ADV I S ERS F O R U M
Beyond ‘cohesion’: Why terminology
must evolve through the generations
BY JOSHUA NACHT AND ANDREW PITCAIRN
F
amilies experience significant and sometimes
difficult changes over the years as elders pass
on and new family members grow into leadership roles. Amid such transitions, doing things
the way they’ve always been done can be a recipe for disaster. What worked for a two-generation family with five members may not work when the family
reaches the fourth generation and now involves multiple households, varying wealth structures, different
liquidity needs and geographical separation. For business families to succeed, we suggest they embrace a
continuum of language that more accurately describes
their circumstances and thereby supports their communication and relationship efforts.
Language greatly affects the way people think, how
they interact and how they move forward. Having the
right words to describe natural, generational changes
in family relationships can help members understand
and embrace their family’s evolution, creating new
opportunities for growth and improving the family’s
response to challenges.
Joshua Nacht, Ph.D. (left) is a third-generation, married-in
member of the board of directors of Bird Technologies,
based in Cleveland, and a second-generation owner of
a real estate development and management company
in Edwards, Colo. Andrew Pitcairn, a fourth-generation member of the Pitcairn family, is the chair of the
Pitcairn Family Council.
The word “cohesion” has become a hot term in the
the family enterprise field. Family business researchers and advisers talk about family cohesion, emotional cohesion, financial cohesion and spiritual
cohesion. These terms can be confusing. Complex
multigenerational families evolve over the years,
and cohesion may not be the most important goal at
every stage of family development.
Below, we describe relationships in business-owning families through the generations, using a range
of terms that reflect subtle yet important variations
in how a family interacts. These stages occur on a
continuum, and the concepts purposefully overlap.
One term or concept does not necessarily start when
another stops, and managing the transition from one
concept to another is art, not science.
Generations 1 and 2: Unified
“We are stronger together.”
In the early generations, the family unit is small and
often unified around the entrepreneur, who has a
strong guiding vision for the family business. The leader of the business is usually the leader of the family.
Relationships remain close, and being unified is the
obvious way to operate successfully together. Unity is
defined as the ability to work together as a tight family unit to achieve success through a shared vision.
Although families should expect varying perspectives
and disagreement even at this stage, unity as an aligning force provides many benefits to the family. The G2
sibling group may also accept a unity perspective as the
basis for their relationships, depending on how many
siblings there are and the group’s emotional closeness.
An example of family in the Unified stage is the
Smith family, a 12-person G1/G2 family with an operating company and an active entrepreneurial patriarch. Mr. Smith has worked hard to build his business,
has set up a foundation to fund his multiple passions
and has done extensive, visionary estate planning
with the help of professionals. At this point, Mr. Smith
realizes the need to address succession and transition planning in both his family and business, and is
in the beginning stages of forming a family council
in an effort to include the opinions of his sons and
daughters.
ADV I S ERS FO R U M
The family has an annual retreat to discuss business-related issues, philanthropy and how to move forward as an ownership group with potentially unequal
ownership percentages. Mr. Smith is the driving force
behind decisions for both his business and his family at
this stage, and the family is unified behind his vision.
Generations 2 and 3: Cohesive
“We stick together for our common good.”
For the next development stage, cohesion is a wonderful term to use. Cohesion is defined as making the
intentional choice to stick together for the common
good of the family. The family is growing across generations and is no longer a single unit; children are
growing up in multiple homes with an accompanying
divergence in values, relationships and experiences
that dramatically increases the complexity of family
dynamics. As the range of perspectives and values
expands, more frequent and meaningful disagreement
is to be expected. The business may not be able to provide employment for all family members (nor do all
family members want to work in the business), so the
group of non-participating owners grows in size and
significance.
These factors prevent family relationships from
being “unified.” The family’s thinking and language
must shift to emphasize how this more complex and
diverse group can stay together. Cohesion works as a
concept at this stage because it describes people who
may be moving apart physically or emotionally, but
purposefully maintain the bonds and relationships
that perpetuate the advantages of a business family.
At this stage, exploring what emotional, financial and
social cohesion mean to the family can be informative and productive.
Using appropriate words and
concepts will help family members
understand how they can best
relate to each other.
The Dunn family, a 43-person G2/G3 family, has
realized the need for a more inclusive model as family
members have increased in number and moved apart
from each other. The focus has transitioned from a
patriarchal view to a perspective of keeping the family
cohesive and involved. They have a highly functional,
nine-member family council that puts out a monthly newsletter and helps organize the annual five-day
family camp. To encourage wide participation, the
family has established various task forces made up
of three to seven family members. These task forces
focus on family vision, concerns, policies and education, reporting their findings to the family council.
