Let’s suppose you have a client–we’ll call him Robert. He started a family business, and he’s about to hand it on to the next gen. What if he could know that his company would last 100 years?
Of course, you can’t assure Robert that this will happen. What you can do is share with him some of the research that can help him improve his odds. This information comes from Dennis Jaffe’s upcoming book, Borrowed from Your Grandchildren, Evolution of 100 Year Family Enterprises.
This book won’t be available until the middle of 2020, but the good news is, you can find several of the working papers on Amazon if you search on Dennis T. Jaffe, Ph.D. It’s worth doing this because Jaffe has been studying family businesses for 40 years, and he’s one of the world’s leading family business theoreticians.
When writing Borrowed from Your Grandchildren, Jaffe studied 102 family businesses that have lasted 100 years or more. His approach involved interviewing at least two generations of each of these family businesses. Here are some of the things he’s learned that could benefit your clients.
Long-Lasting Family Businesses Are Stewards
Family businesses that endure across the generations are financially successful, but they also have a sense of responsibility to future generations. They’re intentional about educating family members on family history, family stories and the importance of the family business.
According to Jaffe, you might encourage your client to do all of the following to help embed a culture that lasts:
- Books and Videos on the Family’s History
- Ethical Wills
- Family Archives
- Family Mission Statement
- Family Newsletters
- Family Newsletters for Children
- Family Vacations That Include all Branches
- Internships in the Family Business
- Joint Philanthropy
- Holidays Together
- Traditions That Celebrate the Family and the Family’s History
Philanthropy Is Universally a Factor
A distinguishing aspect of long-lasting families is that they’re universally involved with philanthropy. By the second or third generation, family members start asking each other, “What is all this wealth for?”
They find that giving back is increasingly important to them, and they want to be more than just consumers of wealth. Instead, they want to make a positive difference in the world.
Being philanthropic is good for society, but it’s also bonding for the family. It strengthens the family’s sense of identity because it helps them know, “This is who we are! This is what we believe in!” Members from all generations can be a part of this.
According to Jaffe, encouraging your clients to be philanthropic can be a major way of helping the family last.
Participate Outside the Family Business
Working in the business in a leadership slot demands a fairly high level of skill, and the people filling those jobs need to be able to add value to these roles. For this reason, by the time a family has been in business 100 years, Jaffe finds that only about 12% to 15% of these family businesses will have family members still working in the business. Additionally, only about half of the centenary families Jaffe studied are still associated with the founder’s core business. The family has branched out into other businesses, often ones that have very little connection with the original patriarch’s core business.
The family members may not be working in the family business, but even so, they are apt to remain involved with it. They may serve on the company’s board of directors or on a family council that interfaces between the family and the board.
They’re apt to be deeply immersed in the family’s philanthropy or serve on the family council or help plan family vacations, retreats, holidays and educational activities.
In the case of your client, encourage a robust program for having family members participate in nonbusiness family activities.
In the case of our imaginary client, Robert, no one can know whether his company will last 100 years. In fact, the odds of an individual company’s lasting that long are on the order of one in 1,000. (That figure comes from Jaffe, and he stipulates that it’s only an estimate because the exact figure doesn’t exist.)
Still, if you encourage Robert to follow the practices of the long-lasting family businesses that Jaffe has studied, his legacy could continue for generations.
Mitzi Perdue is a professional public speaker and author of the book, How to Make Your Family Business Last. Contact her at [email protected]. Contact Dennis Jaffe at: [email protected] or visit his website at http://dennisjaffe.com.
