercise where, like, it's 10 years in the future, and you just woke up. And every morning you write in your diary, and just write the state of affairs. So you're not looking 10 years into the future and guessing you are 10 years in the future, and you're writing down what you're doing. And I think that's a good one. Even going 10 years in the future. And then remembering this time after it's done after you are recovered, etcetera. And also to go with that is he made you write it with your opposite hand and not lift the pen off the paper- Hot Pen, it's called and it really got me a lot more in touch with, like, I looked at that, and it was like, this is where I want to aim 10 years from now.

Mike: Interesting. That's great. I like that exercise, because that really does. Jeff, you and I were in a situation where we're talking about saying, What do you want the situation to look like two or three years from now? Yeah, not that they would have done that exercise. But that's a great one thanks, Ira.

Ira: Family councils you hit on that. And I know that wasn't part of what we were talking about. What? Would you expand on that a little bit? What's the purpose of a family council? What are some of the other things that can happen inside of there? So a family council is not a board of directors. It is a group of family members that, as I said, talks about what it means that we own a family. What are our values? What are the entry and exit requirements? What kind of person is going to be a good fit in this company? What challenges have we learned from the company, you can get teenagers? I'm a big fan of when you do a SWOT analysis and look at your strengths, weaknesses, opportunities, threats. Do a SWOT analysis on your competitor, and then talk about what are their threats, that could be your opportunities, this is something that teenagers can collaborate on cousins can collaborate on cousins who might only know that their parents don't get along that well. And so the business might go down in that generation, because who's going to want our kids working together. So these are things that you can do there. You can have guest speakers who, from other companies that are doing things, well, it should be a mix of education, and fun, and just that you were a family, and also that your family business. You can have a film night if there's a million excellent family business movies, I mean, you watch Six Feet Under. That's like one long family business case for instance.

Mike: I'm going to throw it to you in a second, Jeff. I just want to read what you said earlier, you had mentioned philanthropy, and then you were just talking about the cousins. We're going to do an episode on that in the future, where it's how philanthropy can be the sandbox for entrepreneurship and leadership in that teenager in the child, as you're developing these kids, it's just a great place to do that. Would you agree with that?

Ira: Yes. If you are a family of any kind, you could contact the Community Foundation in your area that basically organizes people's philanthropy and just say, we would like these cousins educated by you about charitable giving, the tax consequences, finding meaningful causes and so on. And they will get that together for you.

Mike: Yeah, agree. Jeff, go back to the family councils.

Ira: What are your quick philanthropy things, like most things, you know, there are better and not so great ways to do it. And there's sort of the easy, you know, pick up, pick something important to the family, or write a check on the one hand, or you can say, what's important to you about what's going on in the world. We have more than enough money than we need for ourselves. And at young ages, say, you know, let's learn about a problem and what's going on in the world. And let's see if we can get our hands dirty, helping to actually volunteer coupled with giving money is really, really strong. And so, to the more that you sort of get actively involved in understanding what the family is trying to impact, and teaching kids how to assess, if the money is going to the right place, and is it having the impact you want and all kinds of creative ways to really do that. Well, but I agree, it's important.

What I was going to say before Ira went on family councils is you get three family business consultants together, you'll get at least five definitions of a family council, there's a lot of ways of looking at it. I agree with everything that Ira said. The way I tend to look at it, it just my own sort of technical way of looking at it is is when the ownership, the family ownership group gets to a certain size, you can't have that many people, communicating with the board, if the business even has a board or communicating with senior management, which may or may not be family. For me, a family council is one once you get past, you know, 10 or 12 family owners, and I've been involved with family businesses of all sizes, but on the large end, you know, 100, 120 cousins. Imagine 120 cousins trying to make a decision about something important. It's insane. For me, the family council is a representative group made for the right reasons, not just the oldest or the biggest shareholders but can really contribute and we do well in that kind of representative Committee. And the family council goes between the rest of the family owners and tries to give a common voice on behalf of the family to the board of directors. So, they can say this is what we want to accomplish. Or if there's no board of directors that can at least communicate to the chief executive and the top management, which may or may not be family. But such an important thing for the family is to try to have a common voice and just a quick thing and then I'll come to you, Ira. I see you had your finger up.

Boards of directors scare a lot of people. They feel like they're giving away control of their company to some people they don't know, which is not the case at all the ownership. The owners can always get rid of the Board of Directors if anything happens that they don't like. A real board of directors is such a crucial and important aspect of any business but especially a family business that's juggling all these tensions. And so, for families that are afraid of a formal legal fiduciary, written to the corporate documents board And there's the advisory board where you just get a few of the right people together, get them in a room, tell them what's going on and get some advice as a way of experimenting with it. I'm being wordy, but you go Ira you had something to say.

