Managing Family Enterprises: Succession and Board Dynamics

In this podcast, Cory engages in a conversation with Barb, unveiling the intricate dynamics of family enterprises through Barb’s extensive experience. Throughout their discussion, Barb sheds light on the varied yet common threads among family-owned businesses, particularly emphasizing the pivotal areas of succession and continuity planning. She underscores the often-overlooked aspect of thoughtful preparation, stressing the need for timely succession planning and urging families to commence this process well in advance.

Barb’s profound expertise shed light on the nuances of integrating external directors into family enterprises and the potential challenges that may arise during this process. The necessity for board evaluations, addressing potential dysfunctions, and aligning with family values emerged as key themes. Moreover, the conversation explored the role of the board chair, emphasizing the chair’s responsibility to ensure everyone’s voice is heard, thus fostering an environment of mutual respect and productivity.

Throughout the conversation, Barb offered practical insights, emphasizing the delicate balance between control and integrating external perspectives. Her suggestions included mentorship programs, tailored coaching, and the integration of external voices, all aimed at guiding the next generation and facilitating smooth transitions within family enterprises. Furthermore, her approach emphasized a thorough understanding of the organization’s current state, bridging alignment gaps, and preparing for the seamless integration of high-powered management teams.

About Barb Schimnowsky

Barb Schimnowsky is a Partner and leader in WATSON’s Board Director and Executive Search practice, boasting a robust background of over 25 years in executive search and human resources. Renowned for her expertise as a Certified Management Consultant and Family Enterprise Advisor, Barb’s reputation stems from her exceptional ability to identify and recruit senior executives. Her personalized approach ensures a tailored match for every Director, Chair, and executive search, establishing her as an unparalleled connector between clients and their ideal candidates. During her tenure at KPMG, spanning two decades, Barb honed the delicate art and science of executive search, mastering the nuanced balance required for success.

Throughout her career, Barb has triumphantly concluded numerous recruitment endeavours, placing adept candidates in diverse senior management and executive roles across various sectors and functions. Recognized for her commitment to understanding each client’s needs and business, Barb is often perceived as an integral part of her team. Outside her client engagements, she channels her passion for advancing the human resources domain by actively contributing to publications and groups within the executive search and HR sectors. Barb’s affiliations include memberships in the Canadian Association of Management Consultants, Family Enterprise XChange, and the BC Human Resources Management Association. Her extensive community involvement also spans past board positions in significant organizations like the Abbotsford Police Department, KidSport Abbotsford, the 2004 BC Summer Games, Pacific Sport Fraser Valley, and the Surrey Library Board. Her contributions to the community have been recognized among Abbotsford’s Top 100 Most Influential People, highlighting her multifaceted impact and commitment beyond her professional endeavours.

Resources discussed in this episode:

Contact Cory Gagnon | Beacon Family Office at Assante Financial Management Ltd. 

Contact Barb Schimnowsky | Watson Board Advisors:

Welcome to Legacy Builders. Strategies for building successful family enterprises, brought to you by Beacon Family Office at Assante Financial Management Ltd. I’m your host, Cory Gagnon, senior wealth advisor.

And on this show, we explore global ideas, concepts, and models that help family enterprises better navigate the complexities of family wealth.

Today, we welcome Barb Shamovsky, a partner at Watson, leading the board director and executive search practice with over 25 years of experience in executive search and human resources.

Recognized as a certified management consultant and family enterprise advisor, Barb’s reputation thrives on her exceptional talent for identifying and securing top-tier executives. BAR’s affiliations include esteemed memberships in the Canadian Association of Management Consultants, Family Enterprise Exchange, and the BC Human Resources Management Association.

Her impactful community contributions involve pivotable board roles, at organizations like Abbotsford Police Department And Kidsport Abbotsford earning her recognition among Abbotsford’s top 100 most influential people.

My goal is to be the most curious person in today’s conversation with Barb Shamovsky. Together, we’ll dive into areas of executive succession, the use of advisory boards for next-generation mentorship, and how to develop your board based on your enterprise vision.

