Strategic planning is essential for any business, but especially for family businesses that face unique challenges such as conflicts and succession issues. How do you deal with these challenges and ensure the long-term viability and growth of your family business? Here are some tips and best practices to help you.
The first step in strategic planning is to clarify your vision and values as a family business. What is your purpose, mission, and goals? What are the core values that guide your decisions and actions? How do you communicate and uphold these values among your family members and employees? Having a clear and shared vision and values can help you align your strategies and avoid conflicts.
Purpose and Mission: Define your family business's long-term aims and value contribution to customers, employees, and the community. Goal Setting: Identify measurable objectives supporting your mission, enabling progress tracking and motivation. Core Values: Establish values that resonate with both family and business ethos, such as integrity, quality, and community engagement. Communication: Develop clear channels and regular schedules for communicating values and vision to ensure consistency across stakeholders. Upholding Values: Implement practices and policies reflecting your values, like fair employment, sustainable practices, and community involvement, reinforced by leadership actions.
When conflict arises in the family business, often there isn't a forum to discuss the issues. Family governance and boards can provide a safe and organized way to resolve conflicts. A formal setting can also ensure that issues are not ignored and that family members have the opportunity to voice their opinions. Given the variety of sensitive issues and implications in business, leveraging governance is highly recommended for effectively resolving conflicts.
The second step in strategic planning is to involve all stakeholders in the process. This includes not only the family members who own or work in the business, but also the non-family managers, employees, customers, suppliers, and advisors. By engaging all stakeholders, you can gain valuable insights, feedback, and support for your strategic plan. You can also foster a culture of trust, collaboration, and accountability.
Comprehensive Inclusion: Engage both family and non-family stakeholders, including employees, managers, customers, suppliers, and advisors, to ensure a broad perspective. Gathering Insights: Utilize surveys, meetings, and feedback sessions to collect diverse opinions and ideas, enriching the strategic planning process. Cultural Benefits: Promote a culture of trust and collaboration by visibly integrating stakeholder input into decision-making processes. Accountability: Establish clear roles and responsibilities tied to strategic goals, enhancing commitment and accountability among all participants Feedback Implementation: Demonstrate how stakeholder feedback is used, reinforcing their value to the business and encouraging ongoing engagement
Focus on the business interest: 1. Emphasize the importance of prioritizing the best interest of the business above individual preferences or agendas in all decision-making. 2. Remind stakeholders of the shared vision and values of the family business and use them as guiding principles for all discussions and decision-making.
The third step in strategic planning is to address the potential conflicts and succession issues that may arise in your family business. Conflicts can stem from different opinions, interests, expectations, or roles among family members or between family and non-family members. Succession issues can involve the transition of ownership, leadership, or management from one generation to the next. To deal with these challenges, you need to establish clear and fair policies, processes, and criteria for resolving disputes, making decisions, and selecting successors. You also need to communicate openly and respectfully, and seek external help if needed.
Policy Development: Create clear, equitable policies for conflict resolution and succession planning, emphasizing transparency and fairness. Open Communication: Encourage ongoing, open dialogue about expectations, roles, and future plans to preemptively manage conflicts and clarify succession processes. External Mediation: Consider bringing in external advisors or mediators to help navigate complex disputes or succession planning impartially. Decision-Making Criteria: Establish objective criteria for leadership and ownership transitions to avoid biases and ensure merit-based decisions. Training and Development: Implement development programs for potential successors to prepare them for future roles, enhancing smooth transitions.
Family Governance: Family conflicts usually start with comparisons of authority, job title, and compensation among family members and family governance covers these allowances as policies and guidelines. Many businesses do not have clear policies, making it very subjective when the business resources are misused either for personal/professional use and they don't know how to respond to them. A formal structure helps to set policies, open lines of communication, and give members the opportunity to bring up any issues. They can serve as guidelines for family members on how to use business resources. Formal governance can also help mitigate family and financial issues by separating ownership of the business from its management functions.
The fourth step in strategic planning is to set realistic and measurable goals for your family business. These goals should reflect your vision and values, as well as the opportunities and threats in your market and industry. They should also be specific, attainable, relevant, and time-bound. By setting SMART goals, you can track your progress, evaluate your performance, and adjust your strategies accordingly.
SMART Framework: Ensure goals are Specific, Measurable, Achievable, Relevant, and Time-bound to facilitate clear tracking and accountability. Alignment with Vision: Craft goals that directly support and reflect your established vision and values, promoting consistency across the business. Market Consideration: Analyze market trends and potential threats or opportunities, incorporating these insights into goal setting to stay competitive. Regular Reviews: Set up periodic reviews of goals to assess progress and make necessary adjustments, maintaining flexibility in your strategic approach. Performance Metrics: Develop clear metrics for evaluating success towards each goal, aiding in objective performance assessment and decision-making.
The fifth step in strategic planning is to implement and monitor your plan. This involves assigning roles and responsibilities, allocating resources, and executing your actions. It also involves reviewing your plan regularly, measuring your results, and identifying any gaps or issues. By implementing and monitoring your plan, you can ensure that your family business is on track to achieve your goals and overcome your challenges.
Role Assignment: Clearly define and distribute roles and responsibilities to ensure efficient implementation of each part of your plan. Resource Allocation: Strategically allocate resources including finances, personnel, and time, to maximize the effectiveness of your actions. Action Execution: Follow through with the planned actions, maintaining consistency with your strategic goals and timelines. Regular Reviews: Conduct regular reviews of the implementation process to assess progress and adjust strategies as necessary. Performance Tracking: Use established metrics to measure outcomes, identify deviations from expected results, and pinpoint areas for improvement.
The sixth and final step in strategic planning is to review and update your plan. This involves reflecting on your achievements, challenges, and learnings, as well as the changes in your internal and external environment. By reviewing and updating your plan, you can celebrate your successes, learn from your failures, and adapt to new circumstances. You can also ensure that your plan remains relevant, realistic, and aligned with your vision and values.
Defining clear governance structures and decision-making processes can establish common ground among family members, creating a space to openly address concerns. Governance can also bring clarity to various roles, responsibilities, and authority levels to avoid ambiguity and reduce potential conflicts. Engaging an external expert can help navigate conflicts and facilitate constructive discussions to reach mutually acceptable solutions.
Over the thirty years of working with family businesses we have found that the process of strategic planning itself is challenging if the family is at a stage 2 or lower. It has neither the capability (collective skill, experience or team benchstrength) or capacity (collective energy and time) to follow the above steps efficiently or effectively. It has a patriarch or matriarch who has not developed a team under them that can play a significant role. The family dynamics will be too raw, rough. What is required first is a meaningful process of raising the bar of all leaders so that it can think in a more sophisticated way, and demonstrate behaviours that create, trust, respect, energy. This occurs within stage 3 families and businesses.