Like most people who work in a family office, I was hired for my subject matter expertise.1 But subject matter expertise alone doesn’t prepare you to be a family office leader—not at any level, not in today’s world.
The families we advise require something different from us in these times. They require that we also be leaders who can navigate fast-changing forces in the global economy, complex political, cultural and family dynamics and new expectations from the rising generation of family enterprise owners.
In short, the new secret formula to becoming the most trusted, innovative advisors for these times comes from adding a trust-based leader to our roles as subject matter experts.
The good news is that cultivating leadership abilities—in ourselves and our teams—not only helps us better meet today’s challenges but also delivers an array of benefits, including improved productivity, better solutions and, perhaps most surprisingly, more fun at our jobs.
What follows is an account of how I recognized the need to rethink my role as well as the roles of others in my family office; how my family office changed our culture to embrace trust-based leadership; the obstacles we encountered and how we overcame them; and the positive outcomes that resulted—as it happens, even during a pandemic.
Rethinking Leadership
Here are some of the many reasons why we need to rethink family office leadership today:
1. Shorter longevity and wider focus. A recent study revealed that, by 2026, Fortune 500 companies are likely to remain Fortune 500 companies for just 14 years on average. That’s less than half as long as they did 50 years ago.2
In the field of family business, a landmark study sponsored by the Family Firm Institute and family business consultant Joe Goodman revealed that the average family business in the United States had changed their core business an average of 2.1 times. It also found that 90% of family businesses owned more than one business, and 20% owned five or more businesses.3
These findings send a clear message: To survive and thrive in today’s global, complex, interdependent and unpredictable world, all businesses—but, arguably, above all, family businesses—must be capable of dealing with the rapid change that can dramatically influence how families reflect on what truly matters and how they define value.
2. Rate of family office transition. An estimated 36% of single family offices are planning for leadership succession within the next six years and an added 24% within the next seven-to-10 years, according to the Family Office Exchange (FOX) 2019 Family Office Study.4 That’s a total of 60% within the decade.
3. Changing expectations of rising family enterprise leaders. The rising generation expects a different kind of leadership. As the president of a family office, I see our role as supporting the first- and second-generation owners while also creating an organization that will meet the needs and expectations of the third generation. This, of course, requires a bit of a balancing act because the roles and needs vary across those generations.
For example, second-generation leaders often find themselves serving as stewards of the family’s pioneering founders and are often comfortable maintaining arm’s-length business transactions with the family office. But third-generation family leaders often think, feel and act quite differently.
According to a 2015 FOX Report, Millennials: (1) prize relationships; (2) crave authenticity; (3) operate in real time; (4) value entrepreneurship; and (5) are more worldly than wise—and know it.5
That first item—that they prize relationships—is an especially strong driver of the need for trust-based leadership. Despite the caricatures about Millennials being tied to their phones, many crave more intimate and trusting relationships than their predecessors did. They want to feel connected, to have conversations and to sense that they’re known.
Millennials are also often more conflicted about wealth than earlier generations, which can raise several new complicating factors for the family office. Studies have shown that some of the greatest risks to the continuity of wealth is preparing the next generation of leadership—and mastering communication—both of which require resources, time and effort.6
All of this puts a premium on developing trusting relationships—and there’s no doing that with family enterprise owners if we can’t first do it among ourselves.
Beyond Business School
I grew up in an entrepreneurial home in Ohio. My dad was a farmer and owned a construction company. I watched how he treated employees and tried to learn from him. But when I went to college to study accounting and finance, I rarely, if ever, heard about the importance of building trusting relationships. I don’t think many people who study business do. As a result, in our work to date, many of us, due to our training and the culture of family offices, have focused primarily on data, information and numbers.
We’re hired as accountants, attorneys and investment professionals—people who, at least in our work, have been trained to focus on matters of the head over the heart. We imagine relationship building and communication skills to be the purview of therapists and social workers.
Many of us have been taught that emotions aren’t useful or even welcome in the workplace. We pride ourselves on our rationality and making decisions based on logic and reason.
But the reality? We’re all emotional beings, and emotions play a big part in decision making and problem solving—and this is as true about financial issues as any others. Arguments about money are the second leading cause of divorce, according to a 2018 study by financial advisor and author Dave Ramsey.7 How can we overlook that emotions play a role in the decisions family enterprise leaders must grapple with?