Guided by Barb’s wisdom and experience, she emphasizes the significance of thoughtful preparation and timely succession planning as cornerstones for family enterprise longevity.

Now Let’s dive in.

Cory: We’re excited to have you here today and share your wealth of knowledge and experiences. let’s dive in. Shall we?

Barb: Sure.

Cory: Barb, imagine you’re delivering a commencement speech to the graduating class of 2023, and you have the chance to inspire them with your story. How would you begin your speech to convey the incredible lessons and experiences that you’ve gained along your career?

Barb: Well, that’s a big question, but I think I would start out saying that I have had the privilege and it truly is a privilege to work with many family-owned businesses. And every single one of them is unique, but there’s also some commonalities And, you know, we have a we have a saying, and you might have heard it before, but if you’ve seen one family, you’ve seen one family.

But what I will say is that, the common thing that we see is the continuity planning and the succession planning, you know, different terminologies that are used these days, but it’s the most talked about and it’s also the area that’s often not done well. And we have seen, you know, some really sort of gut-wrenching situations where things have not been, you know, well prepared and then on the flip side where families have really been thoughtful and intentional about how they approach it, and it’s really held them in good stead. It takes time.

That’s one thing that we’ve also really been able to, sort of see across the family it’s not something that happens overnight. And, if there’s one thing that I would love to shout from the rooftops, it’s; please start succession planning well before you think you’re going to need it! It should be top of your mind. So not exactly a commencement speech.

Cory: For sure. And tell me a little bit more in, as you said, continuity, succession. Both of those are thrown around, they’re depending on who you talk to, they do have, different meanings but can you help just for the listeners to find what your what it means to you and when you use those words?

Barb: Historically, it’s been called succession planning. And, in the family business, it can be sort of 2 different scenarios. It could be succession from the founder to the next generation, or it could be, succession from a founder to an external CEO, or you might already have an external CEO, and now you’re succeed transitioning to the next one.

Regardless, all of them need to be very well thought out the thinking has been to transition to continuity planning because succession planning kind of has a little bit of an implication, you know, there’s a beginning and end. You’ve done it, move on.

Whereas continuity planning implies that it it’s continual, and there is no beginning in an end. And, what we find is, regardless of the terminology, it still should be something that is on the radar of the board or the family on an annual basis and talked about.

But that often doesn’t happen. And I think part of it really has to do, and I’m here, we’ll sort of talk more about when the founder is looking about transitioning. Decisions have to be made and every single one of them is very emotional for a founder.

Do I have next gen that are ready? If they’re not ready, who’s going to run the business? I might have multiple kids. I’ve got to decide who’s well prepared to run it. what am I going to do?

My whole life is tied to this business. There’s so many things and I think what happens, rather than sort of pursue the conversation, potentially have some, conflicting and challenging discussions, people just put it off.  And those decisions are very emotional.

I love all the different scenarios of how emotional and the thoughts that can get in the way of those transitions.

Cory: When you made the comment of the annual-on-annual basis, either at the board level or the family level. Not everyone has boards, and not all families get together that frequently or that formally. Can we talk a little bit, just kind of starting it at that level?

Barb: Typically, every organization has to have a board. Usually when a family, business starts out, it’s the owner. He kind of sitting in in all of the roles. And, as a family, business grows and, more generations get involved, the governance typically evolves as well. So, your board goes from being just family.

Maybe the next step might be that it’s family and some, family advisors paid advisors that you sort of rely on. And then they might transition to, external directors, an advisory board and then from there, they might evolve into a full fiduciary board.

What we find really helpful is, we use the 4-room model, and that is sort of, looking at your family business, imagining it as a floor plan.

And you’ve got the owner room, you’ve got the board room, you’ve got the management room, and you’ve got the family room. And it’s figuring out which rooms that you will have because not every family is large enough for, to have all of them.

But figuring out the rooms that you have and who will be in them, and then what decisions are made in each of those rooms. And then how those decisions are going to be communicated that happen within the various rooms. One of the things that we find when that sort of a process is in place, it forces the conversation about ownership transition. Say, hey, Cory. when do you think that you might be ready to pack it in? Well, 5 years from now.

