Inclusion the key to unlocking engagement in the Family Office
Jesse Jackson, an American rights civil activist once said, “When everyone is included, everyone wins”. Whilst said in a different context, its sentiment can be applied to a variety of different spaces including Family Offices.
For a Family Office to thrive the executive needs to engage successfully with their key stakeholders – members of the family. Even though this can be done in a variety of different ways, one which deserves more focus is inclusivity.
Quite simply, an inclusive mindset encourages stakeholders to remain engaged in the business and share a long-term commitment to its future. Whilst it’s a hard thing to immediately achieve, there are four key aspects we think should be considered as Family Offices look to the beginning of a new year:
- Socio-emotional wealth (SEW)
The concept of SEW suggests that enterprises that create a stock of emotional value for the family are more likely to perform better financially. The five most common factors of SEW are:
- Family control and influence – the value the family places on its ability to control the strategic direction and key decisions of the enterprise.
- Identification with the enterprise – the value the family places on the identity it gains through its involvement in the enterprise. This is often the case with philanthropic activity.
- Binding social ties – the value the family places on the relationships with different stakeholder groups.
- Emotional attachment – the importance a family places on family cohesion and wellbeing as part of their involvement with the enterprise.
- Renewal of family bonds through dynastic succession – the extent the family desires to hand down the enterprise to future generations.
- Effective communication
When delivering information or a message to a family member, it is important to consider whether: the delivery method is appropriate for the content, who the information is being communicated to, how timely the communication is and who is delivering the communication. Given the complexities of family enterprises, it is often the case that some family members fill multiple roles. Implementing family forums may help to ensure that information is communicated to appropriate family members in the most appropriate way.
- Transparent decision making
For family members to be engaged in the enterprise and its activities, they must understand how decisions are made and how they can contribute to this decision-making process. If there are one or two dominant family members who always call the shots and override the consensus, family members will swiftly disengage.
In the absence of effective governance frameworks, it is easy for decisions to be made ‘quickly’ without thought of the broader consequences nor making sure that the basis for the decision has been documented. Therefore, constantly reviewing the frameworks and guidelines which govern business decision making are vital to ensure that all family members feel included in the decisions which affect them.
- Trust and confidence
Without trust, the entire family ecosystem faces significant continuity risks. Alignment and a strong and unified sense of purpose goes a long way in encouraging an enduring commitment to the office. Trusting their commitment, having confidence in their ability to execute, no matter what the ask, and ensuring accountability and support, will go a long way in keeping them engaged for the long term.
Engaging the family in the Family Office takes dedication, time and commitment. It’s an inclusive and ongoing activity and the best time to start is now. Refresh your family’s purpose and values and get alignment amongst family members. Open the channels of communication and organise meaningful forums. There’s too much to lose if you don’t.
Tags Family office