Melanie Stern is Section Editor of Families in Business magazine.
Evaluating one's personal approach to family business by comparing it with others is the idea behind the Family Business Network's exchange programme
While executive education is an ever more popular choice for the modern workforce, more seasoned executives know this alone cannot prevent a family business professional from making monumental mistakes, or prepare them for the complexities of business. For this reason those executives support the long-standing favourite, on the job training – but in reality, facilitating this in the family business context is a challenge that few in the field have risen to.
After noting that family businesses wanted to facilitate the preparedness of next generation management in some way but didn't know how, the FBN set up its Global Exchange Programme for Successor Development. Via temporary arrangements, family businesses can send their future leaders to one another's companies or other suitable institutions where they take up junior or trainee management positions.
The programme focuses on the 'practical emotional' side of family business: learning what is required of a successor to deal successfully with the unique issues presented within a family business, for example; or how the successor's relationship with the family can be used to take the business forward under his or her leadership.
These days, most family firms encourage management experience outside their own business before joining the fray, but it is often difficult to find adequate positions for future family managers with other families. "Family business will get, through this programme, an opportunity not only to give their members outside management experience, but also to give them experience in another family business and another culture, two factors that will contribute to a broader perspective and exchange of ideas among family businesses all over the world," the FBN says of its programme.
Finding a match
The process involves the FBN keeping a list of available positions within its members companies and another list of member companies' demands, working to match these as appropriate. Once a match is made, the two families are responsible for confirming all arrangements.
The host family is responsible for ensuring there is an adequate trainee position for the candidate that will also afford them an insight into how the family and the business runs. The CEO, meanwhile, is required to pledge his personal commitment to the programme and candidate. The firm is also asked to provide an internal coach or mentor for the duration of the exchange to serve as a sounding board and help the candidate achieve their pre-set objectives.
The exchange is open to member families across the globe whose successors have completed college or university education, but the FBN requires that both participants should agree on the management potential of the candidate beforehand. Once this is done, the candidate sets out his personal learning goals and the purpose of attending the exchange on behalf of his family firm.
One prerequisite is that the candidate chooses a firm that is not in the same business as that of his own family; "This is to foster a broader perspective and not let technical learning aspects become too important in relation to personal growth and development," says the FBN. "The programme aims to prepare candidates especially for the challenges of leading a family business, not only to improve specialised skills."
Practising family business practice
Martin and sister Sofia of Finland's Wallberg family, that owns Swedish international paper and pulp chemicals firm BIM Kemi AB, have both participated in the programme and report that the chance to work outside of their own family helped them to see how to enact positive changes within their own. Currently, Martin is the chairman of the Wallberg's family council and sits on the boards of several BIM Kemi local operations, while Sofia is seeking work outside the family business but is active in BIM Kemi through the family council.
In 1997 after completing time in the Navy, Martin was advised by Joachim Schwass (then executive director of the FBN and present director of IMD Lombard Odier Darier Hentsch & Cie Family Business Center) to take up the FBN exchange by spending some time at the Family Business Center at Chicago's Loyola University, to improve his English and learn more about the field. At the time Martin was a student on John Ward's "Leading the family business" course at IMD with his father and had been learning how to develop an integrated business strategy for his family there.
Martin spent a period of a few months at Loyola working organising their library, and making it publicly accessible through Loyola's website, as well as researching family business. In a conversation with Loyola's director Drew Mendoza one day, it was discussed that Drew didn't recommend an entrepreneur run the family council; along with avoiding business conflicts and being an inactive shareholder, Martin's interest in this subject formed the key learning remit he set for his exchange.
On his return Martin immediately put his experience into practice by setting up the Wallberg's first family council – the family had tried once before with Martin's father at the helm, but according to Martin, "it didn't work out because (my father) used to run it more like his management meetings" – and decided on ten rules the council should follow. "We've got a good working spirit in our council – we've produced written visions for our companies and family policies, which include rules for family members, a family history, how we can work together as a family and our demands for return on equity," Martin says. "We also worked out a process to select competent external board members and review their performance annually."
Martin explains how the FBN's offering fits well with his family's own ideas for successor preparedness. "In our family business we decided that if you want to take a leading position in the company, you have to get outside experience – if you want to be the MD you have to work as an MD elsewhere first," the Wallbergs concede. "A Wallberg family tradition has always been 'learning by doing it'," Sofia adds, "so I wanted so follow that tradition as it suits me quite well."
Martin says his experience held him in excellent stead. "I learned that an effective family council would lead to a stronger family and a stronger business, so that we could plan for the future ownership of the business, preserve family values, tradition and history. It is also a way to 'professionalise' the business and to recognise and resolve family conflicts before they occur."
Sofia spent time at Loyola in 2002, working alongside Andrew Keyt and visiting several family businesses, researching women in family business, in-laws and the next generation. She presented her findings on the latter to her family council in January. Both Sofia and Martin agree that as well as learning these important issues, they also developed a lasting network of contacts in the family business arena and feel they are now able to have more and better input into their family business while they both pursue other interests. With a longer term view, perhaps they have had a valuable chance to set up internal controls the way they think it should be when, or if, they join the business at leadership level in the future.