Well, that’s great. It’s like taking that 5-year horizon, which people think, well, 5 years is a long time, but you know what? That 5 years can go by really quickly and working backwards So if it’s the founder that’s transitioning, so do you have kids in the business?

Yes. Are any of them ready? No. And it’s figuring out where are the gaps and having a development plan to try to close those gaps in that 5-year period so that when the owner’s ready to transition, the kids are ready.

Now it might be that the kids are never going to be ready. they’re too young. They don’t have the right skill set, whatever the case may be. I think it’s really important to go through that exercise on a regular basis because If you know that in 5 years from now when the founder transitions out of the business, there’s not going to be next gen wanting to take over or able to take over, then what’s the plan? Are you going to be doing an external CEO search?

And again, that’s something that should be started well in advance, because one of the things if an external CEO is coming into a family business, having good governance structures in place is very attractive to them. I have some people as soon as they know it’s a family business, they don’t want to have anything to do with that.

Whereas you say no, they’ve got an advisory board or they’ve got a fiduciary board. They’ve got a family council. They’ve got an owner’s council. That’s a different story, and that can be very attractive to somebody that’s coming in as an external.

I think regardless, it’s really important for the founder to be talking about where he sees the future what’s his vision and the next generation having conversations about what they see for the future and then trying to sort of, bring those 2 groups together so that they can understand each other’s point of view.

Cory: Now Barb, you had many comments there that I want to circle back to. You made the comment of the being a family enterprise is sometimes not attractive for external management. Tell me a little bit more of what those conversations look like or some of the experiences that these external CEOs have or maybe the what makes the family enterprise space have such a bad rap.

Barb: Well, it’s usually those families that don’t have good in place. And what ends up happening is, the family conflict comes into the boardroom, and there’s nobody external to diffuse that and so in essence, the CEO can sometimes get caught. It’s like it’s like the meat and the sandwich.

and they find that they’re playing mediator between siblings or different family branches or whatever, and it’s just not enjoyable. For them ultimately, if there’s a power play and they’re sort of seen as being, more aligned with one side of the family than the other, ultimately, that doesn’t play well for them either.

Cory: And going back to the four-room model, it sounds like in that scenario, there’s only one room rather than 4 or maybe they’re not as closely divided.

Families that maybe haven’t thought of the rooms in which they’re in or the structures of those rooms. Where do you think that from this this perspective, they can start to say, what?

Maybe I do have some of that in place or here, maybe let’s move this this conversation to that room. How do they get started from there?

Barb: Yep. Well, I mean, in the owner room, one of the first things that they’re going to ask themselves you know, or is it just the owners or, or other people going to be allowed in the room that, let’s say, spouses of owners So having those conversations, but regardless, so in the owner room, what decisions are going to be made in there?

We use a sort of a decision, making matrix so that it’s very clear for everyone, whether you’re in the owner room, the management room, the boardroom, or the family room, if it’s a decision about x, this is who has the ultimate say, and it’s not to say that others aren’t involved, but, you know, the final decision is made in this room.

Once that decision is made, it will be communicated out, and people know how that’s going to be communicated out. How are the family going to find out about, you know, you’re looking at doing, let’s say, a major acquisition.

How’s the whole family going to find out about it? And it can vary because I’ve had one family where, in the owner room, they had an external CEO, but it was very clear that the owner has a final decision if they were going to be opening up a new location or if they were considering any changes to their marketing or brand.

Cory: And in that situation, if that’s what the matrix says, then it it’s probably okay that’s the way that.

Barb: I mean, it creates clarity. When we were hiring the CEO for that we shared the decision-making matrix of the board.

They had an advisory board at that point in time of the owner and also for the CEO. It’s very clear, I’m not going to be opening any new stores without the owner’s approval. I can make recommendations but, the final decision lays with the owner.

And if you come into a situation like that, right from the get go, eyes open, you know where you stand. It creates clarity and it really eliminates a lot of the conflict that can happen because things work well until they don’t. And then if you don’t have the right structures in place, that’s when things can really fall apart.

