The author of the following article is a fourth-generation member of the family that controls one of Americas most distinguished business institutions and served as the editor of his family's strategic planning document.
When my grandmother died a few years ago at the age of 97, we were not a very forward-looking family. We had never needed to be. Her father had put control of his company into a trust back in the days before estate taxes, which meant that my grandmother could enjoy an enormous income all her life as the trust's sole beneficiary with no concerns about what would happen after her death. She knew the assets of the trust would pass tax-free into the hands of her four children without anyone's having to raise a finger to ensure it would be so.
In that moment of my grandmother's death, when the trust dissolved, my family suddenly came face-to-face with two crises. The first was that we no longer had a plan for the future. My great-grandfather's plan had served us all very well, but it would carry us no further than we had already come.
The second was a feeling that we had lost our focus. My grandmother was a strong woman-a visionary-and we all depended upon her. She had intense relationships with each of her ten grand children. Now that she was gone,the family no longer had a single leader; and what was worse, it seemed as though we had suddenly grown more numerous and more distant from one another. While my grandmother was alive, "the grandchildren would have referred to my generation-the ten of us-- who knew one another from summers together at our grandmother's beautiful estate. But now "the grandchildren" meant our own children rather than us.
They were a much larger group-not of first cousins but of second cousins, varying in age from infancy to adulthood. Some of them couldn't even recall having met one another.
Layer of protection It may be unfair to say that our family had done no planning at all for the future. But the planning we'd done had in some ways only made matters worse. Back in the mid-1980s, the family lawyers had established four trusts, one for each of my grandmother's four children -which is to say, one for each branch of the family.
These trusts had a specific function and worked hand in hand with what we called the shareholders' agreement." The shareholders agreement was a binding document we had all signed one afternoon, saying in effect, Thou shalt not sell thy great-grandfather's company." With enough machinations a sale could still probably be managed-if we all decided on it together -but the agreement we had signed made it extremely difficult.
The function of the four trusts was to provide an additional layer of protection by holding all the voting stock in four large blocks, rather than scattering it among the family after my grandmother's death. The terms of these trusts were identical and dictated that the stock be voted as a unit.
In this way, proxy fights would be hardly so much as a possibility, much less a hazard.
Complacency We all of us endorsed these provisions wholeheartedly, because the younger generations have always felt the same passionate commitment to our legacy as our parents have. The problem for us, however, was that after these safeguards had been instituted, we watched our parents settle into a kind of complacency. They knew that no matter how unhappy-or how desperate for cash - any of their heirs might become, the business would remain a family business. And what was more, the transition of leadership to the younger generation was already underway.
A cousin of mine had taken his father's place in the big chair -though even this had been done in a characteristically close-mouthed way, with no discussion and with a good deal of quiet resentment. (My cousin, who is doing a very fine job, graciously refers to his advantage in life as, "a womb with a view.") The board seats would one day be passed along as well - albeit in the same close-mouthed fashion.
As for those cousins who wouldn't participate directly in the management or oversight of the company, the shareholders agreement and the four trusts effectively kept them from having any voice at all. What more could possibly be necessary?
Clearly our parents had put a good deal of thought into how to prevent us from doing something wrong. But what we wanted -and felt it was important that we have -was an invitation to join them at the table.
Journey together Who knows what would have come of us if my brother, troubled by these questions, hadn't one day picked up the phone to find out more about a family business consultant he had come across.
Over the course of a few months, he and a few others in our generation schemed unashamedly. In a risky lunch one afternoon, they proposed to the four members of the older generation that a consultant be brought in to work with us. The older generation would be asked to pay, but we -the adult members of the younger generations -would do the work. Our parents were puzzled, but in the end they went along with the Idea.
A few months later, we began our journey together one afternoon in the executive dining rooms of the company. My uncle gave a gracious speech blessing our venture and posing a list of questions about the future that he hoped we could help to answer. After that, he and the other members of the older generation withdrew and left us to the work we were eager to begin.
Spirit of unity Our first question was: what are we trying to accomplish? We spent the rest of the afternoon on it and came to a kind of answer. All the issues we raised fell into one of two categories: some concerned the family business; others concerned the family itself and the matter of keeping it together. We called these categories, "Family Business" and "Family Glue".
We also agreed that in going forward, our work would be done not only by family members but by spouses, who would have equal voice, and that all adult members of the very youngest generation would participate on an equal footing.
A month or so later, we met again and broke into two groups with facilitators to continue exploring our categories of Family Business and Family Glue. At the end of the day we had agreed to form six task forces. For Family Business the task forces would focus on employment policy, board issues and trust issues; for Family Glue the task forces would focus on philanthropy, family office and family governance. Each task force was charged with devising its own methods, conducting its own research and finally producing a written report.
Reaching consensus Six months later the taskforcers circulated their reports, and we met to discuss the findings. Our debate was often what might be called spirited," but at the end of a long day we had come to consensus on at least the broad points of our task force recommendations, and on many of the specific points in the report as well.
One of our most fundamental questions all along had been are we one family with four branches, or are we four families ? Remarkably, all six task forces came to the same conclusion independently that we are one family. In our enthusiasm we may even have failed at this stage to recognize that there are indeed differences between the branches. But this spirit of unity, and of cousins being entrusted to speak for one another, was the basis for all of our recommendations.
Three weeks later we sent our final report by overnight mail to the four members of the older generation in preparation for a face-to-face meeting a few days later. Except for what the four of them may have overheard informally here or there, this was their first glimpse of the work their descendants had been murmuring among themselves about for the previous ten months or so.
Passionate commitment It goes without saying that they were nervous. Our document was entitled Proposals for the Future. In short, it was a plea for a voice in our own destinies. We proposed specific terms to make such a voice not only possible, but to the benefit of everyone in the family. For example, our parents had been tormented by the prospect of selecting successor trustees from among their own descendants; we offered to take the burden of choice off their shoulders either by electing trustees from among our own number, or by proposing several candidates from among ourselves and leaving the final choice to them.
In addition to outlining the work we had done and the recommendations we had agreed upon, the document also underscored the commitment we all felt to our common legacy. And it stated quite explicitly our respect for the four of them. They have conducted their lives with passionate commitment to what their grandfather had created, and we felt grateful they had raised us to feel the same.
Delight and pride Bringing our strategic planning document into being was something like a birth; and indeed, it was greeted in much the same way as a newborn-that is to say, with delight and pride. The members of the older generation seemed every bit as pleased with our proposals as we had hoped they might be. After their initial burst of enthusiasm, we had to prod them for a reaction to the specifics. But they did at length offer a thoughtful response to our ideas. Their response was in very much the same spirit as our proposals had been. After midwifing the birth of our strategic plan, we might all have walked into the sunset together holding hands -- if we lived in an ideal world. The reality is that our newborn might easily have been neglected if we hadn't all insisted on continuing the work we had begun.
Our task forces have evolved into a standing committee structure. We have elected a family council that struggles to define its role. In some ways we're doing the hardest work now. But what we offered the older generation was a set of proposals, not a set of solutions. We'll arrive at the solutions together, by the old fashioned method of hard work.
From Private Wealth Management 1996/97. Campden Publishing Ltd, Threeways House, 40-44 Clipstone Street, London W1P, 8LX, UK. Reprinted with permission. All rights reserved.