The Importance of Family Businesses in America

Family businesses are the most influential factor in the health of the U.S. economy and they are the ONLY solution to our difficult economic times.

This statement might surprise many people but consider the statistics. According to Family Business Review Magazine family businesses comprise 80% of all business enterprises in North America. They account for 60% of total U.S. employment, 78% of all new jobs, 65% of wages paid  and 34% of these companies are listed on the Standard & Poor’s 500 Index. With those stats as a backdrop, it’s not surprising that nearly 40% of family businesses in America will be passing the reigns to the next generation over the next five years according to Business Week Magazine (August 11, 2003).

Yet the most incredible statistic by far was the one postulated by Robert Avery at Cornell University in his paper, “The Ten Trillion Dollar Question: A Philanthropic Gameplan.” Avery noted that by 2050, virtually all closely held and family owned businesses will lose their primary owner to death or retirement. Approximately $10.4 trillion of net worth will be transferred by the year 2040, with $4.8 trillion in the next 20 years.

The plain fact is that family businesses are in trouble because succession plans are quite obviously less and less effective. This is primarily due to what I call the “motive gap” between generations. According to an article appearing in the Boston Globe, only 40% of family owned businesses survive to the second generation, 12% to the third, and 3% to the fourth. It s also a known fact that these companies are most successful when run by a family member. Family members have the passion, drive and purest motives to run the company in a way consistent with the founding member. While some of these companies will be successfully sold to those outside the family, these statistics represent a disturbing trend and concern for the future of family businesses and the American economy in general!

It doesn’t take a genius to figure out that the root of this problem, simply said, is that sons and daughters are not interested in taking over the family business. Now this may well be attributable to other interests and passions. Certainly this is understandable but it does beg the question of WHY they may not interested or excited about learning the ropes and assuming the reigns? I can tell you that after personally working with thousands of family businesses and in may cases counseling numerous reluctant second or third generation leaders this stems from significant generational differences. These differences can easily be reconciled but often both parties (parents as well as sons and daughters) seem to be completely oblivious as to the differences. The result of generational differences are often mistaken as ineffective work habits, personality flaws or other personal characteristic or attributes. Yet more often than not simply becoming aware of the differences in generational decision making, communication and leadership styles can resolve conflict and restore trust and continued harmony in the business.

This allows the business to thrive even in difficult circumstances.

Mission Clueless

Merely hanging your mission
statement in the lobby or putting it on the back of business cards will not
ensure that your people are “living it.”  Simply doing this demonstrates that leaders
are clueless to the real mission – “making believers of their people!”  Certainly articulating the company’s mission
and specific goals is important but it is even more critical to incite genuine
belief, a deep faith and a burning desire among your team to live-out those
plans on a daily basis. This cannot be accomplished with mere words. It must be
demonstrated by the leaders in the firm with shoulder-to-shoulder unity. When
team members experience this they will then believe that the mission is real…
that the leaders themselves are living this out even under difficult
circumstances.  Don’t be clueless; make
your company’s mission-possible! Providing your people with the skills they
need is the only way to achieve your vision.

Storytelling

Let me ask you a question. Where do you find inspiration from? Movies, music, books, magazines, seminars, friends, family, co-workers? – Maybe from all of those places.

Let’s face it inspiration comes from stories that we hear from other people tell. How they beat the odds, achieved growth, or found a better way, it’s all in the story.

You know storytelling has been around for hundreds of years. From the beginning of time, storytelling has been the means by which cultures and societies have preserved and celebrated their memories, passed on their values and belief systems, entertained, instructed and reported. Long before there were written records, storytellers taught through the oral tradition. It was true in the bush, it’s true in the boardroom and it’s true everywhere in between.

In fact I think true leadership is the effective communication of the story. Our American culture seems to underestimate the power of storytelling. But think about how powerful a story can be when you’re in front of a client. Tom Peters says, stories are the red meat that meets our reasoning process. Stories give us permission to act, they are photographs of who we aspire to be, and they cause the most emotional responses. Stories are how we connect with people.

Falling Asleep on the Job

Achieving
organizational behavioral change must occur first with leaders. Employees
are very good at picking-up signals from management. They observe much more
closely how leaders ACT versus what they SAY. When there is conflict between
these two behaviors, team members are hesitant to change their own behaviors.
But when there is alignment, leaders are credible and win followers. This
behavior is less inborn than learned. When effectively leveraged it produces
engagement, accountability and a passion among team members. In short it changes
behaviors.  Winning
accountable behavior requires authentic role modeling. This means leaders must
learn how to embrace change. When they do the magic begins to happen!