Cory: And in that Barb, starting and you talked about the progression of a board and that every organization has a board, typically, it’s the founder and they have their annual general meeting by signing a resolution to keep their corporation alive.  Going beyond that and bringing the family in and what it means to officially get beyond stage 1.

Can you walk us through a little bit more of not only the structure, but kind of the search from your end and how they can start to put those people in place.

Barb: Well, it’s interesting because the owner might start out and if there’s, other family working in the business, then they might be around the boardroom table too. The lines get really blurred. Like, you’re at the boardroom as an owner, but you’re also manager, and you’re also family member. Still, the lines get really blurred.

Typically, what might happen is if the families were working with some outside advisors like their lawyers and accountants, sometimes they invite them in, and then they start to get a little bit more intentional.

We always say do not bring in advisors or family or friends, onto your advisory board. You have to be really intentional about it. You need to look at where’s your business today and where is it going? And what are some of the challenges that you’re going to be facing? And you figure out, we use a skills matrix.

What are the skills that you need on the board? What do you have currently? And what are you going to need given where the business is going and where are the gaps? And those gaps are the types of individuals that you should be looking for on an advisory board. Very few organizations have all of the skill that they need with their management team. Like, there’s so many things on the horizon these days.

Digitization, artificial intelligence, the list goes on and we see even, the skills matrix will differ from business to business, but there is a lot of, common skills that are being looked for right now, and that’s with regards to the digitization, cybersecurity, artificial intelligence.

During COVID, supply chain was a really big one. If you’re really intentional about getting the right skills on the board, it can’t help but, help improve your business and the discussions that you’re having around the table.

I had one client and they populated their board with people that they knew from there YPO group. And at the end of the day, 3 years later, that board got dismantled. And the biggest reason was although those individuals were very smart and successful business people in their own right, they really did not align with the owners values and what their, perception of growth for the business was.

And the other thing that also happened or didn’t happen rather is, they were not onboarded properly.

If you’re setting up an advisory board, how management reports information to an advisory board versus just to the owner is quite different. And they need to also be incorporated in sort of that learning so that they’re aligned with, expectations and the board is getting what they need.

Cory: And, Barb, going back to the alignment of values, that sounds like a big obstacle in you know, going from, I have family, friends, close advisors, and now I want to make this official and start looking for people who have the talent that and the skills that we need, how do you go about that, the values, exercise, and understanding what that alignment looks like and you start?

Barb: We spend a lot of time with the families and you really, you kind of get to know, what’s going to work. Some families are very high flying, and others are pretty, humble grassroots. And so just even aligning from that perspective, from the get go.

If I’m working with a family, and they’re sort of down to earth. Somebody comes and shows up, you know, in the interview and they’re pulling up in a Ferrari, like, right from the get go, you’re thinking, well, this might not work.

It’s making sure that they share a lot of the common values and you get into that just by having conversations about what’s important to them, what they like to do in their spare time, their involvement in the community, and then, again, with referencing, you can drill down a little bit as well.

Cory: And then going to the onboarding step. This sounds like there’s quite a bit of change management and getting into the way that that people perceive the owner was the only person they had to report to then it might be an ownership group and now there’s this board.

How can the organization transition or the management team transition without creating, too much turmoil within the business while that’s happening?

Barb: That’s a challenge because, sometimes management are a little bit, worried about having, outside directors come on board. Like, what is that going to mean? Am I going to get questioned everything that I that I’m going to do?

And I think, having that decision making major is super important, really bringing up the external directors up to speed, on the business and,  giving them tours letting the management get to know them as individuals so that they can start to see that there’s alignment. I can remember I had one CEO and she was very skeptical about having external people and I had a follow-up call probably about 9 months into it and she goes, it was a tough transition, but now I love it.

Because she started to realize they were just asking better questions.  And, at the end of the day, the results of the business were starting to show up on the financials. You can’t argue with data.

Cory: That’s one of the things and previous guess we’ve had these conversations of you can put these structures into place and understand that it does well for the people. Barb, as you say, there’s business metrics that show that investing in these structures, do have a financial payoff. Is that right?