Neuroscience has also revealed strong connections between emotions and decision making. “There’s a long tradition of seeing reason and emotion as being in opposition to one another. Translating this perspective to neuroscience, one might imagine that successful decision making depends on the rational frontal lobes controlling the animalistic instincts arising from emotional brain regions that evolved earlier …,” as Dr. Christian Jarrett wrote in Wired. “But the truth is quite different—effective decision making is not possible without the motivation and meaning provided by emotional input.”8
Even the World Bank has recognized the connection between trust, which requires emotional intelligence, and economic growth. A 40-country study conducted by Paul J. Zak of Claremont Graduate University and Stephen Knack of the World Bank found that not only does trust speed up decision making but also, it’s directly tied to growth. Countries with very low trust environments often have low rates of investment and economic growth, and countries with high trust have correspondingly higher rates of investment and growth.9
In short, cultivating some emotional intelligence matters in business as in all things. It’s the key to trusting relationships.
This is something I had to learn the hard way.
Beginning the Process
In late 2019, my family office decided to focus on team leadership. This allowed us to bring my co-author and leadership coach Greg McCann to our offices to meet with our leadership and management teams. He understood leadership development and team-building in the family office context. He could also provide coaching, facilitate difficult discussions and offer necessary training.
The management team asked Greg to facilitate discussions with me and the two other members of our leadership team because the team felt so strongly that its members weren’t being heard. Their frustration was percolating more than I realized. That was my “ah-ha” moment.
Up until that point, I had been trying to make changes on my own, and it wasn’t working. We didn’t mesh as a team, and I hadn’t created the environment we needed to develop a new culture. There was a lot of dysfunction—and a distinct lack of trust. There was misunderstanding, anxiety and frustration.
To create the changes I knew were necessary, including a culture of trust-based leadership, I would have to dive into a dedicated process with my team. To do this, we would need to develop two core qualities:
- Capacity, or the ability to evolve your mindset, emotional intelligence (self-awareness and empathy), effectiveness in framing complex issues and ability to step back from a system to see it more clearly. That system can be your ego, client family or their enterprise(s), culture or industry.
- Agility, or having the mindfulness to decide which style or “gear” best suits the circumstances and goals. Most of us, for example, start off crawling in life, then walk, run, ride a bike and drive a car. A few of us become pilots. A pilot then may have the capacity to fly to another country but use their agility to decide that taking a bike to the corner store makes the most sense. The same is true with leadership: We have to call on different skills at different times.
As Greg puts it, this can be stated most succinctly in the form of two questions (which have become mantras for me):
- How do I get comfortable being uncomfortable?
- What gear should I be in to deal with the particular situation at hand?
When I ask myself these questions, I tap into a coaching and mentoring mindset that encourages my team members to lead themselves. These questions also help me create a safe place for my team members to more fully be who they are and, as a result, contribute their best selves to our work.
Leadership and Team-Building
Over the past year, under Greg’s guidance, I’ve worked with my leadership team on developing trust-based leadership and cultivating team-building based on a three-tiered model of the role of leadership:
- Expert. Leaders with this mindset tend to think they always need to be busy doing (as opposed to having the agility for deep thinking or delegating), thinking of themselves as the center of the wheel and each team member as being a separate spoke in a wheel.
- Achiever. These leaders focus more on strategic outcomes and are more mindful of gaining buy-in from team members. The leader sets the vision and works to get buy-in from the team.
- Catalyst. This is the third or highest level, in which a visionary leader focuses less on “me” and more on “we”—that is, the team. A catalyst-level leader is agile enough to decide whether to take charge, take time to gain buy-in or empower the team to lead.
Catalyst, in some ways, is what we aspire to be, but each role serves a purpose. The point of developing an agile leadership style is knowing how to switch among them depending on the need. When we’re focused on technical work, my team may need me to be a subject matter expert. At other times, they may need someone who can provide a solution, a thought partner or a mentor.
The trick is to decide which gear to be in—or which skill to tap into. Sometimes, that’s easy. Sometimes, you might recognize a need to shift gears partway through a conversation. That’s why we’ve focused on developing a keener self-awareness.
Five Behaviors
To facilitate trust across our team, we also used the Table Group’s Five Behaviors of a Cohesive Team framework,10 focusing on developing how to:
- Trust one another. We recognized that we had to connect on the real issues that challenged us, let our guards down and believe that other team members had our best interests at heart. This was foundational.
