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How do you find the right consultant?

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When interviewing prospective family business advisers, follow these steps to ensure a good fit for your situation.

By Ellen Frankenberg

Most clients who engage my services as a family business psychologist represent the opposite ends of a traditional bell curve. Clients at one extreme are enlightened, proactive people who want to ensure the best outcome for both business and family. Those at the other extreme are caught in a morass of family or management conflict and desperately need somebody to bail them out. In the middle of the curve lie many profitable family companies that have not yet experienced enough pain to realize they are sliding down a poorly marked path, strewn with the rubble of discontentment.

Most of us don’t change unproductive behaviors until the pain of maintaining them becomes greater than the comfort they provide. Not speaking to the sister who works down the hall from you may allow you to ignore your pain for one more day, but the widening chasm of disrespect may slowly split apart your business and your family.

Probably the best time to consider calling in a consultant is when you have not been able to resolve a problem using the skills in your own toolbox. A competent professional can analyze your situation objectively and provide solid information about the best practices of other family firms, keeping you away from the far end of the curve.

Here are some examples of family business owners who could benefit from professional advice:

1. No Plan Stan: For each of the past five years, Stan has beaten the averages for his own tough industry, sustaining annual profits of 8% to 10%. He directly manages every aspect of his company. His brightest nephew, a potential leader, was recently hired away by an out-of-state competitor. Stan, now 57, enjoys the action so much that he thinks about making better widgets 24/7. He won’t create a written succession plan, even though he now weighs 247 pounds, smokes a pack a day and startled his doctor with the results of his last checkup. He needs to develop new skills to handle realistic succession planning.

2. Indecisive Ida: Two years ago, after the sudden death of her husband, Jack, Ida interviewed four different advisers about how to manage her “second to die” trust fund. She never chose one; she believes her husband was not well served by his own “trusted” attorney. Jack, who made all the business decisions, never determined which of their four sons would be his successor. Now that Ida owns 100% of the company, she fears the sibling rivalry she was never able to soothe will erupt and destroy the business that supports the whole family. Recalling her past disappointments, Ida is afraid to make a sound decision.

3. Distant Dan: Dan keeps his office door closed so he can focus on financials. He rarely shares his long-term thinking, even with top managers. His two sons, in their late 30s, are competent managers in other companies, but they have no idea about the value of their father’s company or his plans for future leadership. Dan keeps his bright, successful sons at a distance, even though they have expressed interest in working with him. Recently Dan was approached with a solid buy-out offer, but he has no idea what his family’s response will be if he announces a decision to sell. His fear of conflict has caused major communication problems in his family.

4. Successful Steve: Steve’s “mom and pop” business has blossomed; annual revenues now approach $200 million. Steve, a classic founding entrepreneur, just celebrated his 50th birthday and enjoys weekends boating and skiing with his three teenage children. He dreams of passing the business on to the next generation but realizes any successor will need considerable maturity to lead a company with more than $300 million in annual revenues, which Steve plans to achieve by age 60. His wife favors selling the business when they both reach 55 so they can travel together when their eldest hits 23 and the youngest heads off to college. They need a succession plan that meets their own needs as well as their company’s.

5. Explosive Ed and Ted: Last week, in an unexpected rage, Ed knocked everything off Ted’s desk and stormed out of the room. Later, Ed explained that he’d just found out his parents still plan to give Ted 50% of the company, even though, in Ed’s opinion, Ted botches every project he’s assigned. Ed is convinced that his parents always “spoiled” his younger brother and have tolerated his drinking problems too long. Ed, as president, offered to buy the voting shares, but his parents refused, saying they want to be “fair” to each of their sons. The family’s conflict is rooted in false assumptions.

Tips on getting the right advice

In my experience, family entrepreneurs usually find consultants by attending presentations or conferences, referring to Family Business Magazine’s Directory of Advisers or other print or online resources, or seeking referrals from friends or advisers. The Family Firm Institute (, a national organization dedicated to providing educational and networking opportunities for family business advisers and educators, can provide names of credentialed professionals in your area. But that’s just the beginning.