Barb: For sure. And if you get the right person, so let’s say you have a business that’s looking to expand down into the states and nobody on the management team has ever done that before. And you’ve got 1 or 2 people around your table that have done it, that are there as a sounding board.

I mean, that is like having gold, it’s so great for a CEO to be able to call upon people that already been down the path that you’re going and say, well, this work, you know, for me before, be careful of this. It’s not that they’re telling you what to do, and they’re just sharing their knowledge. Just things to look out for.

Cory: Absolutely. So just having those people with the wisdom and as you said, where’s the business is going and who are the people who are going to help us get there? Knowing the some of the challenges that’s that could be on the horizon and having, that’s that table surrounded by people who who’ve been there before really can help get you there faster is what I’m hearing.

Barb: Yep. And, you know, if you’ve got the right people around the table, in those director roles, they are thinking at a strategic level. They’re not down into the weeds. If they are, they’re the wrong people.

Cory: And can you give me a little bit more example of that, because I’m sure it is a bit of a blurry line, but how high they would look from a strategic perspective.

Barb: It’s having the conversation like, if someone is a seasoned director, they know how to keep things at the strategic level. They’re not going to be getting down into the weeds and if they’re asked for them to provide advice on something, that’s it.

They’ll give their feedback but they’re not going to be saying, well, I think you should be selecting this software because the price is better or what have you. Like, that’s a management decision to figure out what they’re going to put in. If they want some advice of whether or not anyone’s used it before, that’s a different question.

Cory: Right. And taking that seasoned director and bringing them together. Let’s talk a little bit more from a leadership of the board. You’ve brought these people together and we’ve got this title of chairman. How do we properly utilize the board and lead the board to make sure that they are helping with those strategic decisions, and we’re getting the most from them?

Barb: Sometimes that can be a challenge in a family board because typically of founder is transitioning out. He’s in that chair position and might not be a seasoned chair, but you can always get, you know, training in that. Even our firm, we do bespeak, training with boards so that everyone’s on the same page, but there’s tons of governance training that’s out there.

And another thing that you’re looking for as well when you are, considering some external directors is looking for people that could have the potential to be a future chair committee chair so that you have some continuity in terms of leadership should anything happen with the chair.

But the role of the chair is really to make sure that everybody is having a voice at the table. And if somebody notices they’re not speaking up, you’d might say, hey, Cory, you haven’t sort of said anything on this. And giving feedback after the meetings. I think we’ve all been on boards where there’s somebody that just likes to be the loudest and smartest voice in the room and doesn’t give space for other people.

They’re not usually the best directors, from the get go, but not everybody chooses the right, directors and having to be able to manage that kind of behavior is important too as a chair.

Cory: Now going back to and it could be that you’ve selected the wrong person. Can you walk through that Barb, if you know somebody needs to be off boarded per se. And how does that work within the organization? We picked some good ones, but maybe we didn’t have the proper alignment here.

Barb: Yep. And that happens sometimes. I mean, you always have the benefit of being able to make a change. Typically, within a family board, it might be you have a term or if the first term might just be for a year so that you can test the waters, make sure it’s a good fit on both sides, before sending it to maybe a 2 or 3 year, but at regardless, you can make a choice, make a change rather, and it’s always a delicate conversation, but you can approach it.

Our business is changing. We figured out we need a different skill set on the board and thank you for your time or what have you. Most people when they go on to a private company board, they know that fit has to be really important and sometimes people don’t deliver at the level that the family was expecting.

Cory: And on that performance management, Barb, a little bit from when we go back to the four-room model, we’ve got the owner room, the boardroom, the management room, and the family room, how about a from an accountability perspective, like the boards who are they accountable to?

Barb: Well, the board is accountable to the family, and, I mean, ultimately, the family is in charge. Their values are sort of important for the board to understand the values and make sure that they’re being lived, throughout the organization, but ultimately, it’s the family that, so they never lose control.

The families at the top and, even if the board said we are we think you should go ahead with this, acquisition. The family is ultimately the ones that can veto that and say no, we’re not ready to take on that additional risk or what have you.