- Engage in (healthy, rigorous, respectful) conflict around ideas. We historically tended to avoid conflict, but focusing on healthy, rigorous, respectful conflict helped us reframe conversations from potentially personal and hurtful to more idea-based and helpful.
- Commit to decisions. We reframed how we made decisions from either unilateral or consensus-based to a focus on a fair process in which all relevant individuals felt they had truly been heard so they could then commit.
- Hold one another accountable. This focus helped me recognize that the more a leader is willing to call out team members on their commitments, the less they’ll have to do so in the future because the team will confront each other, thus creating healthy peer pressure.
- Achieve collective results. This helps us lessen the impact of personal agendas that are misaligned with the team or organizational goals and focus on rowing in the same direction—hoping, of course, for opportunities for individual goals to align with those of the team.
From Theory to Practice
So what did all of these good ideas look like in practice? There were several training sessions and many conversations. But there were also moments that, perhaps most vividly, illustrate what we had set out to accomplish.
One of the first moments happened quickly and easily. There are two floors in our building. The family foundation is on the first, and the family office is on the second. Two of our teams were situated on the second floor while one, the investment team, was on the first floor, separate from the rest of us. This was an easy fix. “We’re a team,” I said simply. “We work together.” And I moved the investment team up to join the rest of us.
We also worked on examining our communication patterns and how they did or didn’t serve us. For example, we have one team member who tended to belabor the point, which drove other people a little bit crazy. Respectfully, we talked to him about it, and he understood our concerns in the context of our new culture of vulnerability-based trust. (Note: We each had our own version of a communication pattern that we brought to the table yet were unaware of and had one-on-one sessions with Greg to start to make these patterns into choices, that is, agility.)
Now we have a shorthand for when he slips back into that behavior. Anyone can simply say: “We need to put a period on that.” And that’s that—because that’s what real trust does. It allows people to share, hear and respond to authentic feedback from each other. The result: a much more productive team.
Our efforts to create a more trusting culture also allowed another team member to open up about feeling like an outsider—because he was an immigrant with different cultural traditions than the rest of us, and no one ever talked about it or reached out to talk to him. He felt that way, he said, for eight years. But after finally feeling comfortable enough to open up about it and be heard, things shifted. For the first time, he joined us for a happy hour: a sure sign of feeling more like part of the team.
These may seem like small examples. But every effort to improve a relationship has a positive cumulative effect—or, as the poet Wendell Berry has written, cascading benefits—on the system.
Our meetings, for example, became much more productive. We efficiently move through the topics on our agenda, get new ideas and get our work done. Being able to trust in honest dialogue allows us to clear the air, which also clears away the obstacles to productive, creative teamwork.
It also leads to better problem-solving and innovation because we’ve created a culture that lends itself to generating and offering new ideas, perspectives and opinions. We allow for vulnerability and don’t get stuck in our own biases and patterns.
Importantly, this work also positions us to establish closer relationships with rising family business leaders who value that. Indeed, it’s hard to imagine how we could ever achieve that close communication if we didn’t first establish more trusting relationships among ourselves.
Among the benefits: We’ve already found that our newly developed culture of trust has enabled us to have important conversations with the family that we likely would have avoided before—catapulting us from a strictly service mentality to one that enables us to more effectively work together through better, more honest communication.
Making it Stick
This isn’t easy work. It’s about improving human relationships, and we all know that takes ongoing effort and practice. It also takes accepting that we’ll make mistakes along the way.
When COVID-19 hit in early 2020, we found ourselves reverting to our old ways: putting our heads down and being subject matter experts—until we realized what we were doing and that it wasn’t helping.
There also have been times when I’ve been the one to stumble. I remember one team leadership meeting when we were trying to decide which projects to prioritize: a wealth advisory one, an IT one or an investment one. Each project had a passionate champion. But we didn’t have the resources to move all three projects forward. It was a Friday, and I’d felt drained from the week so I largely checked out of the conversation—then abruptly ended it by saying: “Let’s keep talking about this,” which, of course, is code for “Let’s not.”
After the meeting, I realized what I had done and put the conversation on the next weekly meeting agenda to ensure that we didn’t stay stuck in conflict avoidance. And the next Friday, I approached it with a more open mind. We were able to get through the discussion and decided to move on to two projects while working to further define the third.
All of this, ultimately, then is a practice: something we need to continuously work at. That’s why we’ve invested 15 months, significant resources and tremendous effort in this work. We want it to become ingrained in our culture; we want it to stick.
