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Action Research: A Model for Family Business Consulting

by Jane Hilburt-Davis

There is no single map for consulting to family businesses, but one approach that I use, and have recommended in our book, co-authored with W. Gibb Dyer, Jr., Consulting to Family Businesses, is a modification of the action research method of assessment and change, commonly used in organization development.  Kurt Lewin, credited with being partially responsible for the term, states that there is “no action without research, and no research without action.”  At the heart of the action research model is the basic assumption the information and insight will motivate change and action and focuses on planned change as iterative and cyclical. It is a combination of gathering data and planned actions. The words are actually in reverse of the actual sequence.

As those of us who work with the complexities of family businesses can testify, the change process, as in any human system, does not happen in a straight line; it is not linear. However, it is necessary for us to understand the fundamentals of this model to be prepared for surprises, emerging events, unintended consequences, and, seemingly, random events.  I am often amazed by these events as they emerge during my work.  Even the mere presence of a consultant can generate changes. For example, as I was helping to prepare a daughter, the heir apparent, to take over for her father, early on she made the decision to pursue a teaching career, a surprise to all of us, including herself.  It turned out to be the right decision for her and she was only able to realize her true interests as the succession process became serious when the consultant was invited in. “Process checks” along the way enable us to evaluate our progress and make the necessary mid-course corrections.. This article outlines the goals and tasks of each of the steps.  Because these steps are iterative, we’ve outlined them in a circular fashion in figure “Stages of the Consulting Process” below:


1.    First Contact—The first contact is often over the telephone.  The advisor’s (in this article, I use the terms ‘advisor’ and ‘consultant’ interchangeably) tasks include understanding the major players and the reason for the call. During this first contact, several questions need to be answered: What is the role of the person calling?  How much power does s/he have in the family business system? What is the source of the referral? Are you more likely to make compromises if this comes from a ‘great’ referral source? Does this affect how you might work with the client? In other words, what types of consulting skills are needed? Is the caller asking for technical advice (information) or process guidance (teaching processes and procedures)? Your risks at this point include underestimating the complexities or overestimating your abilities, i.e. taking on something that you don’t have the resources or expertise to handle. Finally, remember the old adage: “Clients call not to change but as a result of change.” Thus, it is important, in this initial call, or meeting, to ascertain the source of that stress related to recent events that have finally influenced them to call for help.  A desired outcome is to schedule an appointment for the ‘chemistry meeting’.

2.    Chemistry Meeting— During the chemistry meeting, the issues facing the client are discussed in more detail. Usually, I invite the critical players to this meeting. There are several goals.  The first is to begin to establish an atmosphere of trust and openness in which the ‘back story’ issues are more likely to surface. This atmosphere of openness and safety are created by (1) establishing ground rules of confidentiality; (2) defining rules of behavior, a code of conduct; (3) building a collaborative process; and (4) directing energies at the problem not at each other. A second objective is to define the client, which is not as easy as it seems since each professional may define the client differently, although there is growing appreciation that the family business is best served by the consultant who defines the family business system as the client.  Other important questions to ask yourself: Are you and the client system a good fit? Do you like them? Are they willing to commit resources (time, money, personnel) to the change process? What Does the client understand the collaborative nature of the consultation?  If, after answering these questions, you and your prospective client agree that you are a good ‘fit’, you then move to the next stage and write the proposal/engagement letter. (If either of you find that there is a poor fit, decline the engagement and refer the client to a more appropriate consultant.)

3.     Letter of Engagement--  Careful scoping on the front end with the proposal can avoid problems in the evolving consultation. The proposal letter is to define the relationship and nature between the advisor and client. The letter should outline the work to be performed; the expectations the consultant has for the client; and the ways that the consultation will benefit the client.  You will describe what you will do and make an educated guess at what the client will do but cannot guarantee that. The time, money, and effort to be expended are described, along with the method of payment.  Finally, the letter should describe who will serve as the liaison (for administrative issues, scheduling, meeting preparations, etc) between the client and the consultant.