If a board is high functioning quite often, they don’t have to do a deep dive every year, but I would say on a 3-year cycle, they should be looking at how they’re working and have an outside evaluation done on the board to make sure that everyone is in pulling their weight and they’re operating as effectively as they could be.

Another thing that you can even do is not just looking at the board as a whole, but you can also do a pure evaluation. Sometimes when we got drawn in, it might be that there is a little bit of dysfunction on the board and, it needs to be highlighted and you try to sort of deal with it because it could be systemic or it could just be one individual, and then sort of measure again to see whether or not there’s been any improvement.

It’s interesting though because I’ve been reading quite a bit lately about directors saying that there is at least one person who is ineffective on their board, and they haven’t been dealt with. It’s not an easy conversation for the chair. That’s for sure.

Cory: Wow. And so that pure evaluation isn’t necessarily present. All the time or the ability for that mechanism to really give that feedback and allow those directors to step up or step out, I I’m guessing as well.

And Barb, so going back and I really like when you made the comment of, how they never lose control. To me, I’m thinking that some families that would be listening and saying, I don’t really have this external board yet.

I’ve heard maybe that the concept come across a few times. And control is something that I really like about my organization. I feel like I’ve got my finger on the pulse of everything. And, it’s hard to let go of control.

Can you step through a little bit of that, how you can let go of control, but still have that sense of control with external people being in those rooms?

Barb: Yeah. I was trying to think of a really good example. Let’s say that you’re putting together your 1st advisory board, the owner’s thinking of transitioning out and recognizes having some external directors on the board is needed, perhaps because there’s a couple of next gen, and that the other role that board members can also do is help mentor. I got a couple of kids. Not really sure if one or both might be ready.

We’re going to set up this advisory board and, they’re going to help sort of, mentor my kids because quite often, kids don’t want to listen to their parents, right?

But they’ll certainly listen to somebody that’s external. The founder is still, in control. They’re on the board, but there is now some outside voices. Sometimes those outside voices can also bring help to the founder see things a little bit differently too.

They’re still in control in terms of what they want, but getting them to see a different point of view and I find one of the biggest, examples of this is when it comes to technology. The next generation is way more tech savvy and the founder might not be that way at all. And we’ve had this same system all these years. Why would you want to change anything?

But having people from the outside share different experiences and show them the value of implementing new technology can help them change their mind. It’s but at the end of the day, if the owner says I’m not doing it, it doesn’t happen.

They aren’t losing control, but it’s maybe opening up their eyes a little bit more.

Cory: And Barb, going back to the next generation and that mentorship, having the next generation maybe not be ready, but having them present in having this, an education process.

That clearly is something that’s different in family enterprises versus other private or public companies. Can you go through a little bit of being that is so unique in board development, and how do you approach that?

Barb: Every family is different. Some family businesses have a policy that kids can’t work in the business unless they’ve worked somewhere else. That works well.

I remember it was the Richardson family in Winnipeg. They had a policy that kids had to go somewhere else, but then what happened is it got so diluted when they wanted the kids to come back into the business, they had established careers, were living different places.

And so, they thought, well, having that, working somewhere else for I think they had 5 year was too long, so they wanted to change it. If it’s made clear to them, part of your role is, I really want you to help sort of mentor my children, the next gen in the business.

I have one client where, as sort of a test, the dad broke away, a line of business, gave it to the son to run. He’s got the present title, but there isn’t a small advisory board and the one external director is also the son’s business coach. And that works really well because the son, really didn’t support his father’s leadership style.

It was very sort of command and control, and he’s on a total opposite end of the spectrum. And by him having this personal coach. has been extremely beneficial for him, in having a sounding board, somebody who’s certainly adds to his skill set.

He’s more a sales and marketing person. His mentor is actually more of, operation supply chain manufacturing oriented, which is where he needs the support. And, it’s been a really good sort of partnership.