Another way we work to ingrain good habits is by making sure that, in each meeting, we address one of the five core behavior changes. We’ve also assigned each member of the leadership team one of these themes to champion. In this way, we put habits and roles in place that allow this new thinking to permeate our organization and make it a reality of our daily life.
Inviting Participation
Because adding trust-based leadership to our arsenal as subject matter experts represents a significant cultural shift, I consider it important to invite leaders to be a part of this change—rather than demand that they do so. And before they decide to participate or not, I make my expectations clear in an agreement that states:
- Everything begins with vulnerability-based trust, and we all must be committed to working toward that goal.
- We’ll create an ongoing, individual and collective practice to develop our capacity and agility as leaders and as a highly functioning team.
- My role is to define what success looks like and support you as you build plans to take us there. We’ll work together to eliminate any barrier that stands in the way of achieving these results.
- Your role is to develop and execute plans that create the results to fulfill our vision and mission.
- Naming you to this group isn’t a test of, but a confirmation of, the belief in your ability to produce results.
- You’ll be given the full authority and responsibility necessary to accomplish this so long as you’re giving your full effort and operating within your defined area of freedom. I recognize that even with your best efforts, there will be unintended results and failures. That’s an expected part of the journey, resulting in your development and growth.
- The assumption is that all members of this highly functioning team will operate as peers in the context of this work, regardless of position. If
- irreconcilable conflicts arise, the expectation is that you’ll reach out for assistance, and you’ll work to hold one another accountable.
- Healthy conflict among this group is a sign of success.
- Doing this work well will no doubt require that you delegate work you’re currently doing. If you believe that you have no one to take on these tasks, it’s your responsibility to work with your manager to resolve that deficiency. If additional investment is needed to fund more positions, the expectation is that you’ll make the case for that.
- I recognize that not all of you may believe you have the authority necessary to manage these changes. My commitment is you now have it, and feel empowered to call me out on it if not.
Extending This Work
Once we understood the five behaviors we were aiming for and committed to regularly working on these areas, richer discussions, improved innovation, more work—and fun—started to happen. In truth, seeing the changes happening among my leadership team delights me. On my path to focusing more on “we” than me, I genuinely feel happier about their successes than my own.
Looking ahead, we’re now poised to take the next step and seed this work across not only the leadership team but also the entire organization. The point, after all, is that you have to build leaders at all levels of an organization, not just at the top. If you don’t, people won’t be able to move into new roles when they open up.
Shifting the culture of a family office is, in short, systems work. Trust-based leadership fits everywhere. That’s what’s great. We get to keep working at getting better at it all so we’re an organization people love working for, and we’re the best, most innovative and most trusted advisors to our families.
In a time of such rapid change and big challenges in our world, there’s something refreshing and reassuring about focusing—especially in a family business—on the importance of cultivating that core human quality of trust.
Endnotes
1. The article is based on Jill Barber’s work as president of CYMI Holdings. All “I” statements refer to her.
2. Ilan Mochari, “Why Half of the S&P 500 Companies Will Be Replaced in the Next Decade,” Inc. (March 23, 2016), www.inc.com/ilan-mochari/innosight-sp-500-new-companies.html.
3. Thomas Markus Zellweger, Robert S. Nason and Mattias Nordqvis, “From Longevity of Firms to Transgenerational Entrepreneurship of Families: Introducing Family Entrepreneurial Orientation,” Family Business Review (Nov. 7, 2011), https://journals.sagepub.com/doi/10.1177/0894486511423531.
4. “2019 Family Office Benchmarking Study,” Family Office Exchange.
5. “Engaging the Client of the Future: 2014-2015 FOX Thought Leadership Council Summit Report,” Family Office Exchange, www.familyoffice.com/knowledge-center/engaging-client-future.
6. Roy Williams and Vic Preisser, Preparing Heirs: Five Steps to Successful Transition of Family Wealth & Values (2003).
7. www.daveramsey.com/pr/money-ruining-marriages-in-america.
8. Christian Jarret, “The Neuroscience of Decision Making Explained in 30 Seconds,” Wired (March 18, 2014), www.wired.com/2014/03/neuroscience-decision-making-explained-30-seconds/.
9. Paul J. Zak and Stephen Knack, “Trust and Growth,” SSRN (Sept. 18, 1998), https://ssrn.com/abstract=136961.
10. www.tablegroup.com/topics-and-resources/teamwork-5-dysfunctions/.