Billing is a subject that is not often written about, but which is discussed frequently, for a combination of reasons, including our own vulnerabilities, competition, and criticism of fee setting. Because the field of family business consulting is comprised of professionals from several professions, there are differences in the way they charge for services.  Methods of billing include but are not limited to: per hour; per day; per project; retainer; and results based. I have found that several guidelines work for me in my practice:   (1) Choose a method that fits your values, skills, bookkeeping, and comfort level. (2) Be clear with your client exactly what they are paying for and stick to it, (3) Renegotiate around the work, not the fees, if necessary. (4) Remember that one size does not fit all, so decide in advance what fees you will charge for different size companies, geographic area, and your level of skills and expertise. (5) Choose cases that you want to work with. (6) Pro bono work has its own rewards; if you accept the work, be clear about your contributions and why your are agreeing to do the work, for example, is challenging, contributes to the community, or eventually, will lead to more work. (7) When working with a team or other consultants that you have brought in or have brought you in, decide beforehand whether you will bill individually or as a team.

4.     Assessment --Once the client has agreed to engage you as a consultant, the real work begins. An assessment of the family firm’s system is the first step, and has several objectives: (1) to provide the family and the consultant with a road map for the change process; (2) to complete a realistic picture of the situation; (3) to give the members of the family and business an opportunity to tell their stories; (4) to prepare feedback for the family to prioritize the problems to solve; (5) to evaluate any discrepancies between the presenting problem and what you discern to be the real problem (6) to get a feel for what it’s like to work in the boundaries between family and business in this system; (7) to assess the impact of the consultant’s presence in the system (8) to determine how effectively the family can really hear and use the feedback; and  (9) to identify any special problems, such as addictions, personality problems, or ethical; legal; or financial issues that require referral to a specialist. It is during this phase of interviewing the relevant family and business individuals that I begin to organize the large amount of information, patterns, and emerging themes,  in a concise and efficient manner. It is also during this phase of the consultation that I introduce the genogram.  Additionally, I am continually asking myself: What is the real problem? How long has the problem existed? Is the problem related to ‘unfinished’ business?  Where is the most energy for change? Does the problem serve a function? Problems pay important roles in families and in the workplace; they are windows into solutions.  Ask these critical questions before you rush in to fix things.

5.     Feedback/Action Planning-- This phase of the action research model includes deciding on the best way to present the data, your inferences, and conclusions, so that the family can make the best use of it. I usually use a modification of the SWOT analysis, backing up each conclusion or inference with direct and anonymous quotes from the interviews.  How the client system uses your information is key to creating changes. There are actually three interconnected steps in what we call feedback and action planning. First, the consultant organizes the data in a way that’s meaningful for the client.  Second, the consultant makes suggestions and recommendations to resolve the problems facing the client system.  But, in the end, the client must own any solutions so the consultant and the client should jointly problem solve in the feedback session to come up with action steps that can be implemented with commitment and resources.  Finally, the client and the consultant work out a detailed action plan that has been agreed on. (If the family is complex, consisting of several generations, the planning session may be a second meeting, at a later time.) Whether or not this succeeds depends on several variables: the chemistry between the family and the consultant; skills and experience of the consultant; quality of the report and the functionality and ability of the family to process and use the information.; and how the consultant has organized the data.

Here are some tips for generating solutions with everyone’s buy-in.

  • Articulate the problem to be solved.
  • Find out what’s been tried.
  • Don’t suggest old solutions but, instead, help the clients generate their own new solutions; stay focused on the common ground and the future (not the past and the differences
  • Set and agreed to ground rules for communicating and managing negotiations.
  • Identify together what’s needed to close the gap between what is the present reality and the ideal future state.
  • Conflicts should be relegated to the background.  Interpersonal conflicts are toxic for work groups.  They should be address with a plan to deal with them at a later date or off-line. (Dad and daughter will discuss this between now and the next meeting; they will report back to us what they have decided to about this.”)
  • It is always important to end this meeting with a set of action items, recommendations, a time line, and who will be responsible for what.
  • Here are some sure ways to get bogged down, from Consulting to Family Businesses, in the feedback and planning meeting:
    • Focus on the past
    • Focus on the negatives and areas of difference, rather than on the positives and areas of agreement.
    • Impose your values and goals on the process.
    • Ignore the process; focus only on the content; be unsure of the differences.
    • Ignore the undiscussables.
    • Don’t give everyone a chance to speak and be heard and don’t use your power as consultant to allow all an opportunity for input.
    • Allow yourself to be sidetracked from the ‘real work’ that has to be faced.
    • Confuse neutrality with objectivity, giving no feedback or advice.
    • Get thrown off by high emotionality of the relationships.
    • Confuse the noise with the signals.
    • Miss patterns of behavior and communications.
    • Confuse disconnected events with patterns.
    • Be unclear about your role and your contract with the client.

