Family enterprises face unique challenges at the intersection of personal relationships and business objectives. In these enterprises, trusted advisors—especially Most Trusted Advisors (MTAs)—play a crucial role in navigating complex dynamics, from governance and succession planning to conflict resolution and long-term strategy. Drawing from the works of Strike (2013) and Strike & Rerup (2016), this article explores how advisors, through nuanced guidance and a process known as mediated sensemaking, help family enterprises achieve long-term success.
The Unique Role of Advisors in Family Enterprises
Advisors in family enterprises are more than just technical consultants; they often take on dual roles that blend overt technical expertise with more subtle guidance. This duality allows them to assist families in decision-making while being sensitive to the complex personal dynamics within family-run businesses. The dual role of MTAs—providing both explicit advice (financial, legal, operational) and a more subtle, confidence-building presence—enables them to influence family enterprises in profound ways.
As Strike (2013) notes, MTAs are “uniquely positioned to direct family attention to critical business and family matters” without overtly imposing decisions. This trust-based influence fosters family unity and business resilience by subtly guiding family members towards decisions that honour both personal and business values.
Mediated Sensemaking: A Subtle But Powerful Tool
A critical aspect of the advisor’s role in family enterprises is a process called mediated sensemaking. Defined by Strike and Rerup (2016), mediated sensemaking involves slowing down the decision-making process to allow family members to reflect on choices, consider multiple perspectives, and appreciate the complexity of issues at hand. This approach encourages families to make more thoughtful, well-rounded decisions, helping them avoid hasty or emotionally driven choices.
Through mediated sensemaking, advisors introduce alternative perspectives without imposing their views, creating an environment where family members feel respected and involved. This subtle influence allows family enterprises to adapt more effectively to internal and external challenges while maintaining alignment around shared goals. Mediated sensemaking has proven especially useful in family enterprises where relationships and emotions are closely tied to business operations.
Fostering Trust and Building a Strong Advisor-Family Relationship
The success of the advisor-family relationship hinges on trust. Trust grants advisors access to sensitive family and business information, enabling them to navigate the subtle dynamics that shape decision-making processes. Without trust, advisors are limited to surface-level guidance and unable to engage deeply with the family’s unique challenges and opportunities.
Establishing and maintaining trust often requires time and a deep understanding of the family’s history, values, and goals. Advisors must demonstrate confidentiality, integrity, and a willingness to support the family’s vision without pushing their own agenda. The relationship that MTAs cultivate over time allows them to become confidants, guiding families through both routine decisions and transformative events with the family’s best interests in mind.
Conflict Resolution and Managing Family Dynamics
Conflict in family enterprises often arises from the overlap between personal relationships and business roles. The deep-rooted, sometimes unspoken dynamics between family members can complicate business operations, leading to unresolved tensions that may undermine the enterprise. Advisors act as neutral facilitators, promoting healthy communication and encouraging transparency.
By guiding family members to openly express their perspectives, advisors help avoid destructive patterns like groupthink or conflict avoidance, which can stall decision-making and harm family unity and business success. Strike and Rerup (2016) observe that MTAs can “slow down decision-making processes to allow family members to consider multiple perspectives,” preventing rash decisions that could have long-term negative impacts on both the family and the business.
To facilitate effective conflict resolution, advisors often help establish governance structures that clarify roles, define decision-making processes, and outline conflict resolution mechanisms. These structures help family members manage disagreements constructively.
The Advisor’s Role in Succession Planning
One of the most challenging but critical areas for family enterprises is succession planning. Passing leadership to the next generation requires careful management of the business strategy and the family dynamics involved. Advisors help families create structured succession plans that prepare the next generation for leadership while safeguarding the family’s legacy.
Advisors work closely with family members to address issues such as choosing successors, preparing them for leadership roles, and balancing generational expectations. Succession planning is more than a logistical task; it’s a profound shift that requires alignment between the family’s values and the business’s long-term vision. MTAs assist families in crafting succession plans that consider both the family’s emotional needs and business objectives.
By helping the family align on a unified vision for the future, advisors reduce the risk of fragmentation and ensure that the family’s legacy is preserved across generations. This alignment between family values and business goals is crucial for maintaining continuity and resilience.