The family, which places a premium on communication, realized the current (millennial) generation
was not reading emails but does use social media. As
a result there is a social media policy in place, and
social media are used to funnel information. The family is inclusive across branches and generations and
shares a goal of building a cohesive ownership group
to steward their successful business.
Generations 3, 4 and Beyond: Connected
“We choose to participate.”
In the third and fourth generation and beyond, the
family has grown in size and complexity and typically
incorporates a wide range of values, wealth, wants and
needs. Multiple generational perspectives also mean
family members will see the family and its enterprise in a variety of contexts shaped by different worldviews. Because of the family’s exponential growth,
cousins of similar ages could be of different generations. As the family spreads geographically, cousins
may grow up not knowing one another. Generational
shifts may mean wealth structures are vastly different from household to household. Family dynamics
can be quite complex, as the family tree now includes
a number of different branches. Disagreements may
have caused long-standing disconnects among various
relatives. Segments of the family may have chosen to
sell their ownership, under circmstances that could be
amicable or acrimonious. The group of non-operating
owners may well have majority ownership of the family business, or business leadership may have been
transferred to non-family managers.
At this point, the family must consciously decide if and
how members want to be connected. The concept of connection allows for greater choice and freedom in how people relate to one another. By the third or fourth generation,
family ownership typically cannot be described as “cohesive” because the family itself is simply too large, complex
and diverse to hold everyone together. Trying to maintain
cohesiveness among a large G4 family ownership group
may actually be detrimental because the concept doesn’t
allow for the differences that must be embraced at this
stage. Connection, on the other hand, encompasses the
ability to maintain close relationships if desired, or to be
more distant yet still engaged. Connection, distilled down,
implies that everyone has a say on if and how they want
to be connected—without judgment.
An example of a connected family is the Watsons,
a G8, 150-person family who sold their successful
ADVISE R S FORU M
operating company years ago. They have a family
foundation, but no one lives in the original hometown,
and their geographic footprint is large. They realized
that while trying to stay cohesive simply wasn’t possible, they needed to remain connected. Among the
important questions they asked themselves were:
• What does it mean to “be together”?
• What is the value of “getting together”?
• What is the value of doing good work together?
The family believes in the old adage, “A family that plays together stays together,” and they use
this approach to remain connected. The family has
a destination reunion about every three years; about
120 people attend. They also encourage “mini-gatherings” in places near locations where clusters of
family members live. They produce a newsletter, circulated twice a year, that focuses 50% on the family and 50% on the family foundation. Many believe
that the shared interest in the foundation is what
will continue to connect the broader family. Finally,
they realize the need to become digital and have
started to build an online family tree, adding video
and pictures and depicting family members’ hobbies
and professions. All of these approaches are aimed at
keeping the family connected even as they grow in
size and location.
What is best for your family?
Unity, cohesion or connection? What’s most important
is that families take notice of the words they are using
and embrace the concept that works best for their family’s current circumstances. Be sure you are engaging
in a meaningful dialogue about your family relationship dynamic. We encourage families to put serious
thought into their specific dynamics and what they
are trying to accomplish. Using appropriate words and
concepts will help family members understand how
they can best relate to each other, which we believe
will lead to more favorable outcomes for the family
and family ownership group.
By the third or fourth generation,
family ownership typically cannot
be described as ‘cohesive’ because
the family is too large, complex and
diverse to hold everyone together.
Being adaptable, creative, attentive and, let’s face
it, a little humble goes a long way in the ongoing process of family development. Successful business families continually re-evaluate themselves and embrace
a spirit of evolution in their thinking. A good friend
once said, “It’s not about best practice, but rather
FB
practicing what is best for you.”
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Reprinted from Family Business Magazine® May/June 2015
© Family Business Publishing Company • 1845 Walnut Street, Suite 900 • Philadelphia, PA 19103-4710
(215) 567-3200 • www.familybusinessmagazine.com
About Pitcairn
Pitcairn is one of the world’s leading family offices. We are dedicated to helping families sustain and grow their
substantial, often complex financial assets and supporting the unique heritage of our clients across multiple
generations. Pitcairn works with families and single family offices filling one need or providing comprehensive
solutions. Since our founding as a family office in 1923, we have successfully transitioned wealth across generations
of families through a combination of effective planning, strong investment results, thoughtful governance, and a
commitment to education. Headquartered in Philadelphia, Pitcairn also has offices in New York and Washington,
DC as well as a network of resources around the world. You can learn more about our family office services as well
as find additional articles, news, and events on our website at www.pitcairn.com.