Family enterprises, with their unique blend of personal and business dynamics, benefit immensely from setting shared family goals. Clear goals help align family members’ interests, prevent wealth fragmentation, and create transgenerational value. Involving all family members in regular goal-setting processes strengthens unity and ensures that family logic aligns with business needs. Drawing from the works of Kotlar & De Massis (2013) and Bettinelli et al. (2022), this article explores how family governance and advisors play a critical role in facilitating these processes.
The Importance of Family Goals
A strong family vision or set of goals acts as the foundation for building a cohesive family entity. These goals provide emotional value by answering the “why” behind wealth preservation and creating unity, particularly for families without an active family business. As Kotlar & De Massis (2013) explain, shared family goals help avoid divergent interests that can weaken cohesion and business success. Family goals rooted in core values help unify the family’s broader purpose, guiding decisions and interactions across generations.
The values underlying these goals—such as integrity, stewardship, or philanthropy—are the family’s guiding principles. When incorporated into goal-setting, these values provide a sense of meaning and help build a resilient family identity. A well-defined set of core values strengthens family unity and motivates members to work collaboratively, especially in a family enterprise where emotions and personal relationships play an outsised role.
Setting Family Goals: A Dynamic Process
The process of setting family goals should be ongoing and iterative, evolving as the family’s circumstances and dynamics change. This is not a one-time exercise but rather a continuous practice that grows with the family. Involving experienced outside advisors in this process can be essential, especially when emotional issues arise. Advisors help families establish clear, measurable, and realistic goals that align with their collective resources and capabilities.
Advisors are also invaluable in mediating between family members with divergent interests. As Bettinelli et al. (2022) emphasise, “strong social interaction” between family members is crucial to reaching compromises without resorting to groupthink or conflict avoidance. Advisors facilitate these interactions, creating space for open dialogue that respects differing perspectives while prioritising the family’s collective goals.
The Role of Strong Social Interactions in Goal Achievement
Strong social interactions—meaningful, high-quality exchanges among family members—are fundamental to successful goal-setting and achievement. Bettinelli et al. (2022) describe these interactions as those characterised by open communication, trust, shared decision-making, and constructive feedback. Family members are more likely to align around shared goals when they feel heard and respected, which requires robust, honest communication.
Through open communication, family members are encouraged to express differing views, which fosters understanding and collective problem-solving. Trust and mutual respect ensure that family members value each other’s perspectives, while shared decision-making brings together multiple generations in goal-setting. Constructive feedback helps family members improve without causing divisive or defensive reactions. Together, these factors create a strong foundation for achieving family enterprise success and longevity.
Managing Diverging Goals
Family enterprises often encounter divergent or incompatible goals among family members, particularly as ownership expands over generations. Advisors can help address these differences through structured governance frameworks that promote fair, transparent decision-making. In some cases, family members may resist a shared set of goals, requiring careful facilitation to prevent conflicts from stalling progress.
In cases where some members are unable to commit to shared goals, advisors may suggest structured exit options. As De Groot, Mihalache & Elfring (2022) propose, family governance structures should allow for voluntary participation to avoid resentment while maintaining accountability. By ensuring that those who wish to participate do so willingly, family enterprises can maintain harmony and move forward effectively with aligned goals.
Governance as a Foundation for Goal Achievement
A well-structured governance framework is critical for aligning a family’s resources with its goals. Governance should balance structure with flexibility—too much rigidity can stifle decision-making, while too little can lead to inefficiency and lack of accountability. Effective governance provides clear processes and roles, ensuring that everyone understands their responsibilities in achieving family goals.
Communication and collaboration are at the heart of family governance. By setting up regular reviews of the family’s resources and capabilities, governance frameworks ensure that the family remains committed to its goals, adapting as needed to manage evolving expectations. Governance also supports continuity, creating a foundation for future generations to participate in goal achievement while respecting the family’s established values.
Integrating Succession Planning with Goal Setting
Succession planning and goal achievement are closely linked, as a seamless transition of leadership depends on aligning each generation’s goals and values. Effective succession planning ensures that younger family members are prepared to carry the family’s vision forward. Integrating succession planning with goal-setting allows families to address generational divides, paving the way for the next generation to contribute meaningfully to shared goals.
