In the last two weeks, we discussed the dilemma of Bert, vice president of a family business. His family hired a foreign consultant 10 years ago to help them create a family business constitution, but they realized they could not implement many of its provisions.
Bert admits that his family has problems relating to each other, and last week, I emphasized the need for families to fix their personal issues first before attempting a constitution. Family members who play key roles in the business also need to be committed to the importance of doing a constitution, since they need time and effort to do a viable one.
For families who relate to each other well, and who feel no need for outside help, I have laid out some of the usual provisions tackled in most family constitutions. Samples of constitutions can be seen on the Internet.
Once all the major players (from founders to young generations) commit to crafting a realistic, workable, practical yet ideal family constitution, then the work can begin.
Local or foreign
Most families need guidance in creating a family constitution, particularly medium-scale businesses that are not yet totally professionally run. The good news is that several business consultants are available, some here and many more abroad. Most universities have a family business center, and you can inquire from them.
Should you go for local or foreign consultants? If cost is an issue, then foreign consultants in general cost a lot more than local ones. Aside from paying in dollars, you may have to shoulder added expenses such as airfare and accommodations.
I respect some foreign consultants, but many are not familiar enough with local customs, mindset, attitudes. What may be standard practice there may not be viable here.
Unfortunately, business consultants are usually not regulated. Anyone who has sat in on a certificate course or taken an online seminar can purport to be a consultant.
Scout around. Do not hastily commit to any single consultant or group. Be upfront with the terms, scrutinize the MOA. Since no professional group accredits consultants, word of mouth may help. If your friend’s family business has been under the care of a good consultant, then it would be wise to check out the referral.
What should you look for? Competence, for one. An MBA or a master’s in psychology from a reputable university won’t hurt, and a PhD may be better. At the very least, this shows that your prospects have the brains and the heart to stick with finishing tasks, and hopefully will stick with your family when things don’t always go well.
Book learning is not enough. Ask consultants about their track record: approximate number of clients, years of practice, successes and failures (no one has a perfect record).
Bert’s family was angry when the foreign consultant demanded more money when they asked him to clarify provisions. Payment conditions must be clear. More time was also spent on mission-vision rather than on clarifying sensitive issues. Most consultants prefer to guide families over a weekend (as in Bert’s case), but if you feel you need more time, then look for a consultant who can work longer with you.
Look for one you feel can fit your family well. There is no shame in saying no after an initial meeting. You have the right to feel comfortable with your consultant, and vice versa.
I have turned down clients based on gut feelings alone. If they are late to the first meeting, if I feel our personalities do not match, or if I sense somehow they are not on the level, I am inclined to say no. Next week: A young leader of a flour milling business
Queena N. Lee-Chua is on the Board of Directors of Ateneo de Manila University’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (email msanagustin@ateneo.edu.) Email the author at blessbook.chua@gmail.com.