Exceptional families understand that crafting a successful strategy is only the beginning. Measuring progress is crucial to ensure that the strategy remains effective and that goals are being met. The Family Council Canvas, our upcoming strategic tool designed for Family Offices, includes essential questions that guide families in tracking their progress, receiving feedback, and making necessary adjustments. This article delves into how exceptional families measure progress, maintain commitment, and communicate effectively, ensuring continuous improvement and long-term success.

Commitment to Goals

Exceptional families recognise that commitment to goals requires more than just setting them; it demands ongoing support and accountability. In family businesses, maintaining commitment can be challenging due to the dual pressures of family dynamics and business demands. However, fostering an environment where members feel supported in their roles and responsibilities can significantly enhance their commitment. This could involve regular check-ins, providing resources, or even adjusting goals to align better with each member’s strengths and circumstances.

According to the stewardship theory discussed by Kowala and Šebestová (2021), family businesses that adopt a stewardship approach are more likely to foster long-term commitment through trust and shared values. Stewardship-driven families tend to prioritise the collective good over individual gains, creating a stronger alignment between personal and family goals. This promotes a supportive atmosphere, where family members are more likely to stay committed to long-term objectives because they view the business as an extension of the family’s legacy.

Best Practices:

  • Regular Check-ins: Schedule consistent meetings to discuss progress, challenges, and any needed adjustments.
  • Resource Allocation: Ensure that family members have the necessary tools and support to achieve their goals.
  • Flexibility: Be open to revisiting and revising goals as needed to maintain alignment with family members’ strengths and business needs.

Receiving and Remembering Feedback

Exceptional families understand the value of internal and external feedback. Feedback from within the family provides insights into interpersonal dynamics and individual performance, while feedback from external advisors or stakeholders offers an objective view of business operations.

The agency theory, often cited in contrast to stewardship theory, emphasises formal structures for accountability to avoid an agent becoming self-serving. Agency-driven family businesses might focus more on external feedback and formal review processes to ensure that goals are met. External advisors or non-family executives, in this case, could be key in providing unbiased feedback, and ensuring that the family remains on track and intra-family agency issues do not detract from family goals.

Best Practices:

  • Documenting Feedback: Keep detailed minutes of meetings, including feedback given and action items.
  • Regular Review: Revisit past feedback during meetings to track progress and ensure issues are addressed.
  • External Advisors: Consider involving external advisors who can offer unbiased feedback and professional insights.

Measuring Progress

Exceptional families set clear, measurable benchmarks to evaluate their performance. These benchmarks can range from financial metrics to achieving specific family goals, such as succession planning or community involvement.

In the study by Kowala and Šebestová (2021), family businesses focused on different key performance indicators (KPIs) depending on whether they adopted a stewardship or agency approach. Stewardship-based companies often focus on long-term goals, such as sustainability and family legacy, while agency-based companies may emphasise short-term financial gains. To align their progress with their long-term strategy, family businesses should define key performance indicators (KPIs) that reflect their distinctive objectives and style.

Best Practices:

  • Define KPIs: Establish specific, measurable indicators that reflect the family’s business and personal goals.
  • Regular Review: Schedule regular reviews of KPIs to assess progress and identify areas for improvement.
  • Celebrate Milestones: Recognize and celebrate when benchmarks are met.
  • Plan-Do-Check-Act (PDCA) Cycle: Implement this cycle to ensure continuous improvement. Start by planning the desired outcome, executing on a small scale, checking the results, and then acting on the findings to scale successful strategies across the entire business.
  • RADAR Approach: The EFQM model’s RADAR approach (Results, Approach, Deployment, Assessment, and Refinement) offers a holistic method to evaluate and refine strategies, ensuring alignment with the family’s long-term goals.

Effective Communication When Things Go Wrong

Addressing issues promptly and transparently is crucial to maintaining trust and cohesion within the family. Exceptional families establish clear protocols for handling setbacks, ensuring that problems are communicated in a way that is constructive rather than accusatory. This approach helps to resolve issues quickly and prevents minor problems from escalating into major conflicts. In stewardship-driven families, communication is typically more open, while an agency-based approach may rely on more formal reporting structures.

Best Practices:

  • Transparent Communication: Foster an environment where issues can be discussed openly without fear of blame.
  • Constructive Feedback: Focus on finding solutions rather than assigning blame when problems arise.
  • Crisis Management Plan: Develop a plan that outlines steps to take when facing significant challenges, ensuring a coordinated and effective response.

Conclusion

Measuring progress is an ongoing process that requires commitment, feedback, clear metrics, and effective communication. Exceptional families leverage these practices to ensure that their strategies remain on track and adapt to changing circumstances. The Family Council Canvas is designed to help families navigate this complex process, providing a structured approach to monitoring progress and achieving long-term success. By following the best practices outlined in this article, families can create a robust framework for continuous improvement and sustained achievement.

The success of family businesses relies heavily on their level of business maturity and the alignment of their key performance indicators (KPIs) with their risk management function, overarching strategies, and visions. The EFQM model serves as an example of how businesses can integrate these elements effectively.

Reference:

Kowala, R. and Šebestová, J.D., 2021. Using Stewardship and Agency Theory to Explore Key Performance Indicators of Family Businesses. Scientiae Oeconomia, 4(1), pp.1-15. Available at: https://doi.org/10.23762/FSO_VOL9_NO4_1