How to find roles for family in the business

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The totality of a family enterprise – whether there is a formal family office or not – can encompass many roles, from operations to governance and succession, wealth stewardship, investment and wealth generation, and legacy.

As the family and its holdings grow, questions arise around what roles are best suited for which family members.

So how do you know who is best suited for what role? Should it be in the family office or more in the enterprise side of things, or philanthropy, new ventures or simply family cohesion?

These are just a few of the questions that need to be addressed when considering family members for these roles.

The Flanagans in transition in third generation

When Joe Flanagan co-founded Bob’s Surplus Food Outlet in 1977 (now Kitchener, Ont.-based Flanagan Foodservice Inc.), the kids naturally did typical odd jobs around the business, recalls one of his sons, Murray Flanagan.

“None of the four of us intended to make a career of the family business,” he says about himself and his three brothers.

But as they grew and became more interested, “opportunities arose that our parents saw as a good fit – it naturally progressed to full-time roles.”

And these progressed to leadership roles, especially as their father sadly died at 57, though he had already put in place a leadership structure of family and non-family members.

Now that the family is in its third generation, Flanagan says they are in the process of deciding how and whether to continue with family ownership.

But almost all of the next generations (four in his second generation and 10 in G3) are involved in the “business of family.” This includes education, philanthropy, family event and retreat co-ordination and a family council.

As family enterprise evolves, roles become more complex

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When it comes to sorting out the roles enterprising family members might take on, especially within a family office, one of the essential places to start is to ensure there is a clear identity and purpose to the family office so that these roles can serve the interest of family and the business, explains Elizabeth Bagger, family business advisor with Gerald Pulvermacher and Associates.

“I think you will have heard the saying, ‘When you’ve seen one family office, you’ve seen one family office.’ Everyone’s different. Every family office is different,” says Bagger.

With more than 20 years consulting with family businesses, Bagger has witnessed a lot of ups and downs when it comes to who takes on what role. From the small office that’s just trying to figure it out, where someone puts up their hand for a role that needs to be filled, to the multi-family office that could have almost no family enterprise members working in the office side.

“Depending on what you’re doing, if you have a high level of complexity, then you really need to be careful about who you put in what positions,” cautions Bagger. “As [the family office] evolves over time, you’d want to make sure that those people evolve with you or that you get others in to help.”

Having a successful family business doesn’t always mean this will translate into those same people achieving the goals of the family office, so it’s important to assess those roles independently.

“One of the things I remember from one family office I spoke to years ago, they said, “Plan to be successful,” recalls Bagger.

“They had not employed the right people for a really successful family office. They knew they were a good family business and they were good at making the things they made, they just didn’t expect to be good at investing, and they were, so they needed to put the right people in place to deal with that element.”

Take stock of human capital

The best time to consider the roles within the office is in the initial stages of set up. This goes for any branches – investment, philanthropy – that may be developed in the future, says family enterprise advisor and legacy coach Danielle Saputo, herself a member of the Saputo enterprising family.

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“It’s the perfect time to just say, ‘Hey, can we step back? Can we put all our cards on the table? Can we know a reason why and really dive deep into the ‘why are we building this family office?’’” says Saputo.

“Oftentimes, family members [can] just find themselves in a position without even knowing how they got there.”

Those with a more financial or investment background might be the automatic fit for those roles, but Saputo cautions away from discounting others who show abilities in areas like the arts.

“Take time to take inventory of everyone, of all your human capital,” she explains, adding that conversations about roles need to happen out loud and as early as possible.

“I would say that a great place to start is just to put the question out there,” she says. “Very often it’s there in the background, like ‘Oh, someone will step up and fill that role.’ But no real conversations happen to say: ‘Hey, who is the best person to fill these roles and not?’ or ‘What does each individual of the family envision [with] the potential role?’”

Once the conversations have been started then it is time to start formalizing it.

By having certain requirements laid out in the family office bylaws, it can eliminate confusion over what is expected of someone stepping into a role. This could be education requirements or age requirements or other specifics that the family and its advisors feel necessary for the role.

But avoid getting in over your head, says Bagger.

“Let the lawyers take care of what the lawyers need to take care of. Appoint somebody to oversee investments because it can get complex very quickly,” she says. “Doing due diligence and things you’re not familiar with becomes hard. I think you have to accept there is an evolution and that every family will get to it in their own time.”

What to do if a family member chooses the wrong role for them or the family

It comes down to protecting the ecosystem, says Saputo. It is both family and business, rife with emotion, so this type of situation needs to be handled with care and being exclusive toward someone who may be in the wrong role will add to the challenges.

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“Thinking that not putting them in the equation will solve the problem will become a big problem later on,” she says. “If the idea is to be a family enterprise or have the business remain in the family and the mindset is ‘let’s work for the business not in the business’ then every family member is to be considered and made part of the whole.”

Timing could also be an issue and maybe it’s a question of waiting for a few years until that family member finds their niche, Or, it may help to examine a role that could suit them better and discuss it with them.

“We often use the Three Circle model [family, ownership, business] to identify where each family member resided in the whole family enterprise ecosystem and if there is an individual that falls within the boundaries of family and is not involved in present ownership or the business then that person, too, has a role and responsibility to the whole ecosystem,” says Saputo.

“Engaging every member is in the benefit of the whole system.”