Ira: I would, I would just add to that. Two other ideas. One is I've facilitated many roundtables over the years. And even though that might just be the owner or key manager of a company, depending on what the identity of the group is. That's also another way to have an outside board that is more of a kitchen cabinet, you have no legal responsibility to them, you're going to admit your failings more than you might do to your actual board and get good questions asked; more than advice, even strategic questions, a group of people that can help you think it through.

The other one that I've seen as a family counsel in this one company that I worked with was five warring families that all had a piece of this company, and they disagreed on the direction and I'm saying, You ever watch The Godfather, like they bring their families together for a little summit of like, “We're going to kill this guy tomorrow and just say, calm, it's going to be okay for you”. I had said, you need to bring these five branches of your family together, or you're going to end up in a minority lawsuit. And they didn't, and then they did.

Jeff: Yeah, and that branch stuff. I mean, we can go so many different directions, but the branch stuff, as things grow, three siblings each get their share, possibly, and then they have kids, and you can really get caught into trying to equalize trying to run a business by being fair to the different branches. Everyone has to have the same number of top executives. The compensation going to each family line has to be more or less the same. You can't run a business that way. And I've seen a lot of family businesses go arri. Are we having time for a Q & A, too?

Mike: Yeah, just real quick, Ira about the CEO roundtable. I would think when you're a family business, that, you know, there's Vistage out there, and there's a bunch of other places which are great for the CEO roundtable. But it'd be so important to make sure that you're doing it with companies that are of the same size of the, you know, the same generation experience, or maybe somebody that's you're mixing and having somebody that's been through it already, but that family business component is also there as well. And it's not always easy to find that, but it's available. I know Cornell, I think it does some of that work down there. I believe, here in Rochester, St. John Fisher's doing some of that. We try to facilitate that. I know you guys try to facilitate those types of things as well.

Ira: It's such a cheap way to get good advice. And I would say if you have a company that can afford this, it doesn't take a lot of money, even as a round table for your number to even roundtable for your sales manager. I mean, these are all people that need to learn from their peers.

Ira: Love it. So yeah, if anybody has a question, let's, let's take a punt. We'll take a pause, feel free to throw your hand up. You know, this is a great time, you've got two, three of us here. They're willing to help Dan's here as well, we would, if there's something that comes

Jeff: We're happy to keep babbling.

Mike: That's right. Well, before we get to the end, and I cut things off, what I will say is next week, just so that you know what's coming up. We have Kathy Carroll from Leadership Onward. And Mike Goldman, who's a specialist in building a leadership team. So that's what's coming up next week. It's going to be a great show. Dan, did you have a go ahead, Ira.

Ira: No, I'm waving to Dan.

Mike: Hey, Dan, did you have a question?

Dan: No, I just want to say I've been eating lunch so I didn't want to be on camera. So now now I can be fully present for you.

Jeff: You have mayonnaise on your cheek.

Ira: Have you read all of those books?

Dan: I have not yet but I'm about halfway through given the current lockdowns.

Mike: Dan, really quickly, we were talking to CEO roundtables. You do have the CEO roundtables and next gen roundtables happening down there. Correct?

Dan: We are launching some now. So, you know one of our challenges. And you're correct that St. John Fisher in Rochester has some great roundtables there. The New York Family Business Center and Syracuse have some as well. There's an owner's group in Albany. So from the upstate New York perspective, there are those more localized groups, we're actually launching some roundtables that will be broader in nature. I think just given the current nature of the fact that we're all locked down, there's a little bit more of an appetite for this virtual style of getting around the table. It gives us an opportunity to maybe connect with people from say New York City, Miami, Chicago, and we can kind of reach out more broadly. But you're right tip Please, you know, you want either a CEO kind of leader type group or a next gen group or, you know, some of our peer centers also have non family peer groups have, you know, other sort of positions within the family business, it's, it's just the ability to sit around the table with people who can kind of share your own situation and, you know, occasionally go outside that group to bring in expertise, like an IRA or a Jeff or yourself. So we are launching some of those, which, you know, just given the current situation, it's given us some time to think about it and be able to put those together. So probably in the coming month or so you'll hear more.

Mike: Thanks. Alright, Dan. All right. Go ahead, Ira.

Ira: I just want to add that you don't need to wait to join the formal roundtable or put one together. I belong to two groups that the other people in the group call “Mastermind". I just call it lunch with Jane and Izzy. And then I started another one, I've just, they're all solopreneurs. Actually, none of them have employees. And we are just now on Zoom, but we used to go out for lunch, create an agenda, create a little format of taking turns and asking strategic questions. And you could just do this with like two or three or four other people call up, you know, a chamber director or call up, you know, somebody you trust. As somebody once put it, that their board was their crew on the ship or on the deck of their Titanic, the people on the Titanic could see the icebergs and told the captain and the captain was like “Nonsense, this is the Titanic”. You need to get people who are going to speak the truth to you to tell you where your icebergs are to ask good questions. And you could just put that together for free with a few other trusted people, even a couple of other people. Right on Zoom.

