Family businesses account for 50 percent of the GDP in the United States, representing the full spectrum of American companies from small to large including 35 percent of Fortune 500 companies. They cover 60 percent of the nation's employment and 78 percent of new jobs created. The same is true in Europe where many businesses have a long tradition of family ownership or control. Other parts of the world show similar trends with a very active entrepreneurial spirit in Asia in particular. Global brands such as Gucci, LVMH and Wal-Mart, among many others, are controlled by families.
Yet, business coaching tends to be focused on public companies, leaving aside family businesses. This might be due to a lack of interest, need or simply awareness on either side. Whatever the cause, the result is the same: missed opportunities for both coaches and family businesses.
The potential impact of coaching in a family business environment is great. And while some aspects of coaching as a component of leadership development will be similar irrespective of the type of business, family businesses have some specific elements that differentiate them from other organizations.
Factors of Differentiation in Family Businesses
Loyalty, trust, values and commitment are common characteristics contributing to establishing a strong culture and sense of affiliation in a family business. This does not mean that these elements are absent in non-family businesses, but they clearly do not have the same intensity.
Another important aspect of differentiation in a family business is the generational component. While the transfer of knowledge through generations has virtually disappeared from other organizations as a result of a much higher turnover rate, the natural flow of generations dominates family businesses. In fact, this is one of the main reasons for potential coaching interventions.
These elements combine into an important factor, which is the background of coaching situations: a complex 'universe' of stakeholders, beyond the existing groups in any form of business ownership. The family implications can appear in many different forms:
- Family as an ownership entity, organized or not as a family council
- Family members directly involved in the business
- Family members not involved in the business but active in family affairs
- Passive family members still interested from a financial perspective
- Family as such with the complexity of relationships between grandparents, parents, children, uncles, aunts and cousins, not to mention 'additions' through marriage, at times considered as a separate group
Other groups include independent directors, who frequently play an influential 'behind-the-scenes' role and obviously non-family employees, managers and executives. Close relationships may also exist within the community as well as with clients, suppliers and consultants (mainly family business consultants).
When considering a potential coaching assignment with a family business, these considerations are not just 'nice points of awareness,' but are in fact central to any type of intervention. The coach needs to pay particular attention to contracting, especially at the pre-contract stage. The frequent lack of experience of family businesses with coaching and the paramount importance of trust are additional reasons for the coach to be fully conscious of the relevance of his/her ethical and professional standards.
This preliminary stage is necessary to determine the objectives and expectations for the potential coaching assignment, which include the following:
- Are the coachee and/or group of coachees willing participants?
- Is coaching the right type of intervention?
- Is the coach the right fit for the organization?
These questions may not seem fundamentally different from any typical coaching situation; however, the answers are critical. The potential risks tend to be greater in a family business environment not only in terms of outcome but also of professional reputation. Furthermore, taking time to establish trust will favorably impact the selection process.
Such a complex environment requires a combination of different coaching skills and competencies, which include the following:
- Solid business experience at a senior level, enabling the coach to assess business challenges and competitive environment
- Ability to build trust in relationships
- Life experience which provides appreciation of generational issues
- High level of 'cultural' awareness
- Last but not least, a 'clinical' perspective, which will help to understand the behavioral drivers and group dynamics
In all types of coaching interventions in family businesses, it is recommended to build an initial phase of extensive interviews prior to finalizing the objectives of the intervention. Feedback from these interviews will often lead to a different set of objectives from those presented in the first briefing. This process provides greater clarity and objectivity and enables the coach to reach a better alignment by integrating the various perspectives from different stakeholders. Through the interviews, the coach also shapes a good picture of the context.
As a final point on contracting, it is generally preferable to build the proposal on agreed total fees for services provided rather than on a time basis. Discussing time spent is a distraction and a potential source of unnecessary discussion, which is best avoided. Family businesses tend to be very fair in contracting this type of assignment.
The following examples of intervention will illustrate some of the practical coaching situations in a family business.
Coaching in a Leadership Transition
This is probably the most common type of coaching intervention in a family business and the best suited for professional business coaches. Family businesses find the most difficulty in a transition from second to third generation. Deciding on the timing for a transition, selecting the right candidate, identifying the strengths and weaknesses of the potential successor, and setting the strategic direction for the business while attempting to address the expectations and preferences of family members can be an excruciating experience!
An individual coaching intervention will typically arrive at the end of this process, which may have run for several years. Coaching the new or future CEO will focus on changing behavior, helping the coachee identify potential gaps in knowledge or experience, navigating the business and family environment, and addressing specific professional or personal situations.
While coaching tends to focus on areas for development, family successors are often unaware of their strengths, which may have been inhibited over years of building up defense mechanisms. Coaching can help the new leader 'be himself' and shape his own style rather than 'cloning' his family predecessor.
Coaching a family business leader should be primarily situational and practical rather than conceptual. Awareness of the impact of the change on the preceding generation is a key factor even though the 'client' is the new leader and not the family as a whole.
There are a number of variations from this typical framework, including coaching non-family successors or coaching other family members with an executive role in the organization while a transition is taking place.
Facilitating Family Groups
One may assume that family members know each other well and communicate effectively, but reality is often quite different! Family members interact as individuals and as a group with different sets of expectations, priorities and levels of understanding of business issues. These differences alone can make any discussion a challenge.
Facilitating family sessions using group coaching techniques in small groups of five with a professional coach can help families identify and focus on their common purpose. The 'clinically oriented' group coaching process developed at the INSEAD Global Leadership Centre allows a more open exchange in a 'safe' and confidential environment. This process is action driven with participants committing to personal and collective action plans. Another important outcome is an increased level of awareness of how to recognize and leverage differences.
This approach used effectively with diverse groups of senior executives obviously also finds its application in the business itself at the group executive committee level or other senior management groups.
Practicing Coaching as a Way to Communicate and Learn
Applying coaching principles as a way to change behavior and improve communication is another variation of working with families. This method, used in large family reunions, involves a session on basic coaching principles and practical exercise in trios with each participant playing the role of coach, coachee and observer.
This works surprisingly well when helping families to improve their listening and observation skills, to consider other opinions and to see each other in a different light. In a recent family program involving 35 participants representing three generations in the same family, the scene of an 18-year-old participant coaching his 71-year-old grandfather was a wonderful example of learning through generations.
These are just a few illustrations of how coaching can be applied in many different ways to the family context. However, we must always remember that coaching is not a universal solution. Keeping boundaries is another important aspect to constantly keep in mind in a family environment.
This type of coaching can be an extremely rewarding experience. It is an amazing source of learning and an opportunity to build long-lasting relationships with clients. Indeed, my own interest keeps shifting from the 'standard' corporate world to the much richer experience of working with family businesses.
Coaching family businesses also brings to light for me what is coaching and what is not. Coaches are not business or family consultants or therapists. In the words of Galileo Galilei, as a coach of businesses and of family businesses in particular, 'You cannot teach a man anything, you can only help him discover it within himself.'