the essentials april 27-28, 2006 instructors: jane hilburt-davis w. gibb dyer jr
TRANSCRIPT
The Essentials
April 27-28, 2006
Instructors: Jane Hilburt-DavisW. Gibb Dyer Jr.
Introduction, Chemistry Meeting, andContracting with Family Firms
Introductions/Ground Rules
• One minute statement!One minute statement!
• Who you areWho you are
• Where you’re fromWhere you’re from
• Profession of originProfession of origin
• What your expectations areWhat your expectations are
• Ground rulesGround rules
• ConfidentialityConfidentiality
• Breaks, cell phones, participationBreaks, cell phones, participation
Consulting Process
Chemistry Meeting
Letter of Engagement
Assessment
Feedback/PlanningImplementation
Follow-up
Exit
Reentry First Contact
From Hilburt-Davis & Dyer (2003) Consulting to Family Businesses
Overview of the Consulting ProcessOverview of the Consulting Process
First Contact
Chemistry Meeting
Chemistry Meeting
• Participants divide into small multidisciplinary groups to form Participants divide into small multidisciplinary groups to form questions/goals/concerns/plans for chemistry meeting: questions/goals/concerns/plans for chemistry meeting:
• What’s your strategy? What’s your strategy?
• What are your goals for the meeting? What are your goals for the meeting?
• What to look for? Look out for? Are we/am I the right fit?What to look for? Look out for? Are we/am I the right fit?
Letter of Engagement/Contract
Engagement Letter/Contract
• Outline main pointsOutline main points
• Scope of workScope of work
• FeesFees
• TimeTime
• Who’s the client/who signsWho’s the client/who signs
• Discussion of pros and cons of eachDiscussion of pros and cons of each
Assessment and Giving Feedback
Assessment
Assessment Framework
• FacultyFaculty
• ParticipantsParticipants
• What’s the diagnostic framework you use?What’s the diagnostic framework you use?
• How do you gather data? (Interviews, surveys, etc.)How do you gather data? (Interviews, surveys, etc.)
• How did you decide on the questions to ask?How did you decide on the questions to ask?
• What are the ground rules for the interviews?What are the ground rules for the interviews?
Feedback/Action Planning
Feedback/Action Planning
• What data will you feedback? In what format?What data will you feedback? In what format?
• What are your goals for the feedback meeting?What are your goals for the feedback meeting?
• What do you do with the various responses?What do you do with the various responses?
• What responses are you most/least prepared/equipped for?What responses are you most/least prepared/equipped for?
Action Plan
• Specific steps and goals.Specific steps and goals.
• What is the level of intervention? Pp.100-101)What is the level of intervention? Pp.100-101)
• What is the target for change?What is the target for change?
• How will you manage the change?How will you manage the change?
• What to look out for?What to look out for?
• Where will resistance come from and how will you deal with it?Where will resistance come from and how will you deal with it?
• What structures/architecture is needed?What structures/architecture is needed?
• Liaison with family, costs and billingLiaison with family, costs and billing
Barriers to Growth
1)1) Failing to Plan for GrowthFailing to Plan for Growth
2)2) Ineffective Leadership and Management StyleIneffective Leadership and Management Style
3)3) Ill Defined Organizational StructureIll Defined Organizational Structure
4)4) Lack of Information SystemsLack of Information Systems
5)5) Unqualified Personnel and a Lack of HR SystemsUnqualified Personnel and a Lack of HR Systems
6)6) An Organizational Culture that Fails to Foster GrowthAn Organizational Culture that Fails to Foster Growth
7)7) Poor Partner Relations and an Ineffective Board of DirectorsPoor Partner Relations and an Ineffective Board of Directors
Family Factors Contributing to High Family Factors Contributing to High PerformancePerformance
Family Factors Contributing to Low Family Factors Contributing to Low PerformancePerformance
Agency BenefitsAgency Benefits Lower agency costs due to the alignment Lower agency costs due to the alignment
of principal-agent goalsof principal-agent goals Lower agency costs due to high trust Lower agency costs due to high trust
and shared values among family and shared values among family membersmembers
Agency CostsAgency Costs Higher agency costs due to conflicting Higher agency costs due to conflicting
goals in the familygoals in the family Higher agency costs from opportunism, Higher agency costs from opportunism,
shirking, and adverse selection because shirking, and adverse selection because of altruism (i.e., family members fail to of altruism (i.e., family members fail to monitor each other)monitor each other)
Family AssetsFamily Assets Human capital: the family has unique Human capital: the family has unique
training, skills, flexibility, and motivationtraining, skills, flexibility, and motivation
Family LiabilitiesFamily Liabilities Family lacks necessary skills and Family lacks necessary skills and
abilities due to small labor pool, lack of abilities due to small labor pool, lack of talent, or inadequate trainingtalent, or inadequate training
Social capital: the family develops Social capital: the family develops relationships outside the family with relationships outside the family with employees, customers, suppliers, and employees, customers, suppliers, and other stakeholders that generate other stakeholders that generate goodwill goodwill
Family “branding” of the firm or of the Family “branding” of the firm or of the firm’s goods and services may generate firm’s goods and services may generate goodwill and a positive image with goodwill and a positive image with stakeholdersstakeholders
Family fails to develop social capital Family fails to develop social capital with key stakeholders due to distrust of with key stakeholders due to distrust of outsiders (i. e. “amoral familism”)outsiders (i. e. “amoral familism”)
Family relationships lead to Family relationships lead to complex conflicts among familycomplex conflicts among family that may undermine image and that may undermine image and goodwill with stakeholdersgoodwill with stakeholders
Physical/financial capital: the family may Physical/financial capital: the family may have physical or financial assets that can have physical or financial assets that can be used to support the firm be used to support the firm
Family uses firm assets for personal Family uses firm assets for personal use, thus draining the firm of financial use, thus draining the firm of financial and other resourcesand other resources
Table 2“Family Factors” Affecting Firm Performance
AGENCY COSTS
FAMILYASSETS
Figure 3Typology of Family Firms
Quadrant IIQuadrant I
Quadrant IVQuadrant III
HIGH
LOW HIGH
HIGH
ProfessionalFamilyFirm
ClanFamilyFirm
Self-Interested FamilyFirm
Mom & Pop FamilyFirm
LOW
LOW
FAMILYLIABILITIES