Mike: So where do we go from here? We've talked about family councils, we've talked about values and communication, when let's hit on communication a little bit more, as you're going through and watching, you know, family businesses through the years. What are some of the reasons? What do you think are the biggest reasons where communication breaks down? Where does that start?

Jeff: You know, human beings in general are not psychologically very good at hearing feedback about how they could do something different or better, or how their behavior had a negative impact on another person or the business. Human beings are very poor at it, but you can get good at it. So I think a lot of the communication issues I come across stem from people's inability to sort of listen and hear tough stuff. But when families buckle down and really make a commitment, we're going to speak to each other respectfully. But we're going to all listen to what's being said to us with an open mind before we react when you build a kind of culture in the family around that you can have these conversations about what's really going on and make adjustments or not make adjustments and explain why.

In a nutshell, that's, that's really, really crucial. And it's kind of simple. But it's difficult, because it's hard to do. When someone's telling you something that's really important to you, and you believe in it and you've done it because you think it's the right reason. They're telling you it's having a negative effect. That's a really tough spot. So it's easy, right?

I didn't say Ira, that's hard to understand. But it's difficult to kind of follow through on but essential. I would also say just one quick though, Ira family meetings, the families that are doing this and doing it well. They're having regular family meetings for the family in the business, sort of separate from operations, but sort of a strategic family meeting to say how are we doing? How are we communicating? Are we getting pissed at each other and not talking about it? Because that's going to fester? How do we find a way to talk about what we're pissed about? And really important.

Mike, you and I've seen this together, families where the next generations work super hard, and they're doing a great job, and people only look at putting out fires, the senior generation doesn't say, “Hey, you're doing a really good job”. So getting good communication and being able to listen to them non-defensively and give gentle feedback. But also, not forgetting to tell not to take for granted family members that are working really hard and doing a good job that happens too often.

Ira: I would add four tools. One is an excellent book. We had this person as a speaker, Sheila Heen, who wrote a book called “Thanks for the Feedback”. You could if you don't like to read or buy books, you could just watch the horrible thing on YouTube, that it's much harder to receive feedback than to give feedback. Not that it's easy to give good feedback. And the book also is about how to receive feedback that's given badly. The next one is the whole field of nonviolent communication, which I hate that name but Marshall Rosenberg, you could see YouTube videos of him- brilliant guy just talking about how to communicate with much less drama and misinterpretation. If I had one skill as a human being it would be to be good at that.

Another one that you can see on Google a lot called, “The Ladder of in Difference”, which is similar related to nonviolent communication in that, keep your interpretations out of things when you criticize people, you know, just say, you came at 9:30 yesterday and 10 o'clock this morning and then 11 on Wednesday, you know that we open at eight, right? You know, and, but instead of saying, you know, you people are such lazy, no work ethic, etc. Low on the Ladder of Inference; read about it. And the fourth thing is to look up any kind of Decision Matrix, there's my favorites, but the simplest it gets is just a list of pros and cons. And then the third column Remedies for Cons, right? What can we do to get around this con, and just to use that as a way to solve a problem, instead of saying, you know, you always want to go spend too much money on such and such. So, good tools.

Mike: We talked about stories earlier, and it's human nature, when we don't know the answer to something, what do we do we make up the story, you we finish the story in our head, and that's exactly what you're talking about is you can't finish the story in your head, you have to be open to a discussion and a conversation around it. Right.

And I was going to brag that I'm good at any of that.

Mike: Practice not perfection or progress not perfection. That's what that's the mantra to follow. Yeah. The other thing that I picked up real fast is that you're listing off books. And one of the things that I would say over and over again, is that Leaders are readers, and leaders are learners. And if you want to take your family to the next generation, and take it to the next generation, and you want to lead Well, we always need to be open to learning. You know, that's Jeff from the Purposeful Planning Institute, J. Hughes always says “do not be an expert”. If you meet somebody that's an expert in anything, run in the other direction, because they know it all. And the moment you feel you know it all, you stop learning. So, his saying is to approach everything with a beginner's mindset. And I think that's so important, you guys, our students have that. And I've seen that, you know, as we work together, Jeff and Ira, I can hear it in what you're doing and how you're how you're approaching things. So I appreciate that a lot.