Cory: That’s great. And circling back to the conversation of CEO selection because, I think, really, I wanted to explore as you said, there, you’ve got these external CEOs that will turn away the offers from family enterprises. I think we’ve done a great job at exploring some different ways to establish that governance and the boards. But, Barb, going back to the external CEO we’ve established a board. They’re functioning well and now we’ve got some turnover of management or we can see on the horizon that we we’re starting a search or need to start a search.

How do you go from where we’re at now to now we’re bringing in some of that high power management team?

Barb: Well, you have to definitely start with getting a really good understanding of what’s going on in the business. Like where have they been? Where are they now? And where are they going?

The first thing that we do is we meet individually with depending on the organization, individually with the directors, individually with members of the senior leadership team and individually with members of the family and just getting a good handle on sort of the lay of the land. And we prepare what we call an insights report.

Basically, it’s what have we heard from the family, from the management, from the board, where there’s alignment and where there’s not alignment. So that sort of the first thing that we do to get an understanding of what it is that we need.

And if there’s things that are not aligned, making sure that those are dealt with before we even start the search, so for instance, we did one CEO search and it was the first time that they were bringing in somebody that was outside of the family and it became very clear to us that during our consultation process, the board chair who was late seventies, I think, maybe early eighties, was not functioning at the level he should have been and that a change needed to be made.

In fact, the family had been talking about that, but there was a little bit of sensitivity. We said now is a good time for that kind of a change to happen when you’re bringing in a CEO. We allowed them the space to get that dealt with, and put a one of the other directors as board chair. And it also came to light too that they didn’t really have they had quite a governance model because they had a family council as well.

The family didn’t really have a policy in terms of how much of profit, the new CEO would be able to use to help expand the business. They had to deal with that as well.

Getting those potential derailers sorted out before you even start the search is super important. And then, we ask people pull in terms of getting an understanding of challenges in the business, what are opportunities for improvement, the sort of attributes that work well within the family and that don’t.

Then we pull together sort of a profile of what that next person will look like and, that’s sort of the benchmark that we’re using to evaluate and one of the things is quite often when they bring in an external CEO is there’s a little bit of a change man mandate but having a lot of conversation with the family that sometimes change, can lead to turnover, especially if you’ve got a lot of long-term employees and making sure that they’re comfortable with that.

We make sure, are there any kind of sacred cows that you know, the new CEO is not going to be able to touch. We really get quite up close and personal in terms of what’s going on with the business but it enables us to ask the right questions when we’re talking to candidates and ultimately find a great fit.

Cory: I love that it’s not just there’s a person that needs to fit in a chair. It’s much more where are we? Where’s the alignment? Where let’s fix some of the holes and patch those up before we put somebody in so that we’re supporting them to do the best that they can as we bring them in. That sounds like it’s probably not easy, but probably quite rewarding when you see it.

Barb: I always look at it this way. They’re paying us for external expertise. I did sort of a CEO search. One of the things that was really apparent when I was meeting with everyone is they kind of had a whole layer of leadership that was missing in the organization. Although people had VP titles because there was no sort of directors or in some cases, even managers, they weren’t really operating at a VP level.

In fact, the person that I was replacing wasn’t really operating at the level that they should have been either. We had that conversation and the family explains kind of how that all evolved and I said, well, if you’re bringing somebody in, from the outside, at some point, they are probably going to want to change the structure a little bit.

And are you open to that, and making sure that they are. If they say they’re not, well, then that’s the reality, and we need to have that conversation when we’re talking to people to let them know that the structure is going to be a little bit wonky compared to what you used to.

Sometimes we have to have hard conversations with families about their compensation. I find a lot of private companies are either way overpaying or a lot are underpaying.

Cory: Wow. Okay. And I think that’s a conversation that can be all on its own of compensation, externally, family members and there’s so much from a family employment policy and compensation. We’ll leave that. I’ll leave that for another conversation, Barb.

As we as we near the end of our conversation today, before we wrap up our episode, there’s a few questions that I ask each guest. Are you ready for the hard ones?

Barb: Sure.

Cory: Alright. Barb, what is one key strategy you believe is most essential for building a successful family enterprise?

Barb: I say good governance.

