Discussing Purpose Across Generations

BanyanGlobal senior research fellow Marion McCollom Hampton sat down with Banyan’s editorial director Karen Dillon to discuss what it means to have a purpose in a family business.

Time Stamps and Key Takeaways from the podcast are below.

Time Stamps:

[0:23] Marion explains what it means for a family and family business to have a purpose, both in owning the business and owning the business together, and why it is important to be open with discussion about these questions.

[2:45] It can be especially hard for the next generation to have open dialogue with their family about the purpose of owning the business for a variety of reasons entangled in relationships with family members and to the business.

[4:24] Marion shares her advice for how these conversations about purpose should be brought up and take place across generations in family businesses.

[10:10] Marion describes the factors that make up an acceptable and well-thought-through purpose and why it is important to be on the same page about this purpose.

[15:21] Purpose in each different generation typically follows a pattern and each generation typically feels similarly about their connection to the business and previous generations.

[17:57] Marion answers the question: is there are point in time where it is impossible to have a shared purpose?

[21:14] The purpose conversation should not just happen once. Marion explains how to get the conversation going and when to bring it back up.

Key Takeaways:

• Purpose is often assumed, but it shouldn’t be. Too often different family members have different ideas about what the family business purpose is. Families need to talk with each other to find agreement on why they own the business and why they own it together. It works best when families have an open dialogue and make the choice to do it together.
• How do you start a conversation about purpose? Each generation may have a different answer, so it’s important to get on the same page. Often, the current generation just assumes that the purpose is obvious and will sometimes put in place governance and tax structures to support their assumptions. So having cross-generational conversations is important – to ensure that one generation’s purpose doesn’t override the next generation’s sense of purpose. Purpose can evolve from generation to generation, but until those assumptions are spoken and explored, there’s potential to make decisions that negatively impact the next generation.
• Typically, the founding generation’s purpose for the family business starts from need or because they have a dream. G2 usually feels the effects legacy and the obligation to the business to carry on their parent’s dream and the business that provided for them. G3 usually has more diverse owners that can care about a variety of different things based on their upbringing, their connection to the story, and their situation in life, etc.
• It’s ok for different family members to have different ideas of purpose. But eventually they must find a way to align. To truly align on purpose, each individual should take time to think through what is most important to them and how it should be reflected in the joint-purpose of the family. This includes asking themselves if they have all the information they need to make their choice. Ultimately, having agreement on purpose will be critical for both the business and the family, especially during challenging times.
• There’s a cultural component to whether a family can continue to find a shared purpose generation after generation. A core purpose or family culture can have a lasting impact because of the understanding and perpetuation of how the business operates and because individuals subsume their personal goals for the greater purpose.
• The purpose conversation should happen at the very least, every generation, but it is better to have this conversation every 5 years or so. Some families articulate this message constantly, so it is always in the forefront and part of the conversation.
• It takes practice to have these conversations well and it should happen in the appropriate places—the owner or family council if these forums are set up, and facilitated if not.
• But not every group of owners can ultimately reach a shared purpose. And that’s ok, too. If you understand that you no longer share a sense of purpose, then one option is to work together to find the least painful exit possible for those who can’t agree.