Differentiation and Developing Critical Boundaries in the Family Enterprise Presented by David Bork Leslie Dashew Sam Lane THE ASPEN FAMILY BUSINESS GROUP.

Differentiation and Developing Critical

Boundaries in the Family Enterprise Presented by

David Bork

Leslie Dashew

Sam LaneTHE ASPEN FAMILY BUSINESS GROUP

Family Firm Institute 20th Annual Conference

INTRODUCTION

•     INTRODUCTION AND PHILOSOPHICAL

PERSPECTIVE

DAVID BORK

BOUNDARIES AND DIFFERENTIATION

•    CONCEPTS AND

APPLICATION

LESLIE DASHEW

Boundaries and Family Business

• Intrapersonal Boundaries

• Interpersonal Boundaries

• Subsystem Boundaries

• Boundaries Between Systems

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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!”

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Permeability Of Boundaries

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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….

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Family Triangles

Communication should happen directly between individuals, not through others.

Me

SisterBrother

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Family Business RolesBoundaries Between Roles

OwnershipFamily

Business

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Overlapping System

Family (sub) System1. Emotion-focused2. Inward oriented3. Minimizes change4. Unconditional acceptance

Tasks:NurtureDevelop self-esteemGrow adults

Business (Sub) System1. Rational-focused2. Outward oriented3. Requires change4. Conditional acceptance

TasksGenerate profitsDevelop skills

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Boundaries Within The Family

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Boundary: Family vs. Community

• Privacy within the family

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Managing Boundaries

• Border Guards

• Passports

• International Treaties

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TOOLS TO MANAGE BOUNDARIES

SAM LANE

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”.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

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PRESIDENTF1

F2 M2M1

BOARD OF DIRECTORSF1 F2

SHAREHOLDERSF1 - B2 - F2 - B2 -

F3

NON-FAMILYMEMBERS

FAMILYCOUNCIL

B1

B5

B3

B7

B4

B6

B6

B7

BOUNDARIESB1 - Shareholders Position Paper - Distribution PolicyB2 - Buy-Sell AgreementB3 - Board Membership Criteria - Family Mission StatementB4 - Business Plan - Succession Plan - Family Employment PolicyB5 - Family Council CriteriaB6 - Employment AgreementB7 - Employment Policy - Business Plan

GOVERNANCE STRUCTURE

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FAMILY EMPLOYMENT POLICY

FAMILY ENTERPRISE

POTENTIALFAMILY EMPLOYEE

BOUNDARY

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FAMILY EMPLOYMENT POLICY

• Who can work For the business?

• Preparation required - Monitoring

• Entry decision process

• Compensation

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FAMILY DISTRIBUTION AND COMPENSATION POLICY

FAMILY ENTERPRISE

FAMILY OWNER

EMPLOYEE

FAMILY OWNERBOARD

MEMBER

FAMILY OWNER

BOUNDARY

FAMILY NON-OWNEREMPLOYEE

BBB

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DISTRIBUTION POLICY

•Who Decides?

•Based on “Free Cash Flow”

– ”Cascading Pools of Cash”

A BUSINESS PLAN:

•Financial Projections - 5 Year

•Migrate or Aggregate Value

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FAMILY COMPENSATION POLICY

• Concept: “Fair Market Value”

• Who Makes the Decision?

• Performance Based?

• How Administered?

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BUY-SELL AGREEMENT

FAMILY ENTERPRISE

ADULT FAMILY

MEMBERS

NON-FAMILY BOARD

MEMBERSSPOUSES

BOUNDARY

YOUNGERFAMILY

MEMBERS B B B

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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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