University of Adelaide Business School Advisor Stream Panel Bruce Hatcher Richard Owens, OAM Michael Perkins Mark Voeller Facilitated by Jill Thomas University of Adelaide Business School

Ownership Family Business Three Circle Model Taguiri & Davis (1992) Ownership Family Business

How Consultants Typically Enter the Systems Family System Family Therapists Psychologists Business Management & Leadership System Business Consultants OD consultants Ownership / Governance System Estate Planners Accountants Lawyers Estate Planning This model shows where we tend to enter the system – i.e. I tend to enter in the Business management and leadership system. Larry tends to enter in the ownership/governance system. Some of you may tend to enter in the family system. As an advisor, you need to know what you know and know what you don’t know. Know when to refer to another advisor. i.e. I know enough about law to make sure my clients have updated their estate plans to reflect the succession plan we have developed, but I don’t write the documents! Unity Planning Succession Planning

The Systems Ownership Family Business Ownership / Governance System Values /Vision Legal Structure Ownership Transfer Board Family System Roles & Relationships Family Values Myths / Mores Conflict Resolution Clarity of Communication As advisors, what are the various “things” we work on in each system? Since this is a system, what happens if we only look at ONE of the circles? Ripple effect Unintended consequences SO…. What should you do if your expertise is Strategic Planning? When I work with a business on its strategic plans, I have to recognize that the strategic plan will impact other parts of the family business and other circles could impact the success of the strategic plan. Educate my clients about those impacts Bring in other team members? Business Management & Leadership System Mission & Strategy Culture of Organization Org Structure Compensation System Decision-making Process

The Core Disciplines Legal Financial Management Science Behavioral Science Every family business has an existing system, structure and process they used to do their work. By system, we mean the sum of the structures, processes and behavioral dynamics through which the work gets done. By structures, we mean the formal and informal, written and unwritten arrangements used (implicitly or explicitly) to get the work done. By processes, we mean the patterns of behavior, or the step-by-step ways, that the work is accomplished—the means to the ends. That is, decisions are made; information is gathered, organized, shared and used; responsibilities are delineated; authority is delegated; and accountability is provided. Family business consulting involves helping owners assess whether their current system, structure and process is meeting their values, needs and goals. If the current system, structure and process meet their values, needs and goals: great. If they don’t—then family business consultants help those owners (i) determine what changes are needed, (ii) develop a transition plan addressing those changes, (iii) implement the plan, and (iv) evaluate the changes. FFI identified four “core disciplines” as being central to family business consulting; that is, helping family assess and make changes to their current system, structure and process: Legal Financial Management Science Behavioural Science

Differing Perceptual Filters: The Core Disciplines Ownership Financial Management Individual Business Mgt. Family Legal. The system, structures and process used to make decisions (whether the current system or any changes made to the system) has legal implications. The legal system is societal’s way of enforcing agreements and resolving disputes if the individuals don’t agree otherwise. Financial. The system, structures and process used to make decision involves: Identifying, recording and verifying financial data (income, expenses, equity, assets, liabilities—accounting), determining how much cash is needed by the owners and business and how to invest that cash (e.g. financial planning, investment advisers), obtaining and maintaining access to cash (e.g. banking, investment capital, business brokers), and making sure cash is available in a catastrophic situation (death, natural disaster, fraud—insurance). Management Science. Family business consulting involves assessing and possibly making changes to the current system and structures used to get the work done (e.g. organizational development, communication, and planning; management development, communication and planning; etc.) Behavioural Science. Family business consulting involves assessing and possibly making changes to the current system, process and patterns of behavior, or the step-by-step ways, that the work is accomplished. Important items to note: Family businesses involves all of these disciplines in some way. Family business consulting requires assessing: which of these disciplines are involved in the work; what of those disciplines you can provide as a professional; and what of those disciplines need to be provided by someone else. Family business consulting involves helping the owners and business coordinate the disciplines needed to understand their current system, structure and process; identify what of their current arrangements work or don’t work; develop a plan to make the changes needed to accomplish the values, needs and goals of the owners and the business; and help implement the plan. Behavioral Legal

What type of knowledge base is needed for interdisciplinary consulting? Four Areas of Professional Services For Family Businesses and Enterprise Families Management Science Finance Legal Behavioral Science Awareness Technician Proficiency Level of Professionals

MODELS OF TEAMS Consulting (Interdisciplinary) Teams—a pre‐existing team that is hired by the client Collaborative (Multidisciplinary) Team—advisors from different disciplines who meet in a study group forum, get to know each other’s work, and bring one another into client situations on an as‐needed basis or in a “shadow” consulting function. Accidental—advisors who meet and connect only through the client, coordinate their efforts, only in their work with that particular client Dysfunctional—advisors unknown to one another; even if working with the same client they do so with no coordination

Session 3: Theoretical Concepts and Models The Core Disciplines Content vs. Process Consulting Interdisciplinary Consulting

How You Proceed: Distinguish Content vs. Process Expert Transactional Final reports Clients follow up on their own Shorter timeframe Curious Developing systems Outline of recommendations for discussion Consultant facilitates follow-up Longer timeframe Content1 Consulting Process Consulting Content Consulting and Process Consulting is a way to describe how a professional works with family business clients. Content Consulting tend to: Have governmental laws and rules that need to be considered. Emphasize facts, concrete goals and tangible results. Use structures, tools, and techniques to provide results for the client (estate plan, business plan, buy-sell agreement, financial plan, etc.) Process Consulting tend to: Have laws and rules of personal dynamics that need to be considered. Emphasize communication, relationships, and personal dynamics. Use the individuals involved to develop their goals and solutions. Points to make: Both styles of consulting has its place in family business consulting. And usually both have their place at the same time, which makes it hard. That is, certain laws have to be followed, the family need results, and there are limited techniques that are available to comply with the law and provide the results, and personal styles and dynamics can’t be ignored or the tools put in place will break down. Consider what style you best represent. Consider what other style might be needed to do what the owners want you to do. 1Technical

How You Proceed: Consider Multi-disciplinary Approach Finance Content consulting Accounting Insurance Process consulting Ownership Family Business Advisors Strategic Planning Legal So how do you determine what other professionals might be needed and who that other person is.? Clearly there are a lot of different type of professionals to choose from. Reference the Slide. How to answer the question of what other professional might be needed. Remember what family business consulting consists of: “helping owners assess whether their current system, structure and process is meeting their values, needs and goals, and, if not, helping those owners (i) determine what changes are needed, (ii) develop a transition plan addressing those changes, (iii) implement the plan, and (iv) evaluate the changes. So you will need to know the following about the owners and the business: How the current system, structure and process works; What about the current arrangements the owners want to keep and change; How to change the current arrangement to deliver on the changes the owners want to change and what they want to keep; What has to happen to implement any changes; How to develop a plan to implement the changes; and How to implement the plan. You also need to know the following about you and other professionals: What professional knowledge, skills and experience is needed to do the above? What of this can I do, do I want to do, and will I do? If there something is needed and I don’t provide it, where do I find it? Duration 11:45-12:00 Business Succession Industrial psychology Organizational Transformation Organizational Development