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Differentiation and Developing Critical Boundaries in the Family Enterprise

Differentiation and Developing Critical Boundaries in the Family Enterprise. Presented by David Bork Leslie Dashew Sam Lane THE ASPEN FAMILY BUSINESS GROUP Family Firm Institute 20th Annual Conference. INTRODUCTION. INTRODUCTION AND PHILOSOPHICAL PERSPECTIVE DAVID BORK.

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Differentiation and Developing Critical Boundaries in the Family Enterprise

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  1. Differentiation and Developing Critical Boundaries in the Family Enterprise Presented by David Bork Leslie Dashew Sam Lane THE ASPEN FAMILY BUSINESS GROUP Family Firm Institute 20th Annual Conference

  2. INTRODUCTION INTRODUCTION AND PHILOSOPHICAL PERSPECTIVE DAVID BORK

  3. BOUNDARIES AND DIFFERENTIATION CONCEPTS AND APPLICATION LESLIE DASHEW

  4. ASPEN FAMILYBUSINESS GROUP Boundaries and Family Business • Intrapersonal Boundaries • Interpersonal Boundaries • Subsystem Boundaries • Boundaries Between Systems

  5. ASPEN FAMILYBUSINESS GROUP Intrapersonal Boundaries • Separation and Individuation • Differentiation: • Non-reactivity • Behaving with integrity • Clarity of self “It’s hard to find your place in the sun in the shade of the family tree!”

  6. ASPEN FAMILYBUSINESS GROUP Permeability Of Boundaries

  7. ASPEN FAMILYBUSINESS GROUP Interpersonal Boundaries • Agreed upon boundaries between people • What I agree to do; what I expect of you… • Defined, at times, as roles • CEO/Employee • Parent/Child • Owner/Operator • Often contextual • In the business, I am… • At home, I am….

  8. ASPEN FAMILYBUSINESS GROUP Family Triangles Communication should happen directly between individuals, not through others. Me Brother Sister

  9. ASPEN FAMILYBUSINESS GROUP Family Business RolesBoundaries Between Roles Family Ownership Business

  10. ASPEN FAMILYBUSINESS GROUP Overlapping System • Family (sub) System • Emotion-focused • Inward oriented • Minimizes change • Unconditional acceptance • Tasks: • Nurture • Develop self-esteem • Grow adults • Business (Sub) System • Rational-focused • Outward oriented • Requires change • Conditional acceptance • Tasks • Generate profits • Develop skills

  11. ASPEN FAMILYBUSINESS GROUP Boundaries Within The Family

  12. ASPEN FAMILYBUSINESS GROUP Boundary: Family vs. Community • Privacy within the family

  13. ASPEN FAMILYBUSINESS GROUP Managing Boundaries • Border Guards • Passports • International Treaties

  14. TOOLS TO MANAGE BOUNDARIES SAM LANE

  15. ASPEN FAMILYBUSINESS GROUP TOOLS Procedures, Structures and Agreements that develop and promote healthy boundaries and pre-negotiate areas of potential conflict. They promote positive emotional interactions based upon principle-centered governance and counter the negative impact of conflictual interactions in a personality-centered system. Taken together these agreements form the “Family Constitution”.

  16. ASPEN FAMILYBUSINESS GROUP MANAGEMENT / OWNERSHIP TOOLS • Succession Plan • Governance Structure • Family Mission Statement • Family Meetings • Family Employment Policy • Dividend / Distribution Plan • Developmental Goals • Shareholder / Buy - Sell Agreement • Estate Plan • Shareholder Position Paper

  17. SHAREHOLDERS F1 - B2 - F2 - B2 - F3 BOUNDARIES B1 - Shareholders Position Paper - Distribution Policy B2 - Buy-Sell Agreement B3 - Board Membership Criteria - Family Mission Statement B4 - Business Plan - Succession Plan - Family Employment Policy B5 - Family Council Criteria B6 - Employment Agreement B7 - Employment Policy - Business Plan B1 FAMILY COUNCIL BOARD OF DIRECTORS F1F2 B3 B5 B4 NON-FAMILY MEMBERS PRESIDENT F1 B7 B7 B6 B6 F2 M1 M2 ASPEN FAMILYBUSINESS GROUP GOVERNANCE STRUCTURE

  18. FAMILY ENTERPRISE POTENTIAL FAMILY EMPLOYEE BOUNDARY ASPEN FAMILYBUSINESS GROUP FAMILY EMPLOYMENT POLICY

  19. ASPEN FAMILYBUSINESS GROUP FAMILY EMPLOYMENT POLICY • Who can work For the business? • Preparation required - Monitoring • Entry decision process • Compensation

  20. FAMILY ENTERPRISE BOUNDARY FAMILY OWNER EMPLOYEE FAMILY NON-OWNER EMPLOYEE FAMILY OWNER FAMILY OWNER BOARD MEMBER B B B ASPEN FAMILYBUSINESS GROUP FAMILY DISTRIBUTION AND COMPENSATION POLICY

  21. ASPEN FAMILYBUSINESS GROUP DISTRIBUTION POLICY • Who Decides? • Based on “Free Cash Flow” • ”Cascading Pools of Cash” A BUSINESS PLAN: • Financial Projections - 5 Year • Migrate or Aggregate Value

  22. ASPEN FAMILYBUSINESS GROUP FAMILY COMPENSATION POLICY • Concept: “Fair Market Value” • Who Makes the Decision? • Performance Based? • How Administered?

  23. FAMILY ENTERPRISE BOUNDARY YOUNGER FAMILY MEMBERS ADULT FAMILY MEMBERS SPOUSES NON-FAMILY BOARD MEMBERS B B B ASPEN FAMILYBUSINESS GROUP BUY-SELL AGREEMENT

  24. ASPEN FAMILYBUSINESS GROUP SHAREHOLDER / BUY-SELL AGREEMENT • Anticipates and pre-negotiates areas of potential conflict • Balance financial, business and family factors • Ownership proliferation issues

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