We often hear, “It takes a village to raise a child.” Similarly, for extended business families, it takes the whole family to raise an employee. The commitment of the stakeholder group is needed to ensure that family members have the knowledge required to serve not only as employees and managers of the business, but also as responsible owners and capable board members.
Passing the business to the next generation is one of the leading challenges facing family businesses. We humans can love only what we know. Research has shown that through active family education, heirs can gain the attributes required to understand the business, its culture and the keys to success. The importance of family education is clear: Having knowledgeable family members who are willing and able to participate as employees, as well as responsible owners and board members, contributes to business sustainability through the generations.
For those not trained in education, building an educational program might seem daunting. The temptation is to look at outcome needs and stab at solutions in a “whack-a-mole” sort of way. However, there is a logical way to proceed in establishing a functional program that includes all family members, from the youngest to the eldest. Including the youngest is important because the earlier you capture their hearts, the better. Moreover, an educational program provides fun family interactions that tighten the bonds within the family enterprise.
Here are my suggestions for designing a family education program. They are based on my experiences as an educator (41 years as a junior high and high school teacher) and as a member of the Eddy family, which has owned and operated Port Blakely Companies, a forestry and land development business, since 1903.
Where to begin
The first step in building a family curriculum is to identify five or six family members from the adult generations to form a task force. If the family is small, this group might include all or most of the adults. If the family is large like ours, the education committee of the family council is a good place to start. (If your family council does not have an education committee, this is a good time to form one.) Otherwise, ask for volunteers and include a cross-section of generations. If the family has any teachers willing to serve, snag them; you will find their contributions invaluable.
The second step is developing a Philosophy Statement and a Mission Statement. Ask yourselves: “Why is educating the family important to us?” The shared answers can be merged into the Philosophy Statement. For example, our Philosophy Statement reads:
We believe education of the family is important:
• to heighten interest and pride in the history and values of the family,
• to heighten interest and pride in the heritage of the business,
• to enhance the ownership skills of family members,
• to provide understanding of the values and principles of the business, and
• to keep ourselves educated about the business as it evolves.
The Mission Statement flows from the Philosophy Statement and should be short and concise. Ours reads: “The mission of the education committee is to provide a curriculum to educate the family about its heritage and the business.”
The last step is to bring the mission to fruition. Identify three or four major fields of knowledge and under these strands develop specific topics, each one a nugget of knowledge that can be shared through your various experiential and educational activities. Since our mission focused on both business and family, and our business is real estate and forestry, we developed four major curriculum strands: family, forestry, real estate and business finance/wealth management.
Implementing the curriculum can be challenging when families are spread across the globe. We do our educational activities during our annual meetings, which are held on a summer weekend to maximize the ability for families to participate. We discovered it is better to address forestry, real estate and finance on a three-year cycle. The family topics are presented every year. Over the past decade we have found this pattern to work well.
Fun, interactive activities for all
Trying to find activities and tools that entertain and educate as well as satisfy the needs of all ages can be a challenge. Your education program must be aligned with the specific needs of your family, but here I will share some thoughts and lessons learned from my family and others I have encountered.
Our family separated the content areas by age groups: 5 to 14 years old, 15 through 17, and 18 and above. After some strategic planning, we also found we needed to plan a program for what I call “the lost generation”: those adults from 25 to 40 years of age who had not attended many annual meetings when they were growing up because of other commitments. Their knowledge of the business was scanty, and their sense of family was confined to closer relatives. We needed to focus on this group, at least for a while.
We affectionately dubbed our youngest group “Eddy Academy.” We made T-shirts for them and developed camp-like activities centered on the year's theme. They do not attend the business meetings, but rather are given their own schedule. One smaller business family I know has set aside a separate time, disconnected from their annual meeting, for their youngest generation. They gather for an annual tour of the family's forests and a family picnic so that, in the words of the CEO, the youngsters “can smell the forests.” Who teaches this generation may also vary. In the early years we had family council members, some of whom are teachers, rotate as Eddy Academy leaders throughout the day. The problem was that the leaders had to miss the adult meetings. With a growing number in the young age group, we recently hired a consultant team to provide educational activities for our children. Other families have also found such consultants quite helpful.