The right consultant for you is someone who has earned your trust. After all, this outsider will be permeating the inner circle of your family and your business.

Here are some steps to consider before you make your choice:

1. Try to define the problem that’s got you stumped. Can you write it down in one or two sentences?

2. Identify who is involved in this problem, and who must participate in finding a solution. Owners? Family members? The management team?

3. Determine the type of expertise your problem calls for. Legal? Financial? Managerial? Psychological? Or is a multidisciplinary team of advisers desirable? Many family business issues require collaboration among several different professionals, with one of them serving as quarterback. Just be sure you aren’t hiring the wrong person for the job. For example, don’t ask a lawyer to help brothers develop conflict management skills, or an accountant to assess candidates for company leadership, or a psychologist to give advice on selecting a new IT system.

Here is an objective system that’s commonly used by corporate decision-makers who spend thousands of dollars on consultants annually:

a. Ask your relatives (or, if your family is large, a small group of family members representing different generations) to work together to prioritize their criteria for choosing a consultant. Ask them to assign a percentage to each criterion, depending on its importance to your family, so that all the items add up to 1.00. As you can see in the example below, one family decided their most important criterion was “values that match our values” and the least important was “price.”

A. Credentials: .15
B. Overall competencies: .20
C. Experience with our issue: .10
D. Price: .05
E. Values that match ours: .25
F. Good references: .10
G. Personal chemistry: .15
Total: 1.00

b. Invite two or three candidates to be interviewed by the committee. Then ask committee members to rank each candidate on a scale of 1 to 5, with 5 being the best score on each criterion. For example, an individual who is perceived as having top credentials would be given a rank of 5, which would then be multiplied by .15 (the relative importance of credentials) for a score of .75. Compare the candidates’ total scores. In the example given in the table below, candidate B was selected.

Importance A B C
Credentials .15 5 3 1
Overall competencies .20 4 3 2
Experience with our issue .10 3 2 4
Price (5 = most expensive) .05 3 5 2
Values that match ours .25 1 5 3
Good references .10 4 5 1
Personal chemistry .15 2 4 4

Totals 2.95 3.85 2.50

Some families schedule a daylong workshop or weekend retreat with a consultant, asking him or her to educate them about best practices, review their past and facilitate a discussion in which they envision their future. At the end of the meeting, family members assess whether each relative feels comfortable enough to continue working with this individual. Does this person treat each family member with respect? Does the consultant have the right competencies to match our needs? Will this person be objective enough to help our family get beyond emotion to make tough decisions?

Of course, consultants aren’t miracle workers. Family members must contribute their own skills, insights, time and energy to the process. Many consultants, after an initial meeting with the family, write a letter of agreement in which they outline realistic goals and estimate the time and costs involved.

Usually an engagement with a family that has taken years to develop its problems will last at least a year, with the option of an ongoing commitment thereafter. Some families focus on one problem at a time (e.g., succession planning, conflict resolution, estate planning) and then return for more advice years later, when other issues emerge (developing a board of advisers, hiring a non-family executive, deciding on a buyout offer).

After investing their time and commitment, families should take away written documentation of their hard work. Family business consultants sometimes help in the drafting of a family charter, which describes family members’ core values and goals for the future, especially as they pass into more complex second or third generations. Consultants also may aid in the development of a family strategic plan, which defines specific policies that the family agrees to follow (such as criteria for hiring a family member, owning stock or selecting the next CEO).

One good idea from a family business professional—especially when it’s tailored to your situation—can be priceless. The time, energy and money you spend on the right consultant may be the most economical way to avoid the morass at the wrong side of the bell curve.

Ellen Frankenberg, Ph.D., is a family business consultant who facilitates family meetings and coaches executives and successors ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).

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