Cory: Awesome. And the most common challenge that you see, when working with family enterprises what are you encountering when it comes to wealth transition, or that generational continuity.

Barb: I would say on the generational continuity, it’s, eventually, it has to happen and don’t keep putting it off and waiting until, sadly, an emergency, health situation is forcing you to do it, and then you’re not doing it pro properly because you’re really behind the eight ball.

Cory: And so, it’s really just the starting that as soon as possible and being prepared.

Barb: Yep. Having in the conversations.

Cory: Absolutely. And in your experience, what are the top 3 key qualities that successful family enterprise leaders possess? And leaders could be anyone, within in the organization, of course.

Barb: Well, being able to create followership and people want to work for people that they’re inspired by. I think that’s super important. In a family business I think making sure that you’re collaborative and inclusive and that you’re willing to hear from Nextgen and other, external perspectives, don’t just because you’ve built a successful business doesn’t mean you know at all.

And I think, humility, having an understanding of your own strengths and weaknesses and, not being afraid to hire people to fill those gaps. Lastly, I would I would say embracing change.

Cory: Absolutely. And change is so quick these days.

Barb: One thing I didn’t touch on and I think is an important sort of closing comment is I look at advisory boards as probably the best insurance policy that you’re going to have because as an owner, If anything happened to you tomorrow, if you have an advisory board, you know that there’s people around the table that know your business, that can you know, keep things going until you, you know, find a replacement or, you know, whatever needs to happen.

And typically, as well if you have an advisory board, one of the things that they are usually really good at pushing is making sure that there is an actual emergency plan in pay place so that you know beforehand if you got hit by a bus, who is going to be stepping in and running the show until you get better or until you find somebody new.

Cory: I love that. I think contingency planning, you can plan for the expected, but you also have to plan for the unexpected.

Barb: Absolutely.

Cory: That’s great. Barb, before we conclude our discussion today, I’d like to highlight. Where our listeners can engage more with the conversations that you’re having, could you kindly provide us with where our guests can find you?

Barb: Sure. my email is [email protected] and we have an office in Vancouver and Toronto and also one of our partners in Ottawa. We do work right across the country and, happy to do to connect.

Cory: Great. And Barb, you did mention that there was, something that we hadn’t covered, and I’m appreciate that that you added it in. But I just wanted to make sure that there was anything else that you wanted to share with our audience that we didn’t have the chance to touch on.

Barb: No. I don’t think so. I mean, family businesses place such an important part in our economy and I started out feeling privileged to be able to have worked with so many and, it’s just a I feel blessed because what I do is not work for me. I truly love what I do.

Cory: That’s terrific, Barb. Thank you. Thank you for your time. Alright.

Barb: Have a great day.

Cory: You too.


Thank you, Barb, for taking the time to share your experience and expertise with us today.

Your insights have been incredibly valuable, and we’re grateful for your contribution to this episode.

As we conclude our episode, we trust you took away a couple of items that you can contemplate within your family enterprise on your own continuity journey.

In our discussion, Barb navigated the nuances of integrating external directors into family enterprises, unpacking potential challenges and stressing the importance of board evaluations and alignment with family values.

Throughout our conversation, Barb shared practical insights, emphasizing the delicate balance between control and incorporating external perspectives.

Her guidance extends to mentorship programs, tailored coaching, and the integration of external voices, all aimed at facilitating smooth transitions within family enterprises.

I’m truly thankful to Barb for sharing her time, expertise, and insight with us during this discussion For further guidance and to explore more on these vital aspects, within your family business, reach out to Barb Shonnowski at Watson Board Advisors.

We’ve provided all of their information and links in our show notes.


This program was prepared by Cory Gagnon who is a Senior Wealth Advisor with Beacon Family Office at Assante Financial Management Ltd. This is not an official program of Assante Financial Management and the statements and opinions expressed during this podcast are not necessarily those of Assante Financial Management. This show is intended for general information only and may not apply to all listeners or investors; please obtain professional financial advice or contact us at [email protected] or visit to discuss your particular circumstances before acting on the information presented

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