Families are complex, families in business more so. For this reason, when designed thoughtfully and executed efficiently, family office governance can provide clarity on decision-making, roles and responsibilities and, ownership privileges within the organization. This not only reduces the potential for conflict but enables the family to flourish.
Yet, far too often, families make the mistake of getting caught up in implementing generic structures that have little regard for the family’s specifics. The result? A rigid set of rules and organizational designs that do not address the real issues and ultimately fail.
For this reason, families must develop governance that is sensitive to the family’s history, values, dynamics, culture, and objectives and is designed in harmony with their unique situation and needs.
Genograms are practical and useful tools for understanding family dynamics and offer insight to guide family office governance processes. After all, as the adage goes, “You don’t know where you’re going until you know where you’ve been.”
What is a genogram?
Genograms, much like family trees or organizational charts, are graphic representations of family systems. They can depict relationships or histories in greater detail than family trees, allowing users to visualize hereditary patterns and psychological factors inherent in relationships.
Initially used in therapeutic and clinical settings, genograms have developed and been adapted to fit various themes over the years and are now used in multiple fields, from medicine to education and business.
Genograms and family offices
Many of the family offices’ challenges arise within the family system and become repetitive patterns that pass down through the generations. Despite their exceptional business acumen and talent, many business families cannot objectively identify their family’s negative patterns that lead to behaviors that ultimately have a detrimental effect on relationships and the business.
According to Julien Lescs, family office advisor and co-founder of Kanope Impact, ‘By bringing in family governance specialists, family businesses can identify the emotional ownership barriers that deter the next generation from continuing the legacy’. Lescs recently published a thesis around the idea of “Genogram 2.0”, where the family business is transformed into another family member. This gives the family an opportunity to explore emotional connections and potential barriers linked to the business.
Constructing a genogram facilitates communication and discussion about the family’s biological and emotional past. This helps everyone involved better understand these patterns as well as the layers, relationships, diversity of perspectives, and health of the family across generations.
Genograms can be broad or targeted with different themes depending on the relationships or behavioral patterns the family and their advisors wish to investigate. They can be instrumental in identifying repetitive patterns that influence or affect the family and business. Issues such as sibling or branch rivalry, gender stereotypes (where sons are automatically first in line for succession), or even enmeshed relationships where family members cannot achieve autonomy within their roles are examples of contentious topics that may be investigated. In other cases, each person’s relationship to the family fortune and how this influences attitudes and decisions within the organization may be explored.
According to the paper, Developing a Family Business Genogram by Manfred F. R. Kets de Vries and Randel S. Carlock, authors of “Family Business on the Couch: A Psychological Perspective,” a well-crafted genogram enables family offices to address three primary questions. The first is how prior experiences shape collective behavior and interactions. The second is what can be done to make current relationships, whether positive or conflicted, more meaningful; and the third, what values and behaviors will help the next generation construct more positive future interpersonal relationships?
The answer to these questions can prove powerful tools in identifying and understanding both individual family members and the family’s collective values, perspectives, attitudes, motivations, relationships, and patterns. From these, relevant, realistic, and practical family governance processes and structures, tailored to the family’s unique requirements can be developed. When implemented correctly, these can then curtail negative patterns and conflict and facilitate positive ones that embody the family’s values, encourage growth and prosperity within the family and its business, and set the course for future generations.
Getting started with genograms
Genograms are usually most effective when they depict three or more generations involved in the family office. Generally, the most senior generations are reflected at the top of the genogram, extending down in multiple branches as the family expands across generations. Much like a family tree, family members are arranged by couples with their children and grandchildren beneath them.
Depending on the topic being explored, factual information such as births, marriages, and deaths can be recorded. Other information such as roles in the company, relationships to others, or even dominant traits may be detailed under each family member’s name. Various symbols exist to assist in the graphic depiction of various emotional relationships.
It is vital to be concise and bear in mind that genograms are not designed to create a comprehensive family history but rather identify patterns of relationship and behavior within the subject being explored.
While most family members are generally aware of family patterns and arrangements or even relational conflicts on some level, being made cognitively aware of these and appreciating their influence and significance is very different. Seeing these things on paper often elicits a different emotional response than discussions do. This can help families move from being caught up in revolving discussions to taking actionable steps to develop governance processes that facilitate impactful change within the family office.