Objective Understanding of Business Concurrent to recognizing inter- and intra-generational family issues, to develop consensus in an FOB, it is equally essential to gain an objective understanding of business. From an Operations Management perspective most difficult problem is clearly identifying crucial operational characteristics of business. To be successful, this process should be independently constructed and must be based on operational information, not financial information. The Importance of Objective Measurement Unfortunately, in most family businesses operational characteristics of business are never accurately or objectively described. Key decisions are based not on hard facts but on various "interpretations" of sometimes unrelated circumstances. This is not an unusual phenomenon: Family businesses tend to rely on well-intentioned people, memory, and varying degrees of managerial expertise to reach their business goals and objectives, rather than creating a sound operating system. As an illustration, I often ask family business CEOs to question their senior managers about how much work is accomplished daily in their individual areas of responsibility. If these key managers merely are able to report results, without knowing and measuring labor hours involved, a serious managerial discrepancy exists.

Designing a process for correcting this problem generally can be accomplished within a few days, depending on complexity of operation. Validating operational characteristics of business should be a high priority issue, one that commands immediate attention.

A Three-Legged Stool Building consensus in a family business can be compared to proverbial three-legged stool. There is Senior Generation, Succeeding Generation, and Business. Each "leg" has different needs and issues, and each requires different kinds of expertise to ensure that those needs are met and issues resolved. Unless equal importance and attention is given to each group in a family business, optimum stability will never be realized. Unfortunately for many family businesses, building a harmonious consensus will always remain a dream and never become a reality.

A realistic outgoing CEO and family often seek help of outside advisors or an Advisory Board to ensure that job rotation and/or special assignments for successor include situations where s/he will have to seize or assert some authority to be successful. Over time, successor will have built a solid power base from within rather than just being handed power. Perhaps even more difficult to measure, but critically important, is motivation. Does potential successor really want to assume control? S/he might want job, even really want it passionately, but for reasons such as being eldest, for power or prestige it might bring them...or for any number of other reasons... but is it really what they want to do? Fairness = equal performance expectations In obstacles to succession, we noted that parents often felt that fairness meant giving each child an equal share of business when they might not have contributed equally to developing that business. Another aspect of fairness is in area of performance expectation. Unless children earn their position on basis of merit, unless they are expected to be accountable for their performance in business just like any other employee, it will not be possible for them to effectively assume leadership after a succession / transition. So we have found that a key to success is to set standard for performance and accountability from earliest involvement. Less frequently, a parent sets standard much higher for family members rather than lower and we have found this to be just as much of a problem. Set a standard for business - family members must leave family behaviors at home and act like an employee. [Work outside family business for part of one's career really helps here to show standards of behavior that other organizations set.] Graduated retirement... but set and stick to a final date! As time for succession approaches, take longer and longer absences - both for outgoing CEO to get used to being away, for opportunity they offer to evaluate potential successors, and for organization and its customers and suppliers to get used to fact that it can operate under planned new leadership. But announce and stick to a date of withdrawal / succession. As for "outgoing" person having a continuing role, we have seen this happen admirably - and we have seen it fail spectacularly! The key to success is clarity and self-discipline. If an ongoing role is agreeable, define its role, responsibilities, authority and accountability like any other job. Stick to those parameters and make sure that everyone knows that is all you are there for!