What Is The Value Of Family Meetings?

By Roy Williams and Amy Castoro

Fast forward a couple years and the resentment and resignation beginning to form among family members is manifest in lack of attendance in family gatherings, insincere and less frequent conversations, and an increased likelihood of lawsuits as family members look for an alternative path to their inheritance.

What happens in family meetings done well?

Family meetings done well provide the opportunity for growth and learning of all family members. It can be the forum that builds trust, strengthens two-way communication, and bonds the family together across generations.   Family meetings are where the work of building a strong foundation that allows the wealth to be a force for good as opposed to the all too often told story of destruction.

This level of a family meeting requires a willingness to learn new tools of engaging with each other, and addressing some of the missing conversations that may be in the way of deepening trust, communication, and relationships.  This kind of learning takes time, practice, and patience.  For the family above, it starts with providing a safe space for the son’s aspirations to be genuinely heard, and co-designing terms such as a formal business plan, educational and experiential standards to be met, and timelines to be established that both sides can support.

What happens in family meetings not done well?

Family members, who have had a past experience of the family leaders exerting control in their meetings and relationships, often resist scheduling family meetings. In another example, a family with six children were unable to generate any interest in bringing the family together to discuss family wealth and business.  For them, the business was the very source of the growing divide among family members.  It was considered the seventh child who demanded all of dad’s attention, and there was never an invitation to join the business. 

Conversations with dad were always about the business and did not leave room for any other input.  The idea of bringing all of the spouses and making arrangements for childcare were just too much of an effort for what would be just another meeting where dad set the agenda and did all of the talking about a subject the family found frustrating.  Their thoughts were that their participation was unwelcome and they would not have any influence in the decision-making process even though it significantly impacted their lives, and their children’s lives.

What is communication?

Some time ago, we asked a Harvard English Literature expert's help in defining the word, "communication."  He divided it into two words: “common” and  “action.” Therefore, if we are not taking common action, then all we have is a lot of noise. Although it may not be in Webster’s dictionary, it made a great deal of sense to us and we have found it useful. We also find that communication has two roots -- one is perception and the other is trust.

Perception

When viewed by people in North America, this picture is seen as a side of a building and three stick people, either inside looking out or outside looking in through a window. In rural Kenya, they see a tree, denuded by elephants and giraffes, and a woman carrying a package to market with two others. The North American’s perception and the Kenyan’s perception are what they are, based upon their histories. The key is that a breakdown of communication may be caused by a perception issue.

In our first example of the son who insists on an increased distribution, the role of the beneficiary is missing from the family.  Often, the conversations necessary to define these roles are rarely held with the input of the entire family. The concept of qualification and performance standards required by these roles are not in the regular purview of family communication and are assumed to be addressed, over time.   The responsibility of who gets what and when falls directly on mom and/or dad’s shoulders.  Somehow, someway, the perception is that age and living will prepare the heirs to become good stewards and role-takers. If the framework for assessing success in a position are not agreed to, how will you know if the person is being successful?  Enrolling the entire family in these conversations builds alignment and buy-in and strengthens the family as a team.

Trust   

Without trust there is little-to-no authentic communication and, in most cases, not even any desire or interest in communicating. Trust is the root in every relationship. It is the foundation that makes the estate plans, family business strategy, family meetings, and family harmony possible. 

Trust has three components which can be observed and managed:

Reliability – doing what we say we will do, when we say we will do so, and managing our commitments.

Sincerity – is our public story the same as our private story? Gossip is an example of insincerity and one step away from betrayal.

Competence – do we have the capacity to do what we said we will do, when we say we will do it?

In our example of the son who wants increased funds to start a business, it is essential this last component of trust that is missing.  Dad just doesn’t see that the son has the skill to do what he says he can do.  Together they can identify the skills required, the goals to be achieved, and a timeframe that will work for both of them.

The three components of trust, wrapped with care, become authentic trust. Authentic trust is the care we use to apply the components of trust. For trust to exist, we must manage all three components and if one breaks down, trust in the relationship breaks down.

We have found that the issue of differing perceptions and breakdowns in trust are responsible for the communication failures we have witnessed.

Why have a family meeting? 

Physical contact and presence with family members results in bringing the family together as a team.  In one particular family, the family had never all come together for the sake of discussing the family and its relationship to wealth.  Although they all lived in the same area and had generally good relationships with each other, they never all sat down together to discuss their family identity.  The moment everyone settled into their chairs, there was a palpable sense of unity, so much so that a few family members were moved to tears.  It was the first time they had acknowledged they are a family, and in taking the action to all come together galvanized their commitment to strengthening family relationships.

