One of our favorite books by Patrick Lencioni is “The Five Dysfunctions of a Team.” (If you haven’t read it, we highly recommend it.) He’s also the author of an article in the Harvard Business Review about corporate values.
In this article, Lencioni asks readers if four values — communication, respect, integrity and excellence —resemble their own companies’ values and then drops a bombshell: These are the values of Enron, the energy company that declared bankruptcy after committing one of the biggest accounting frauds of this century.
Not surprisingly, there’s a lot of cynicism about values, and yet, our company has spent time and effort developing a list of values that (1) tells our team members and clients how we operate; and, perhaps most importantly, (2) helps families maximize the odds of successfully transferring their businesses from one generation to the next.
Topping our list of core values is People First.
People First
To us, people first means:
- Always assuming that others speak and act with the best of intent.
- Communicating and acting in a way that acknowledges that relationships fuel personal, family and business success.
- Honoring the successes and aspirations of others.
- Putting people before financial success.
When the stakes and expectations of others are high as they are in business transitions, and when communication is as emotional as it can be in these transitions, it’s easy to slip into focusing primarily on financial rather than human capital. It can be scary to test our assumptions, ask questions, and even learn to communicate in new ways, yet it’s our job as Transition Strategists to help owners, successors and their family members do exactly that.
Financial Capital
Owners of successful companies come to us with their financial capital bases covered and typically covered by highly competent professional advisors who specialize in law (tax, business or estate planning); accounting (business and tax planning); and wealth / investment management.
These advisors are rightly focused on maximizing the financial capital of their clients and of their clients’ companies.
Human Capital
In contrast, the role of a Transition Strategist is to help owners, their families and their successors recognize that unless they care for human capital as intentionally as they do their financial capital, they put their family relationships and transition and future of their family businesses in jeopardy.
For example, when owners make a unilateral decision about which member(s) of the next generation will succeed them, other family members can feel overlooked, unhappy and possibly even resentful that they didn’t get the seat at the table that they felt they deserved. Family relationships are damaged and can be destroyed when family members feel unheard, dismissed or that they’ve been treated unfairly.
It is not easy to wade into the waters of discussing the opportunities as well as inclusion / exclusion in a family business, however, by doing so, families are often able to preserve their greatest assets: their family connections and relationships. By putting its best practices into action, the ownership generation has the opportunity to pass along some of its most treasured family values. In short, unless owners attend to their human capital when transitioning their businesses, neither their families nor their businesses are set up to thrive.
Put People First.
Long experience with hundreds of families has shown us that owners who put people first maximize the odds that a business transition will position both families and businesses to flourish. When human capital takes a significant backseat to financial capital, however, it’s difficult for both families and businesses to withstand the inevitable turbulence of a business transition.
We know every transition journey is unique, and we’ve developed resources to support you wherever you are in the process.
- Join our monthly workshop to learn proven transition strategies
- Explore programs designed for your unique journey
- Access free tools to start mapping your path
- Meet Elizabeth on Collective Conversations for personal insights