for Family Businesses & Their Advisors
Brought to You by Jane Hilburt-Davis
& Key Resources
As we enter this fall season, Key Ideas brings more resources for
family businesses and their advisors.
Family Meetings: The Dangers of False Consensus
ago, a social psychologist. Solomon Asch, performed a famous group
pressure experiment in which an individual is asked which of two of
four lines were of equal length. Other group members, coached in advance,
unanimously picked a clearly unequal line. The tension mounted in
the room because the uncoached subject wanted to be both accepted
by the group and confirmed that he was right, as he was certain he
From this experiment, Asch asked
the question: Under what conditions would people agree to see
the same thing and produce false consensus, or in today's world,
experience 'group think'?
the Full Article >
Who Gets Grandma's Pie Plate Workbook?:
A Guide to Passing on Personal Possessions!
from the University
of Minnesota Extension Services
Here's a gem of a guide to passing on personal possessions. Written
in workbook form, it includes worksheets which can be photocopied
for use with the whole family. It is both practical and value-based.
I have used it with several of the families in business that I work
with and highly recommend it as a great tool for deciding what's
fair in distributing property among the family members. The 'yellow
pie plate' refers to any object that holds memories and meaning
beyond the monetary value. This work book covers topics such as:
"Understanding the Sensitivity of Transferring Personal Property";
"Determine what Fair Means", Determine Distribution Options:
Establish Ground Rules"; Managing Conflicts if They Arise".
Outline and Order Information >
The Wisdom of Crowds: Why the many are smarter than the few and
how collective wisdom shapes business, economies, societies, and
fby James Surowiecki
In this fascinating book, Surowiecki explores the idea that "large
groups of people are smarter than an elite few, no matter how brilliant-better
at solving problems, fostering innovation, coming to wise decisions,
even predicting the future." He begins with a story about British
scientist Francis Galton who, while visiting the annual West of
England livestock fair, came upon a weight-judging competition.
An ox had been on display and members of the gathering crowd were
lining up to place wagers on the weight of the ox. Eight hundred
people tried their luck; they were a diverse lot, many 'non-experts'.
When the contest was over and the prizes had been awarded, Galton
borrowed the tickets and ran a series of statistical tests on them.
He added all the contestants' estimates and calculated the mean
of the guesses. Galton thought the average guess would be way off
the mark but he was wrong. The crowd thought the ox would weigh
1,197 pounds. It actually weighed 1,198!
the Full Review >
Would You Suggest?
Our Readers Provide Solutions!
In our last issue of Key Resources we presented readers
with an interesting case study of two brothers facing a family business
challenge. We invited you to respond and got some insightful suggestions.
the case study with reader suggestions >
Corporate Governance by the Numbers: It Doesn't
from The Wharton School, University of Pennsylvania
Here's a new take on corporate governance. Wharton accounting professors,
David Larcker, Irem Tuna, and Scott Richardson find that although
lots of people are coming up with governance scorecards, and best
practices and "selling this stuff, as far as we can tell, there's
no evidence that those scorecards map into better corporate performance
or better behavior by managers." They do think that corporate
governance matters but after "puzzling over reams of company
numbers, they are not confident that anyone can measure whether
one firm's governance is better than another's at least, not by
using typical metrics."
They conclude that structural indicators of corporate governance
used in academic research and institutional rating services have
a very limited ability to explain managerial decisions and firm
valuation. Structural indicators include:
- Whether a company has a lot of insiders
on its board
- Whether the boards chairman is also the
- Whether a single outside investor holds
a big block of company's stock
- Whether a company has a lot of debt
- Whether it has a lead director
No matter how they parsed the data, as the article states, they
didn't uncover any strong, consistent relationship. In many cases,
in fact, "they even saw the opposite of what one might expect,
finding for example, that companies with big boards report smaller
abnormal accounting accruals which is inconsistent with prior research
that suggests big boards are bad." They suggest that companies,
worried about their governance, do nothing rash. "Our message
is that there's not much evidence to back up bold claims and simply
benchmarking your governance to best practices isn't going to be
They recommend that companies tailor their policies and practices
to what works in your setting. As in all things, decide what's best
for you, your company, and your family. Do your homework; decide
what the board needs to accomplish and who is best for the job,
the company and the stakeholders.
Additionally, always keep in mind the new rules for publicly and
privately held companies, in the Sarbanes-Oxley Act. Here are a
two links for more information on SOX:
What Do You Think Leads to Family Business
This month we're asking our valued readers to participate in a
quick poll (it's simple and anonymous). Please click on the links
below to weigh in. We will share the results in the next issue of
For members of family businesses, what do you think is the
one factor that most contributes to family and business success?
- Family harmony
- Agreement on business goals
- Outsiders on the board of directors
- Formal policies for next generation employment
Here to VOTE >
For advisors to family businesses, what do you think is
the one factor the keeps good succession plans from being implemented?
- Inability of founder to let go
- Inability of next generation to take over
- Lack of agreement on vision for family
- Lack of agreement on vision for business
Here to VOTE >
Us Make You Shine
The WD-80 Program!
Twice as good as WD-40, we at Key Resources assist legal and financial
advisors to help their clients run more effective family meetings
and get to making better decisions about the business. Similar to
the handy WD-40 we "loosen rusted parts and free sticky mechanisms".
An attorney wrote, in a recent letter of thanks to us, "more
than I thought possible was accomplished in the ownership meetings
with your facilitation".
if you need help with:
- Moving the family, board, ownership group
from great plans to implementation.
- Getting the documents signed!
- Creating great strategic plans that don't
sit on the shelf but are used.
- Moving from conflict to accomplishments.
- Dealing with complicated family issues
that are negatively affecting the progress.
We are a nationally known group that tackles all these issues with
results! Please Contact
Jane Hilburt-Davis for more information on how we can work with
you to help you shine in your work with your family business and
family office clients!
Key Resources will be participating in the following events:
Institute for Family Owned Business Panel Discussion:
Women in Family Owned Businesses
January 12, 2005
Learn more at: www.usm.maine.edu
Massachusetts Society for Professional Psychologists
Love and Money: Consulting to Family Businesses
October 2, 2005
Learn more at: www.mspp.edu
The Family Office Symposium
Using Genograms to Map Family Values and Interactions
April 29, 2004
Sponsored by Financial Research Associates
Learn more at: www.frallc.com
That's all for this edition of Key Ideas. As always, feel
free to contact
us with feedback, questions or comments.
Until next time,
40 Middleby Road
Lexington, MA 02421
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