Family Business
Resources

Participation of in-laws in family meetings and decision processes

Length

4 min

AppID

VIMEO-62373189

Description

Listen to Dr. Ivan Lansberg, who teaches family business at the Kellogg School of Management, present ways of inclusion and exclusion of spouses in the entrepreneurial family governance and decisions.

Industry

Education

Language

English
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Transcript

Family companies really bring together a set of issues that humanity has been struggling with for millennia. I mean, they are at the core of who we are as a species; issues of collaboration with relatives, issues of inheritance, and it does not matter whether you got a billion dollar enterprise or five goats. If that is what you own, how do you make decisions about how you are going to leave your assets onto your next generation?

It is particularly powerful when it comes to the treatment of spouses, and we have come to segment that choice into three modes that families pick. In one choice, my daughter’s husband is my son. I adopt him. He is a full citizen of the family, and my expectation is that I would not think of having a family meeting without inviting him, of course. He is a family ... View More member; we would tap his opinion, we would share all the information we have about our enterprise and everything else with him. He is, you know, a full citizen of the family.

In another choice, my daughter’s husband is not my son; he is my son-in-law. There are certain things for which he is my son and certain things for which he is not my son. So, what happens in those families, I often tell families that it is like having a green card. You know, you are a resident alien of that family, so to speak. You have the right to pay taxes, and you have the privilege of working, and if we have a war, we will recruit you, but you cannot vote. So, it is kind of a hybrid condition, you know, you are in the family, but you are not. So what happens when you are organizing a family meeting, in that condition, somebody has to have a conversation about do we invite the in-laws in, and if we invite the in-laws in, for what part of the meeting do we invite the in-laws in?

And then there is a third condition where my daughter’s husband is just that, my daughter’s husband. And in that condition, the assumption is that the in-law is not a member of the family, and we would not think of having a family meeting with them in, because the assumption is that they are really here with a tourist visa, so to speak. They do not particularly have any rights, and, in fact, if anything, we have to guard against their involvement, because they may misuse the information we may share with them.

Now, where a family is on that continuum really depends on the family’s culture, the family’s personal experience with matters like divorce. Families where there has been a high incidence of divorce are naturally much more cautious around how to bring in-laws in then not. And, the reality in most of the families we work with, which are large, complex families, is that you got a whole slew of branches, each one of which has a different track record on that. So, when you are dealing with issues of governance, one of the first things, one of the first assignments, is bringing the relatives who have the leadership, or have been entrusted with the leadership of the governance, to actually make a conscious choice of how they are going to demarcate the boundaries of the family. For many families, the idea that making a choice about who is family, is in fact a choice, is a revelation. So, the wonderfully interesting, and I think this is again a recurring challenge, is getting families to address the issue of what scenario will suit them best.