Watch Professor John Davis, who teaches Family Business at Harvard Business School, present 3 tips every business family should follow. In a family business it is essential to talk about issues, plan to resolve these issues by often implementing change and finally to create straight-forward agreements among family members.
The three things that cut across families irrespective of issues that they are facing, number one, they have to talk. It seems like it is the most obvious prescription, but it is also the most relevant, and when you stop talking, you stop solving the issues basically, and the issues never stop and so you have to keep on talking. And you have to develop a facility for having the important conversations on a pretty regular basis. Most of it happens informally not in a structured setting where there is an agenda, or a formal meeting, etc. but there have to be times where you agree as a family to come together and talk. Number two, you better plan. To affect real change in a family or a family business, it takes longer than it does in other kinds of organizations. In part because families do not like to recognize the need to change and so they delay that recognition and so pressures build up. We want to change in families in a way that preserves the dignity of people and allows people to feel well regarded through this change process, and that by definition mandates that you, you do it slowly, you do it respectfully, you do it in steps and with lots of premonition. And if you want to do things in a, not a disruptive way but a thoughtful way, you have to plan more in a family business system, plan more on your family, plan more on your business, plan more on ownership, and then you transition. Number one is talk, number two is plan, number three is make good agreements. It is hard creating very straightforward agreements within a family, because things change. And the fact that we are good partners now means that we should respect each other enough to have a good ownership agreement, a good buy-sell agreement. Getting people to sit down and create agreements that can be guideposts when we need it and doing it in advance of when we need it that is like one of the most valuable management practices in these systems.