Typical Training is for Pets

Training
our people to be more compliant and follow policies and procedures just doesn’t
work. They often politely listen and tell us precisely what we want to hear yet
fail to make significant, sustainable change. When self-driven behaviors are
adopted team members perform with greater passion and engagement. They make
better decisions and create more consistent results. Don’t  train your
people like they’re pets. They need practical and relevant solutions to today’s
difficult business challenges.



Mark Hobnobs with Congressional Candidate

Here I am with Bill Bloomfeild who is running for Congress in the 72nd District. I know Bill from our long association with Wash Laundry Service here in El Segundo. What I like about Bill is he is an independent and doesn’t talk bad about the Rpublicans or Democrats. In fact his whole platform is finding a way to bridge the rediculous partisan gap with just common sense and a little hard work. Check him out at www.bloomfeildforcongress.com

Managing Change from the Front Lines

“Three of the Top Workplace
Stressors”

“A true leader has the
confidence to influence change, the courage to make tough decisions, and the
compassion to listen to the needs of others. He does not set out to be a
leader, but becomes one by the equality of his actions and the integrity of his
intent.” – General Douglas MacArthur

The most powerful form of influence we can exert as leaders is… “the ability to
influence change.” Yet when change is produced it creates emotions and fears
among the members of the organization.

Change is stressful. But stress is a stimulus that can be positive or negative.
Studies have shown that stress in the workplace most commonly occurs in one of
three situations:

1. When there is a high demand placed on employees

 2. When employees are being closely watched

 3. When employees are concerned about their competence or value

As leaders it is our job to quell those fears. When we operate in the
management role we must balance our passion, execution and sensitivity. It is
good to be passionate about where we are taking our organization. But even more
important is translating this belief into action. Taking part in the execution
process makes a big statement to your team. The best generals have led their
troops into battle at the FRONT of the lines. You won’t win cooperation by
calling the plays from the sidelines. This will create resentment and reduce
morale. Finally be sensitive to the emotional and behavioral issues involved in
change. Get in touch with how the change is affecting each of the critical
members of your organization.



In order to truly put these precepts into practice, we need to understand
the way change works. Jeanie Daniel Duck in her book, “The Change
Monster,” points-out the stages of organizational change and how this
impacts the people in companies.

 The stages of change are as follows:

1. Stagnation

2. Preparation
3. Implementation
4. Determination
5. Fruition

Stage 1: Stagnation
This first phase can be summed up in two words: demoralization and
denial. A demoralized company exhibits the same symptoms as a depressed person:
general slowness, difficulty in making decisions, and a lack of motivation.
Stagnation can be caused by poor communication, lack of leadership, murky
strategy, too few resources, conflicting goals or poor execution. Before you
can implement a sound strategy, however, you have to modify the culture of the
company – its beliefs, attitudes and habits. In most cases these are the
elements hindering growth. To burst free of stagnation, you need to ask
yourself: “What outdated beliefs and behaviors are preventing us from
conceiving or executing a winning strategy?”

Stage 2: Preparation
During this stage, many operational issues are addressed. This
often results in a new structure for the organization, new employee roles. New
responsibilities are designed, and management determines which products or services
will be most critical in the future. The goal in this stage is to align and
energize our management team around a corporate strategy and vision. As leaders
we must all consistently articulate the SAME vision. In other words, we all
need to be on the same page as to where we’re going and how we plan on getting
there. Only then will it be clearly understood and executed by others. We also
need to be careful of becoming too dictatorial with our precepts. The goal is
to develop a group thinking about change. This can’t happen if the leader isn’t
open to hearing criticism of his or her ideas.

Stage 3: Implementation
Implementation is different in every organization. Leaders are
responsible during the implementation phase for managing expectations, energy and
experience. Asking people to change can create resentment, embarrassment and
tension. Here are some ideas to reduce the barriers to change among team
members:

Test before deployment – If a new process is being implemented, try it in one
department or with one product or service group before rolling it out.

Build behavior first – Focus on a SINGLE OBJECTIVE and ask the
employees for input. This allows us to empower our team by letting them SHOW
YOU how they can come up with the solution. Create your own little focus groups if necessary for green-light
thinking.

 Plan replication – Duplicate your successes. Transferring change
from person to person takes time. Let change spread rather than forcing it on
your team.

