In the next two-part series of blog posts, we’ll be sharing a conversation with one of BCR’s
senior consultants and partners, Laurie Foster. Laurie earned her BA in Economics and MBA
from Stanford University and then launched a 15-year consulting career on the East Coast with
Bain & Company and Mercer Management Consulting.
At BCR, Laurie works with Hawaii CEOs and senior management teams in leadership and governance, strategic planning, and organizational effectiveness all with an emphasis on implementation and change management.
She leads BCR‘s Family Business Consulting practice and has had extensive experience
consulting and working with family businesses in Hawaii. In addition to her BCR work with
families, Laurie grew up in a family business and understands firsthand the challenges and opportunities.
In this interview, we talk with Laurie about her experience in consulting with family businesses and how engagements with family businesses work, and what families can do if they are interested in succession.
BCR: What do you do at BCR with respect to Family businesses?
Laurie Foster: Our mission is to achieve the succession goals of families and to make the transitions smoother than what it might be otherwise. The succession path can be quite bumpy and we try to make it less bumpy and if possible, accelerate the process.
The first step is to clarify the succession goals which may include achieving wealth, making a fast transition, ensuring a long-lasting family legacy, ensuring the employees are protected and/or defining a fulfilling life after succession. Once the goals are established, the path to getting there is defined.
Families explore options such as a family member transition, an internal non-family transition, recruiting a new leader, or selling the business. We encourage families to pursue two options seriously because any one option might fall through. Another option allows for the family not to start from scratch if that happens.
BCR: How did you get interested in working with family businesses?
Foster: I specialized in quality management and re-engineering on the East coast, which was a hot topic for many years. Once I got to BCR I realized that family businesses and succession were a niche that was fast emerging and was not well served. It was also an area that was much more difficult/murky in my view than many more common business issues I had experience with. Working with families was more challenging and I knew early on it was an area that I wanted to tackle.
BCR: Does succession come up from the beginning or is that something you suggest and push the family towards?
Foster: Ten to fifteen years ago, we would have to initiate the discussion regarding succession
with families. Typically, the generation in control did not want to address it and often pushed it
aside as something they would deal with internally. The more we discussed family dynamics
and succession with families, it became clear that an outside advisor with experience would be
very helpful, especially in preserving the family relationships.
Fast forward, today people call us for help in family business transitions. With baby boomers retiring and next-generation Gen X and Z emerging often with more aggressive styles, the need for outside assistance is welcome. People now understand the difficulty of succession and the very negative impact if succession fails. Families appreciate the structure that we provide and how we are able to walk businesses and families down the succession path.
Once we set expectations and understand the landscape then we figure out the starting plan and understand that we’ll be modifying the plan as we go. We always come back to the plan if it changes and use the main framework as a working model going forward. The family is always dealing with strife and we have to bring them back to the structure they have.
BCR: Once a family commits to succession advisory work, what is the typical path you take toward succession?
Foster: I have to laugh when you say “typical” because there is no such thing in family business consulting. Having said that, we always start with what we call a “diagnostic” of the family and the business to get a strong sense of the players and the business environment that they are operating in.
This first step is critical in understanding the people dynamics, personalities, goals, and company operations to determine the most effective approach going forward. That process can take 2-3 months, which is sometimes hard for clients to understand as many want results fast. We have to explain that often they’ve spent 20, 30, or 40 years building an ecosystem and that we’re going to need time to craft an approach to transitioning it for the future.
Once the succession end game is established, we often address several main areas. Development of the successors is common, which may include leadership development, skills enhancement, gaining greater knowledge of the business, and more. We also often focus on strategic planning for the business. The business strategy dictates what skills are needed by the leadership team. If younger family members are involved, it is great to get them engaged in the future direction of the business. Typically, mom or dad are in charge of that and now we are asking their opinions!
We also often get involved in estate planning for the older generation. This may include the transfer of business ownership and/or other aspects of a larger family estate. Tackling operational issues may include institutionalizing greater structure and accountability, which older-generation family businesses are typically not the best at. The incoming generation usually wants this structure but it takes time to get the older generation to embrace this.
A common denominator for all of this work is addressing family dynamics. We help the family run the business as a business yet the familial relationship is often intertwined. Separating family and business is hard for everyone involved including the non-family employees. There are a variety of individual and team dynamics tools that we use to work on building strong functional dynamics.
Business Consulting Resources has been championing successful transformations for 40 years and providing a comprehensive portfolio of consulting service solutions to help you solve complex problems. Reach out and let’s talk!
