Are “Best Practices” the Best Practice for Your Family Business?

Is a Best Practice the Best Solution for Your Family Business?

Conflict and uncertainty eventually challenge most family businesses.

There is no shortage of books and articles espousing a so-called “best practice” for a family business. While many of these often provide great value for their intended audience, it is important that stakeholders not follow these recommendations blindly. Below are some points to consider when evaluating a best practice for potential implementation.

VALIDITY

Is the best practice in question supported by unbiased, statistically valid data – and not just anecdotal? It is often difficult and/or time consuming for both stakeholders and advisors to make this determination. For this reason, it is wise to maintain some degree of skepticism.

APPLICABILITY

Each best practice was developed or observed for a group of companies with similar characteristics. However, no two family businesses are exactly alike. Even small differences can greatly impact the applicability of a best practice and it’s hard to know which differences matter.

PAST PRACTICE

Best practices are essentially solutions that have worked (or seemed to have created value) for a group of companies with similar circumstances in the past. The world is changing constantly and best practices that worked well in the past may no longer make sense. Sometimes today’s creative solution will become tomorrow’s best practice.

ABILITY TO IMPLEMENT

It is likely that any so-called best practice will be perceived by at least some stakeholders are not in their interests. When this is the case, the recommendations may be resisted.

Those who perceive recommendation as serving their interest will push harder, stakeholders will polarize, and the best practice coming with the best intentions may actually do more harm than good.

Good advisors are well-schooled in legitimate best practice, but are not slavishly devoted to their implementation. When a best practice is applicable, they have the skills, methods and experience to help implement in a manner that experience to help implement in a manner that minimizes conflict. In addition, they can draw upon their experience to help their clients craft creative solutions, perhaps integrating aspects of best practice, that truly serve their interests.

Original post found in Family Business Magazine Fall 2015