Stage 4: Determination

Because change does take time, many of the former champions of
change may have developed second thoughts. At this time it is not unusual to
see conflicts arise as a result of change. Often service levels drop, sales
falter, production problems deepen, and profitability wavers. It is critical
that leaders have the determination to see change through. We can be tempted to
throw up our hands and say, “That’s it! We’re going back to the way it
was. Nobody is doing what we told them to do!” Don’t mistake your own
perceptions for reality. People are finding a new way to accomplish their
goals. One that is more dependent on their efforts rather than their leaders
support. Conflict is not necessarily bad. It produces change, a reorganization
of priorities and self-sufficiency. Conflict must be facilitated in a
constructive way.

Stage 5: Fruition
No change is easy. But achieving long-sought-after goals is
rewarding. Once a targeted goal is reached, success often begets success. This
is the time to reward people for their success. Reward in public and punish in
private. The great Dale Carnegie said, “Praise the slightest improvement
and praise every improvement. Be hearty in your approbation and lavish in your
praise.”

Understanding the stages of change will afford leaders the ability
to assist their employee in dealing with the stress that change produces. As
effective leaders we must foster behaviors which are consistent with the
company’s values and objectives. Doing this in an organization experiencing
significant change is an audacious

Dale Carnegie customized corporate solutions provides all of the tools that
leaders need to deal with change in organizations. These include behavioral and
work competency assessments, strategic planning and succession planning systems
and leadership and employee engagement programs.

Give us a call to discover how you might be able to deal with
change more effectively.

 

The Importance of Family Businesses in America

Family businesses are the most influential factor in the health of the U.S. economy and they are the ONLY solution to our difficult economic times.

This statement might surprise many people but consider the statistics. According to Family Business Review Magazine (Summer 1996) family businesses comprise 80% of all business enterprises in North America. They account for 60% of total U.S. employment, 78% of all new jobs, 65% of wages paid (Financial Planning Magazine, Nov 1999) and 34% of these companies are listed on the Standard & Poor’s 500 Index. With those stats as a backdrop, it’s not surprising that nearly 40% of family businesses in America will be passing the reigns to the next generation over the next five years according to Business Week Magazine (August 11, 2003).
Yet the most incredible statistic by far was the one postulated by Robert Avery at Cornell University in his paper, “The Ten Trillion Dollar Question: A Philanthropic Gameplan.” Avery noted that by 2050, virtually all closely held and family owned businesses will lose their primary owner to death or retirement. Approximately $10.4 trillion of net worth will be transferred by the year 2040, with $4.8 trillion in the next 20 years.

The plain fact is that family businesses are in trouble because succession plans are quite obviously less and less effective. This is primarily due to what I call the “motive gap” between generations. According to an article appearing in the Boston Globe on May 4, 2003, only 40% of family owned businesses survive to the second generation, 12% to the third, and 3% to the fourth. It s also a known fact that these companies are most successful when run by a family member. Family members have the passion, drive and purest motives to run the company in a way consistent with the founding member. While some of these companies will be successfully sold to those outside the family, these statistics represent a disturbing trend and concern for the future of family businesses and the American economy in general!

Leadership Isn’t for Cowards

Just wanted to make everyone ware of a great book… “It’s Not MY Fault!” Seven Ways Leaders Can Unearth (and Neutralize) the Fear That Lurks Behind the Blame Game by Mike Staver.
Many organizations are plagued by fingerpointing and responsibility dodging and this is poisoning their culture. The book explains that fear-based leadership lurks at the heart of the blame game. It outlines what leaders can do to overcome their own fears and find their courage—and help their followers do the same.
Removing fear and establishing a take-responsibility culture begins with leaders. Once you have let followers know that you are on their side and want them to win—while establishing that you won’t settle for anything less than the highest degree of execution and performance—they’ll begin to adopt your fearless attitude.
“Acknowledging that you are ultimately responsible for the results of your life, thoughts, and actions creates a level of freedom not experienced by those who choose to blame others,” he adds. “It empowers you to act. Courageous leaders are driven by, even obsessed with, the imperative to eliminate excuse making and blame from themselves and their organizations.”

Finding the Singularities

Here’s a pretty cool event…How do singularities change your personal life? What unimaginable products and services will be offered by companies of the future? How about transporting matter or synthetic biology in constructing an “internet of living things” – life made from data and parts.  Holy cow buckle! Check out this presentation by Metal – http://metal.pingg.com/Singularities