Ira: Yeah, concept in the field right now, it's kind of popular is the idea of the learning family, the family that comes together and they learn as a group they learned individually and share it, but they're constantly trying to learn about business about family, just all kinds of things and share it with each other. And it's an integrated part of the sort of family business life is how do we learn? How do we keep learning? How do we share what we're learning?

Mike: And just to build on that is to have a book club together with your family members. And I would just add one book to that that's really interesting, full of great stories is “better, faster, smarter”, by Charles Duhigg. It is a good one that people of any age can enjoy. And that's also on Audible if you want to buy audible versions of it for your family. And then you just discuss it in an organized way.

Mike: Love it, love it. 12:56. Before we put our parting words together any questions or thoughts, anybody want to pop in for a second here?

Ira: My father would always say, kind of paraphrasing Groucho family, “Business is a great institution if you're ready for an institution.

Mike: All right, well, I had to restart. So Jeff, what I'll do is, once you give us two minutes, any parting words, and then please let us know how people can find you. And I would highly recommend you go out to Jeff's website and find his, at least the blog post, you know, Metallica family businesses. I've used that over and over again; it's been one of the greatest conversations. Go ahead.

Jeff: It's great. It's a great documentary, Metallica, they're not blood related, but they're very much like a family. It's a heavy metal rock band. The documentary is when they hired a guy that had a psychological background to come in and help them and it's really mesmerizing to watch and just a great, great documentary.

I think I said really the basics of what I had to say, if you're really committed to having this ongoing business that goes from one generation to the next, the more that you open up communication, the more you're willing to hear the younger generation, what their ideas are, what they're passionate about, but also hold them accountable that you don't give them a place in the business unless they can prove that they that they've earned it and that they can do something with it. When I had my clinical training, learning to be a shrink, I was trained in child therapy with kids as young as three and I really believe that a lot of the issues I see in family businesses where things go awry, come back to parenting at the earliest ages. And on the one hand there are parents that say to really young kids, “Look at all this someday this will be yours”. And I say, “That's terrifying to me, the best thing you could do to a three or four- or five-year-old is say, look at all this. If you want to be part of this, someday, you're going to have to work really, really hard. And show me that you love doing this kind of work. And that you can make this even better than I made it. Those are two really different conversations telling a kid they're going to be handed something gigantic that they didn't work toward”. Or with just as much love saying, “I'd love to have you be part of this one day, show me that you love it. Show me that you can work hard, and you can make it better and we'll talk.”

Mike: Ira?

Ira: I think it's just good to take a good look at whether you really want to work with your family. How did your parents teach you to drive a car to ride a bike? If they were jerks, then they're going to be jerks now.

Mike: Yeah. How do people reach you guys?

Ira: I’ve got a website, you can search by name, it's Blumandsavlov.com. But if you search Jeff Savlov's family business, you'll find my site. I've got resources and blogs and stuff like that.

Ira: Who's Blum?

Jeff: He knows me. That's why he asked. That's my wife. She's a psychologist. She doesn't do the family business stuff. Ira and I go way back, and he knows my wife. I know his wife. So, she's a psychologist. She doesn't do the family business consulting, but we have our little entity together.

Ira: And I'm at Irabryck.com.

Mike: Thank you everybody for joining us. If you are enjoying the show and getting a lot out of this, please send us feedback. Send me an email, Michael.Columbuspalumbos.com If you have subjects that you'd like us to tackle, we're happy to do that.

In an upcoming episode. Nick, Matt will be joining us.

Laurie, I want to say thank you. I hope it's not too early as Laurie said that she would join us.

We're looking to mix this up as we go forward. And we will mix in the family business consultants who are doing the work with family businesses that are going through it and talking about them and celebrating the wins and you know, and sharing, you know the frustrations of being a family business for as many generations as somebody has. So if you're a family business and we'd love to be on the show, you can see this as conversational and easy. And we really enjoy working with everybody here.

A special thanks to Dan for coming on the show. Just remember Cornell St. John Fisher there's a ton of other resources out there we do this weekly because we love it. They do it because they love it and they have tons of resources to really help and reach out with thank you all.

Jeff: Thanks Mike.

Ira: Take care everybody.

The content presented is for informational and educational purposes. The information covered and posted are views and opinions of the guests and not necessarily those of Lincoln Financial Advisors Corporation. Michael Columbus is a registered representative of Lincoln Financial Advisors Corporation, Securities and Investment Advisory services offered through Lincoln Financial Advisors Corporation, a broker dealer member SIPC, and registered investment advisor insurance offered through Lincoln Financial affiliates, and other fine companies. Family wealth and legacy LLC is not an affiliate of Lincoln Financial Advisors Corporation. Lincoln Financial Advisors Corporation and its representatives do not provide legal or tax advice you may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.

CRN-3193535-080620