For those of high school age we have a mentorship program. Our annual meetings begin with a “graduation” for those who have turned 15 during the year. Each graduate is called forward, formally introduced to his or her adult family mentor, and given a plaque. The high schoolers sit in the adult meetings alongside their mentor, who is encouraged to contact the protégé throughout the year.
Those of college age have a more formal internship program overseen by our Human Resources department. It has been so popular that our family council is currently setting up one- or two-week internships for all of the adults in the family who wish to participate. Such activities provide lengthier exposure to the working end of the business while also providing strong work experience. To provide leadership training, a position on the family council is encouraged. Some families also have their high school or college-age members serve as interns on their foundation boards. With guidance, these young family members learn firsthand about the family values, meeting protocols and wealth management strategies.
Education programs continue through all stages of adulthood. In the early years of our family council, we kept hearing that many of the adults did not understand the annual report or how to read the quarterly reports. To address this problem, the company produced our educational booklet, A Guide to Reading Port Blakely's Annual Report. This educational tool, written by the company CFO and the managers of each division, explains how our enterprise is managed under the influence of our family values. More important, it also clarifies the financial jargon used in business reports by detailing line by line what the various components of an annual report mean. When deemed necessary by the family council, we also hold midyear investor briefings focused on a wealth management topic.
Business educational activities
Finding activities under the business strand for all ages should not be too difficult. Tours of operations are always fun, and they enable employees to put faces to the family owners. Hands-on creative activities are also beneficial. Brainstorm how the family can engage each of the five senses in getting to know and feel the business.
To address the many topics under our forestry and real estate strands, we have tours of our operations with integrated fun-filled, hands-on activities. Usually Eddy Academy shares these tours with the adults. For example, one year there was a family tour of our shipping yard. Oversized trucks, sorters and loaders demonstrated their work, and there was a mini-loader for the children to climb into and work. Everyone moved from station to station as they learned different aspects of the log shipping industry. The Eddy Academy day culminated with a four-hour private tour of the Portland World Forestry Center and a chance to enjoy its interactive activities. Later that evening, with the adults in attendance, one of the family ancestors was inducted into the Forestry Hall of Fame.
Recently during a real estate themed year, a tour of one of our developments coincided with the village's annual family-day celebration. Eddy Academy helped with some of the village's activities while the adults toured the new hospital building site and the YWCA complex. Afterward everyone enjoyed a picnic in one of the development's parks.
These activities bring the business to life for all ages far more than annual reports do!
Wealth management/Business finance activities
This knowledge strand is one in which outside financial advisers, accountants and lawyers can provide expert input if a family does not have a family office. Our family draws from the accounting and law firms that have handled our business for more than 100 years. One year when we were focusing on this strand, we separated the adults into two age groups: 15-40, and 40 and up. We had workshops tailored to each group addressing topics that included financing a college education, how to buy a house, trusts and trust management, and the importance of wills.
For the younger set, the question arises: How does one teach business finance to those ranging in age from 3 to 14? To answer this question, we borrowed heavily from the Junior Achievement idea of creating your own company. The first year, Eddy Academy became a refrigerator magnet production company. Another year they built birdhouses, and last year they painted canvas bags.
Before the annual gathering, the four oldest members of Eddy Academy are deemed CEO, CFO, COO and HRO. During their meeting time, the four adolescent officers guide a discussion, lead a vote for their company name and divide up the younger children into production and sales teams. Under the watchful eyes of the company officers (and adult supervisors), production occurs. That evening, the young company officers oversee their teams as they either sell or auction off their wares. The next morning, Eddy Academy meets to count their earnings, figure out their profit and choose the charity that will receive it. They then prepare a presentation to their stakeholders (the adults of the family).