6.    Implementation --  Intervention, literally, means “to come between”.  This is the moving and changing stage in Kurt Lewin’s three phases of the “unfreeze, move/change, and refreeze”. Once we understand the nature of the client’s questions and problems, and are armed with good theory, we can begin to take steps to choose appropriate interventions.  In my experience, success is related to three factors: (1) what the client brings; (2) what the consultant brings; and (3) the agreement that the client and the consultant have on the goals of the engagement.  Since change is always the goal of interventions, we need to be clear on the type of change needed and possible.  There are two major types of changes, incremental, also known as first order or evolutionary change and fundamental or revolutionary, or second order change.  First order changes include, for example, readjustments to the work roles and family involvement; fine tuning to procedures that improve the business but do not change it fundamentally.  Second order or fundamental changes involves a change in the rules and, subsequently, the system itself.  This type of change includes essential changes in the organization’s culture, vision, strategy; or large changes in the way the family or firm functions, such as selling parts of the company, or dividing it into separate units, each to be managed by the next generation. Incremental changes usually take less time and typically don’t generate a great deal of resistance.

On the other hand, second order changes often require significant shifts in the thinking and acting of the client. She or he is being asked to think, feel, and act in very different ways, and often takes a great deal of time and energy. I find Roger Harrison’s guidelines in his classic article, “Choosing the Depth of Organizational Intervention” to be useful.  He advises to intervene at a level no deeper than (1) that required to produce enduring solutions and (2) that at which the energy and resources of the client can be committed to problem solving and change.  To that I would add to intervene at a level no deeper (1) than your skills and training allow; and at a level no deeper than (2) that described in the initial contract without getting permission from the client system.  Always consider working with a multidisciplinary team when consulting to family businesses.  Generally, one professional cannot do the work alone that is required with these complex systems.

7.     Follow-up--  I build a ‘follow-up’ meeting into the contract. It is difficult to establish an exact time but usually within the first 18 months after our work together, I will schedule a follow-up meeting to review the progress, reinforce positive changes that have occurred, At this meeting, we either recontract for additional work or we end our work together.

I have found that successfully managing each stage of the consulting process, from first contact to exit, gives the family business advisor his or her best chance for success. Since we are working with both the content and facilitation of the process, this model offers a map and provides a benchmark to assess our progress. Of course, we bring ourselves and our experiences in collaboration with each client. And it will work if we always pay close attention to the feedback we’re getting and are willing to respond even if it means repeating steps, making mid course corrections and constantly checking out the alignment with the original contract. While our consulting framework may be orderly, the client system is not, and change often occurs not in tidy sequential steps but in sudden unpredictable ways. There is a constant cyclical nature of the work. Keep in mind:

  • Never work, consistently, harder than your client. Never do your client’s work; and avoid client engagements that assume you will do the work.
  • Practice life-long learning; join or start a multidisciplinary study group. Continue to learn, read, attend workshops, and increase your repertoire order to be prepared for what emerges.  Know when to call for help, or bring in someone from another discipline.
  • Although change doesn’t always start at the top, leadership must be a champion of the project.
  • Never break your own rules, no matter how tempting.  Know and manage your own feelings.
  • The odds are against you; 75% of change efforts do not yield promised results, often because the consultant is unprepared for the twists and turns in the relationship with his/her client. (Olson & Eoyang, 2001, Facilitating Organizational Change). Lewin’s model, of unfreezing and refreezing, is a useful measure, if only we were working with blocks of ice!  Remember, you are working with human systems that offer surprises along the way and be prepared. Given the uncertainties and often unpredictable responses of our clients, never is this more important than with family businesses, which are emotional as well as work systems.
  • Always challenge your own assumptions and ask: am I asking the right questions?  Am I really listening?
  • If you get stuck in one phase of this model, first ask “What got missed in the previous phase?”
  • Avoid interminable consultations.  Know when to declare victory and get out.  This includes both real victories in which you and the client have reached the agreed-on goals and near victories in which each of you has gone as far as you can go.



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