No governance intervention is ever a permanent solution.
Families and businesses are constantly evolving, and each change brings new challenges. It is typical for a family to take a moment to relax and consolidate its accomplishments after an intense Phase 1 and Phase 2 effort. But it is important to track the impact, intended and unintended, or each continuity effort, and to make necessary adjustments to fine-tune the new designs.
The fundamental difference with our work in Phase III is the weight of history and experience. LGA builds on all of the structures, policies and processes that emerged from Phase II and the focus shifts to maintenance, remodeling and redesign, as needed.
For example, some documented criteria for participation or leadership roles may be too simple, leading to too many candidates, and others may be too demanding, leading to too few. A Family Council typically takes a year or more to get started, to build routines and to begin to effectively serve the family’s needs. Building or strengthening a Board of Directors is almost always a multi-year process.
The motor of change in family companies is the passage of time.
Invariably, the generation that designed and managed the first governance system moves on and family members of the next generation gradually join the existing structure. These individuals who weren’t there at the moment of inception need to make the governance system their own. We are often called upon to facilitate the redesign of the governance system to adjust it to the needs of the new generation owners.
Similarly, the needs of the enterprise also change. Many of our clients started with single operating company that evolved into a global multi-divisional enterprise requiring new integrating governance structures such as a Holding (or a trust) and the on-going management of multiple levels of boards with varying degrees of authority. During this phase, we are often called upon to streamline a governance architecture that grew organically over years to become cumbersome and ineffective.
Finally, a leadership succession process typically takes somewhere from five to as much as ten years — if the family is proactive enough to begin early in the careers of the successor generation, and fortunate enough to not face a transition until both generations are ready.
The lead consultant or consulting team will be guided by the pacing and preferences of the client family in designing Phase 3 work. Most commonly, we will return to the Family Council annually for a number of years, typically helping to plan and facilitate the Family Assembly.
Board assessment and updates to leadership assessment usually are conducted every three to five years. Many of our client families prefer to contract with their consulting team on a retainer basis during Phase 3, guaranteeing access to their consultants for a predetermined number of days per month or per year.
And it is wise to expect the unexpected.
Families and their enterprises are subject to sudden and unanticipated challenges. The familiarity and trust that develops between the family and the advisors in Phases I and II make re-entry possible at those moments.