The Influence of Advisors on Family Governance
Effective governance structures are essential in family enterprises, providing the foundation for clear decision-making and accountability. MTAs play a key role in establishing and refining governance structures that align with the family’s values, goals, and business strategies. Governance frameworks not only clarify roles and responsibilities but also provide a pathway for managing conflicts and making strategic decisions.
Through governance, advisors help families balance the need for structure with the flexibility required to adapt to changing circumstances. This flexibility is particularly valuable in family enterprises, where the line between personal and business interests is often fluid. Advisors work with family members to design governance structures that facilitate transparent, fair, and inclusive decision-making.
Best Practices
Successful family enterprises can strengthen their collaboration with trusted advisors by adopting these best practices:
- Prioritise Relationship-Building: Building a foundation of trust takes time. Family members should engage with advisors openly, sharing not only business information but also personal values and family history to foster a deeper understanding.
- Embrace Open Communication: Encourage candid dialogue where all voices are heard, ensuring that family members feel valued and understood. Advisors can facilitate these conversations, creating a safe space for honest exchanges.
- Establish Clear Governance Structures: Governance frameworks clarify roles, responsibilities, and decision-making processes, enabling the advisor to work within an organised structure that supports the family’s goals.
- Engage in Continuous Learning: Family members should be open to learning from the advisor’s expertise, adapting their approach as circumstances change. This learning mindset is essential for navigating the evolving challenges of family enterprises.
- Develop a Long-Term Vision: Working with advisors to define a shared vision helps align family and business objectives, creating a cohesive path forward for future generations.
Case Studies
To illustrate the impact of trusted advisors in family enterprises, let’s consider two hypothetical examples:
The Walker family office, a multi-generational enterprise, was experiencing tension between older and younger family members regarding strategic direction. Older family members preferred conservative investments, while younger ones were keen on innovative ventures. Their MTA helped bridge this divide through mediated sensemaking, facilitating conversations where each generation could voice concerns and aspirations. This process fostered a shared vision that balanced traditional values with future growth, strengthening the family’s unity.
The Lin family enterprise faced a complex succession issue, with multiple heirs expressing interest in leadership roles. The family’s advisor helped develop a structured succession plan that included leadership training, mentoring from current leaders, and a phased transition. By facilitating open discussions about each family member’s goals and qualifications, the advisor helped the family arrive at a consensus.
Conclusion
Advisors play a unique and invaluable role in family enterprises by blending technical expertise with subtle, trust-based guidance. Through processes like mediated sensemaking, they help family members reflect, consider diverse perspectives, and make informed decisions. By fostering open communication, trust, and strategic alignment, advisors support family enterprises in balancing personal relationships with business needs, ensuring long-term success across generations.
FAQs
What is mediated sensemaking, and how does it support family enterprises?
Mediated sensemaking is a process where advisors help family members slow down and reflect on decisions, introducing alternative perspectives and encouraging thoughtful consideration. This helps families adapt and make better-informed decisions.
How do advisors help family enterprises manage conflict?
Advisors act as neutral facilitators, promoting healthy dialogue and establishing governance structures that prevent conflicts from affecting business operations.
What role do advisors play in succession planning?
Advisors guide families through the complex process of leadership transition, ensuring that future leaders are well-prepared and that succession plans align with both family values and business needs.
Why is trust crucial between family enterprises and their advisors?
Trust allows advisors to access sensitive family and business information, enabling them to provide unbiased advice and navigate complex family dynamics.
What is the role of Most Trusted Advisors (MTAs) in family enterprises?
MTAs provide both technical advice and subtle guidance, helping families navigate internal dynamics, make informed decisions, and plan for the future.
References
- Strike, V. M. (2013). The Most Trusted Advisor and the Subtle Advice Process in Family Firms. Family Business Review, 26(3), 293-313. https://doi.org/10.1177/0894486513492547.
- Strike, V. M., & Rerup, C. (2016). Mediated Sensemaking in Family Firms: The Role of Most Trusted Advisors. Academy of Management Journal, 59(3), 880-905. https://doi.org/10.5465/amj.2012.0665.