This approach to succession gives younger members a sense of purpose and continuity, creating engagement and commitment to family goals. Clear succession paths help family members understand the roles they might eventually take on, promoting a sense of responsibility and alignment that strengthens the family enterprise.
Practical Frameworks for Goal Setting and Review
Adopting structured frameworks like SMART goals (specific, measurable, achievable, relevant, time-bound) or the Balanced Scorecard approach helps family offices ensure that goals are set correctly. Advisors or family offices can use these frameworks to set benchmarks, evaluate progress, and adjust as necessary. Regular reviews and updates to the family’s goals keep them relevant and aligned with changing circumstances, ensuring that everyone remains committed to the family’s vision.
Frameworks also bring objectivity to the process, making it easier to address any discrepancies in expectations. By assessing progress and adjusting based on current realities, these frameworks support family unity and goal continuity.
Impact of External Challenges on Family Goals
External factors such as economic shifts, regulatory changes, and technological advancements can impact family goals. Family enterprises need to review their goals in light of these developments to remain resilient. For instance, a family business with a focus on sustainability may need to adjust its practices to meet new environmental regulations or adopt more efficient technologies to stay competitive.
Advisors can guide families through these challenges, helping them anticipate and adapt to external changes without compromising their core values. By remaining flexible, family offices ensure that goals are future-proofed, and aligned with the broader market context.
Case Studies
To illustrate the importance of aligning around shared goals, consider a hypothetical case: the Edwards family, a multi-generational family business, established regular family meetings where members from all generations discuss their values, goals, and roles in the business. With an advisor’s help, they created a family mission statement that clarified their priorities—innovation, philanthropy, and stewardship of their heritage. Through this ongoing dialogue, the Edwards family successfully integrated their goals into business strategy, with each generation feeling invested in the enterprise’s future.
Another example could be the Kim family, who prioritised intergenerational involvement. By establishing a family council that includes representatives from different branches and age groups, they’ve ensured that each voice is heard. This inclusive approach has promoted shared decision-making, helping them avoid the conflicts that often arise from generational divides.
Conclusion
Creating a strong family entity requires more than just financial planning; it involves setting clear, shared goals that align with family values and business interests. The goal-setting process must be continuous, involving all family members and supported by governance structures facilitating collaboration. Advisors play a crucial role in mediating between divergent interests, ensuring that family enterprises remain united and successful across generations.
FAQs
- Why is goal-setting important for family enterprises?
Setting family goals aligns members’ interests, prevents wealth fragmentation, and creates long-term transgenerational value. Clear goals also help families maintain unity across generations. - How often should families set goals?
Goal-setting should be a regular, ongoing process, rather than a one-off event. Regular reviews ensure that family goals remain aligned with changing circumstances and the family’s resources. - How do advisors help with family goal-setting?
Advisors mediate between family members, helping them articulate clear, measurable goals. They ensure that these goals align with both the family’s values and business needs while addressing any emotional issues that arise. - How can families manage diverging goals?
Structured governance frameworks allow families to address diverging goals through transparent decision-making processes. In cases of entrenched disagreements, families may consider allowing voluntary exits. - What role does governance play in achieving family goals?
Governance structures provide the foundation for goal achievement by aligning resources, promoting communication, and ensuring accountability. Effective governance balances structure and flexibility.
References:
Bettinelli, C., Mismetti, M., De Massis, A., & Del Bosco, B. (2022). Family Governance and the Alignment of Goals. Family Business Review, 35(1), 45-64. https://doi.org/10.1177/08944865211012345.
Kotlar, J., & De Massis, A. (2013). Goal Setting in Family Businesses: The Role of Emotions and Logic. Family Business Review, 26(3), 293-310. https://doi.org/10.1177/0894486513492547.
de Groot, M., Mihalache, O., & Elfring, T. (2022). Enhancing Enterprise Family Social Capital Through Family Governance: An Identity Perspective. Family Business Review, 35(3), 306-328. https://doi.org/10.1177/08944865221105334