During the family meeting time, developing the family values and developing the Family Wealth Mission Statement based upon those values, built new levels of intimacy, trust, and communication between all family members.  While the end-product of a Family Wealth Mission Statement provides the keel of the family, the process to that outcome is often where the true learning and value is generated. 

Often by the time a family comes together to discuss values and mission statement, the children are adults and have families of their own.  They believe they have their own set of values, and not always sure the larger family shares the same values, or even respect their own.  We see this represented in subtle judgment in how a particular family disciplines their children, or the tolerance granted to one sibling is markedly different than that of another.  When the family engages in our process of defining values in five key areas of coordination--physical, intellectual, spiritual, psychological, and financial--they are both relieved and astounded at the similarities. 

It is by having the freedom to express their individual values in the key areas of life in a trusting environment and engaging in conversations about them that then allows an amalgamation to evolve.  The result is a co-designed and equally supported Family Wealth Mission Statement that forms the cornerstone of the family direction for generations to come.

Why family roles are important

Family members identify the roles required to address estate, trust, business, philanthropy, and other family needs. This role-identification process often identifies particular family roles specific family members have and includes interest, aptitude, and passion for assuming these roles.

Family members learn the process of developing the qualifications and performance standards for the roles and gain understanding about how to monitor the performance of those roles.  In one example, a family member was considered an outcast.  Through a facilitated family meeting, he found the courage to express an interest in a role on the family foundation.  After clarifying the qualifications and standards, this individual was supported by the rest of the family and went on to train in the family foundation and later become the head of the family foundation.

In a more typical situation, family members hold positions on boards out of obligation, or timed “service.”  These boards are often in a stalemate and become a mix of “disrespected power” and resentment, a powerful combination inclined to culminate in resignation and breakdown of family harmony.

The creating of a family bank as a resource for those entrepreneurs and philanthropic family members is another way for individuals to express their own passions in alignment with the Family Wealth Mission Statement.  The family meeting is an excellent platform to transition the skills of the more experienced and successful family members to the next generation.  This could include engaging in live philanthropic activities with conversations about how to assess their impact, or working as a team to explore impact investing.  Other possibilities include bringing in experts to offer insight to particular investment possibilities, creative financing possibilities which allow younger family members to participate, and build a family philosophy toward financial growth.

How family meetings teach communication skills

Family meetings create more opportunities for building trust, reinforcing the family values, and supporting the Family Wealth Mission Statement.  The Williams Group family meetings use real-time issues to generate meaningful conversations.  The goal of these conversations is not simply a resolution of the particular topic, but more importantly to teach the skills of how to engage in important conversations in productive ways which protect family relationships.  Without this skill, families will continue to be stymied by challenging and important conversations, resulting in a type of cordial hypocrisy and they often drift apart.  One family of five children, all of which were now adults with their own children, never learned to have important and meaningful conversations with their dad.  He was often away while they were growing up, building the business.  They really only knew him as “the guy who left early and came home late.”

What is the first step?

Knowing what needs to be done, and doing what needs to be done are often very different things.  The first step is taking the leadership initiative to take the necessary action of assessing the levels of trust and communication, heir readiness, and mission and values.  That can be accomplished through an anonymous survey of family members to give them a place to express their interests, questions, and expectations or having conversations with their advisors about what they need to do as a family to be prepared. 

Once the family readiness has been determined, the next step is bringing in new communication tools to ensure long term success in navigating challenging conversations, making decisions as a team, and managing relationships in a way that keep family bonds strong.  After the important conversations have been addressed, it is time to focus on the purpose of the family wealth by building authentic alignment to family values and Family Wealth Mission Statement.  Keep in mind that family wealth is more than money and real property. Family wealth may also be considered to include the strength of family relationships, the professional and personal networks, the traditions and experience of the family members, entrepreneurial family culture, etc. 

Finally, once that mission statement is completed, it is important to connect it to the existing estate plans so the two are not operating in parallel.  For example, the family might state that treating each other fairly is a fundamental family value.  The estate documents may favor one person over another.  When the estate documents are executed, the likelihood of significant arguments may ensue because everyone had a different interpretation of “equally.”

Conclusion

Creating a place for families to work on themselves is a unique and vital skill for successful wealth transfer.  The research supports this premise.  Roughly 65% of the reason for failed wealth transfer comes from lack of trust, not knowing how to have the right conversation at the right time, and unprepared heirs.  When families trust themselves and others to have productive conversations that take care of both sides of the relationship they are inspired to go forward together.   Trust is a skill that can be learned, and once that happens, the family becomes a highly effective team committed to creating a lasting family legacy.