Fireside Chat with Jennifer Bush: Navigating Family Real Estate Business Challenges

This week, I got together with Kelly, a friend and colleague, for a Zoom fireside chat. On the agenda? All things family real estate businesses!

Read on to find out more about:

-?????? Leadership succession planning within the real estate industry

-?????? The unique challenges faced by real estate family businesses

-?????? Navigating governance challenges in family-owned real estate businesses

Leadership succession planning within the real estate industry

Kelly: Jennifer, it's a pleasure to speak with you. Today, we're going to speak about leadership succession planning for real estate businesses. To kick things off, could you share a bit about your background in leadership development?

Jennifer: It's great to be here. Yeah, sure. So I've had the privilege of working in leadership development for many years. I've done this for local, national, and international companies of all shapes, sizes, and structures. That experience has equipped me with the tools needed for effective succession planning. As I often say, "My corporate background in leadership development means that I've got the tools."

Kelly: That's wonderful, Jennifer. What do you think is the secret to identifying the right successors for family businesses? And preparing them to take over?

?Jennifer: In my experience, it's all about knowing what it takes for someone to step into a leadership role and nurturing their development. It's about values. Leadership transitions. To put it simply, it's about finding the right person and guiding them through the challenges of succession. I've done that work, for both high potentials and your average manager.

Kelly: Let's turn to your personal journey. Can you share some of the challenges you faced when taking over a family business as a second-generation owner?

Jennifer: Oh, absolutely. It was like diving into the deep end. Very quickly, I was responsible for everything, but with minimal preparation. I had to deal with family tensions, financial matters, and a bunch of other complex things. You know, questions like, 'why do you have the final say?" and "why isn't there money available? I mean, I didn't know contracts, I didn't know financing with banks, and there was a lot of legal stuff like eminent domain that I had to learn on the fly. It was a real learning experience for me.

Kelly: It sounds like quite the challenge. Can you share more about your work in designing and implementing leadership development programs?

Jennifer: Certainly. I've been involved in designing and implementing leadership programs that transform regional managers into division presidents and vice presidents. These programs have catered to both high potentials and your everyday manager, and they've been rolled out across many states, countries, and various types of businesses.

Kelly: What's your advice to family real estate business executives who are looking to ensure a smooth transition and secure their business legacy?

Jennifer: I'd say it's crucial to recognize the importance of leadership succession. It's not just about passing the torch. It's about securing the continuity of your family real estate business for generations to come.

The unique challenges faced by real estate family businesses

Kelly: Ok, so we've touched on your journey and your expertise in leadership development. But let's delve a little deeper into the unique challenges that real estate family businesses face. What are they?

Jennifer: One of the most common challenges is the differing expectations among family members. Some view the business as their legacy, something they must preserve and nurture. Other family members lacking an emotional attachment may focus on the financial benefits.

Gender dynamics can also come into play. The women in the family might feel like their perspectives are being overlooked.

In this kind of scenario, sometimes I'll organize a family retreat. It works well in providing a platform for open discussion.

Kelly: You mentioned the emotional attachment to legacy properties as a potential issue. Some family members may want to keep and manage these properties even if they aren't turning a profit. Others might prefer selling them. How can you resolve this?

Jennifer: Yeah, it's a difficult one. The first thing is to acknowledge and address these feelings. Communicate openly and honestly to find common ground as a starting point. Each party will usually have valid reasons and concerns for feeling the way they do. Recognizing and respecting all perspectives is the first step.

Kelly: Let's talk a bit more about communication then. You've mentioned its importance in the context of family-owned businesses. Could you elaborate on that a little?

Jennifer: Communication is at the heart of many challenges within family real estate businesses. It dictates all important decisions and who's involved in making them.

Sometimes, family members need a structured way to communicate. For this reason, I often encourage families to use a third party like me. I facilitate the conversations and then teach them proper ways of effective communication.

Kelly: Yeah, because a lack of communication can lead to conflict, right? So can you share strategies for conflict resolution within families?

Jennifer: Conflict resolution involves two key components: advocacy and inquiry. Okay, so advocacy is about expressing your own viewpoint. And inquiry, that's the art of actively listening to understand, not just to respond.?

Really, it's about fostering a climate of open dialogue.

?I also provide tools and structures, such as the RACI (Responsible, Accountable, Consulted, Informed) model. These tools and structures can help families make decisions effectively.?