Through this process they have learned that foreign currency exchange matters (we have New Zealanders and Canadians in attendance), what retained earnings are, that profit equals earnings minus costs, and that philanthropy is a family value. This idea has proved so successful that it gets repeated every finance year. We are already seeing fruit from this approach. The company's vice president of human resources remarked, “I am always looking for qualified family members to entice into the business. I can see that in the not too distant future it will be a much easier task.”
Getting to know family
Gathering family members and sharing eyeball-to-eyeball on a regular basis is important, but including some fun and entertaining activities can deepen the relationships. Family members have special talents, and those need to shine forth! For example, the very large Laird Norton family produces Norton University every few years. During this time, family members give workshops and presentations on their unique abilities and careers. In our family, every few years the family council chooses three individuals to be featured in five-minute videos shown before the family dinner.
Another family holds what they have termed their “Coming of Age” Ceremony to teach family values to next-generation members. Those turning 16 choose one family value and meet with a family elder to discuss it. They write a speech. That evening the family gathers in formal attire. The 16-year-olds are picked up in a limousine and whisked off to the designated restaurant. As they are escorted to their table, the gathered adults cheer. After dinner the speeches are read to loud acclaim.
As the family grows into the third, fourth and fifth generation, it becomes a challenge to know each person and how each individual family member fits into the family tree. To help with this problem, the early members of our family council produced a family tree placemat for the annual dinner. The following year, Eddy Academy transformed the mat into a 120-foot-long family tree with a square for each member to stand on. It was great for all members to look around and visualize where they fit on the tree.
Creating a community
For a family business, building community is the core of sustainability. Getting to know one another through fun-filled educational activities provides the bonds for that community. A family knowledgeable about each other and about its business will have its succession concerns eased. Through all of our interactions we have come to know and more deeply appreciate our business and each other. Branch lines and generational divisions have dissolved and family members are bonded through common experience and interests. We are far more united with one another and with our employees. Educating the family has provided the vested interest we need to keep succeeding. We look forward to our annual meetings and seeing those who are not only our relatives or employees, but also our friends.
Charlotte E. Lamp, Ph.D., is a member of the Eddy family, a fifth-generation business family that has owned Port Blakely Companies, a forestry and land development enterprise, since 1903. She served on the family council for six years, five of them as the education coordinator. She was a junior high and high school teacher for 41 years. She holds a master's degree in Administration, Curriculum and Instruction and a Ph.D. in Leadership Studies with a focus on family governance.
Copyright 2012 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.
Eddy Family Education Curriculum Topics
I. KNOWLEDGE STRANGS:
• Eddy Family
• Forestry
• Real Estate
• Business Finance and Wealth Management
II. TOPICS:
Eddy Family
• Vision and Values
• History
• Legacy
• Innovation and Success
• Branches
• Who's Who?
• Who's You?
Forestry
• Structure of the Forest: Living elements and non-living elements
• Biology of a Tree
• Resources from Trees
• Flora and Fauna of the Forest
• Caring for Forests — Stewardship
• Trust Set-Asides
• Conservation Easements
• Migration of Environmental Impacts
• Territorial and Aquatic Exceptions
• America vs. New Zealand
• Planting and Silviculture
• Harvesting
• Marketing
• International Trade
Real Estate
• Building a Community
• Mitigation of Environmental Impacts
• Green Building
• Structural Components
• Land Management
• Stewardship
• Vertical vs. Horizontal
• Marketing
Business Finance and Wealth Management
• Financial Terms
• How to Read a Financial Statement
• Assets vs. Liabilities
• Asset Valuation and Discounts
• Heart or Wallet?
• Ethics of Ownership
• Financial Planning: Investments and Life Cycles
• Estate Planning
• Trusts and Wills
• Prenuptial Agreements
• Borrow or Redeem?
• Managing Capital Purchases (i.e., a house)
• Philanthropy
Lessons learned from Eddy Academy
Here are some pointers based on our experience in designing a curriculum for our family's 5- to 14-year-olds.
• Annual T-shirts and an annual graduation ceremony are extremely well received.
• Hands-on activities with lots of variety are best.
• Hiring education consultants to work with the young set is helpful.
• Things to avoid: videos, “busy work” and activities that take too long or are too intricate.