Kelly: What's your message to our readers who might be dealing with similar challenges in their family businesses??

Jennifer: My message is simple. Reflect on your family business dynamics. Find the challenges. And don't hesitate to seek coaching or guidance to help you resolve them. It's never too late to address these issues and find the right solutions.

Navigating governance challenges in family-owned real estate businesses

Kelly: Jennifer, let's talk now about the role of external board members. What's your view on this? Good or bad idea??

Jennifer: Long term, it’s a good idea. External board members are like a breath of fresh air. They’ll bring expertise from different roles and industries. They’ll bring their battle scars from leading a business through challenging times. They can use their wisdom to help answer the tough questions that need to be addressed. And they’ll push challenging issues, such as having a robust succession plan for the next generation.

I mention that particular issue because a recent PwC survey I read showed that 62% of family business leaders plan to pass on management and/or ownership to the next generation. Yet only 18% have a robust succession plan in place to make this happen.

Short term, many families have lots of barriers to bringing on independent directors. They may not want to share their financial information with outsiders. They may fear having their decisions looked at closely by outsiders. They may think they don’t have the money to pay an independent director. Or they may think they are doing just fine without independent directors and don’t want to upset the current status quo.

Kelly: Fascinating! What about having family members on the board? How is their role different from independent directors?

Jennifer: Family member owners are essential to successful board governance. They understand the family dynamics and the business’ contribution and reputation in the local community. They are ambassadors to other family shareholders about the business.

Oftentimes, family members may not have the depth of business experience independent directors have. Regardless, each plays a significant role in successful board governance.

Kelly: What are some of the, shall we say, more delicate issues around having family on a governing board??

Jennifer: One of the big challenges is deciding who is considered family? Are spouses? Live-in partners? Can both a family member and his/her spouse sit on the family business board? At what age could a family member be considered for board membership? What happens if a couple gets a divorce?

Some families shy away from having spouses on the board to avoid complicating matters. Others think spouses are ok; live-in partners are not. Oftentimes, if spouses are ok, then they can’t serve at the same time as the family member to whom they are married.

?Whatever you decide, having clear policies is key. They’ll provide clarity when dealing with the unexpected, if it happens.

Kelly: Can you expand on that a little?

Jennifer: Boiling it down, ultimately, we're talking about safeguarding the stability of the business during emotionally charged times. I like to think of governance policies as the guardrails on a winding mountain road. They provide a structured path for everyone involved.

In one family I worked with, the family and board members who were leading the respective companies did not want to even consider non-family board members. When it came to spousal involvement, they trusted the spouses and realized they had things to offer the companies. They also realized that having clear rules was like having a safety net, and they had two: firstly, if you separated, you're off the board and secondly, couples could not sit on the board at the same time. These rules created boundaries and protocols for dealing with personal matters without disrupting operations.

Kelly: So, it's about maintaining that delicate balance between personal and professional matters?

Jennifer: Yes. Businesses thrive on stability and predictability. When emotions are involved, having predefined rules means everyone knows what to expect. Some might find that cold or detached. It’s not. It's about creating a framework that keeps the business running smoothly, even when family members face personal challenges like divorce or separation.

Kelly: Thank you, Jennifer, I enjoyed chatting with you!

Jennifer: Thank you, Kelly, I enjoyed it too!

Summary

Here’s the main takeaways from my chat with Kelly:

1)??? The first step is to recognize the importance of leadership succession. Understand that it's not just about passing the torch. Think about the bigger picture - really, It's about securing the continuity of your family real estate business for generations to come.

2)??? Take the time to reflect on your family business dynamics. Actively look for the challenges you’re facing. When you’ve found them, communicate openly. Don't hesitate to seek coaching or guidance. It's never too late.

3)??? Consider welcoming external members onto your board. External perspectives can bring untold benefits.

4)??? Establish clear policies, especially on spousal involvement. It’s easier for everyone when people know where they stand.

Taking these steps will help you to overcome challenges, strengthen governance, and secure the future of your family-owned real estate business.

Jennifer

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- I’m Jennifer.

- I provide clarity to family businesses – helping them to succeed at both.

- Wealth and legacy planning, communication and relationships, business strategy, and mentorship.

To find out how I can help you, visit my profile! Follow me.

Or visit my website: https://jenniferbush.net/

#familybusiness?#trustedadvisor ?#executivecoach ?#leadershipdevelopment ?#legacyplanning

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