Dr. Kirby Rosplock
Welcome to our Tamarind Learning webinar with Dr. Dennis Jaffe and Dr. Jim Grubman, who are here today with us to talk a lot more about family governance and, specifically, a really powerful paper that they wrote together. I can't believe it's a few years back now, but it's the Two Pillars of Governance in Family Enterprises, a straightforward understanding of complex systems. Now, this paper is fantastic. I share it with many of the families I work with, but I know that so many families have more questions, and so do advisors like myself who really want to speak to the experts about how this model came into being and how it really works. So thank you, Dennis and Jim, for being on the call today, and thanks so much for being willing to share more of your wisdom.
Dr. Jim Grubman
Thank you for having us.
Dr. Kirby Rosplock
So, Dennis, maybe you can jump in and tell us what inspired you to write this paper or come up with this approach and kind of what you saw missing in the literature.
Dr. Dennis Jaffe
Well, there was a big hole in the sense that people talk about family offices and family governance, and they go right into how they manage the business. It's very focused on owners, and it's very focused about business and the family. There's no part of the governance discussion that says, how do we build a family? Just like we have to build a business over generations, we have to build a family. And so there was a big hole. And I think it has to do with the fact that a lot of the focus came out of business schools and management kind of focused things, where they focused on the mechanics of running a family office or family governance. But they didn't talk about where the family came from, as if it just continues. If the people are together as owners, then they're also a family. But in my research, I found that the family has to build itself over generations. It doesn't just happen. And there was no description of how the family builds itself and how does the family sustain itself, and what does the family have to do. That has nothing to do with business.
Dr. Dennis Jaffe
And this is the idea that we're talking about now, more and more non-financial wealth. How do we talk about the things that the family does, like developing the next generation, like learning together, like giving back to the community that really has nothing to do with business but have everything to do with who they are as a family.
Dr. Kirby Rosplock
So it sounds like we're missing some sort of explicit rules and operating guidance to how a family would function. Right. The family system historically has always sort of established its norms. Parents sort of are the hierarchy, children are the next. But I can imagine, right, when we're going to generations two and three and four, we live longer, just three generations. Now it's four, possibly. And so that must really have imbalanced effects, right? If we have different family households with different views, what are the organizing principles? So I'm just wondering, Jim, maybe you can show us visually more how this stacks up against a traditional business governance model.
Dr. Jim Grubman
Absolutely. In the article, we have a diagram, and here in this webinar, we're going to show you more of that diagram. And to what Dennis said, traditionally, people have tried to kind of shoehorn in family activities and tasks and things into the enterprise governance. Well, we'll have the board do that or something like that. And that we felt that actually, no, there needs to be explicit differentiation and different things for the family side and the business side. So I'm going to share my screen here. And this is typically in the Two Pillar Model, what most people are familiar with, of the enterprise pillar, where you have owner groups at the top, which may have a lot of complexity. At the bottom, you have the things that the owners own, a major operating company, perhaps other assets, real estate or a smaller company or several smaller companies, and liquid investments that the family has. And then between them, there's a board of directors with a CEO to run the operating company. There may be a smaller or different board for the other assets. There are a lot of different things with this sort of hierarchy, but essentially this is what most people are familiar with and what they think of.
Dr. Jim Grubman
But we really talked about, well, that's enterprise governance on the family business side.
Dr. Dennis Jaffe
The other pillar is that the owners are a small subset, and they tend to be the elders, they tend to be the older generation. They tend not to include spouses and younger people. And there's no orderly way in a family that people who are the established elders have a process to step down and allow other people. So it becomes a very tight autocracy. And people who aren't in it begin to get frustrated. So this is a structure that works until it doesn't work, and then there are problems.
Dr. Jim Grubman
Exactly. And the risk of it becomes insular that the owners and even the rest of the governance think that they're representing the family, that they know what the family needs, that whatever the family needs, they're going to do that. It really does get condensed into this part of it about the family, when in actuality the family needs much more. And the typical two elements that are important for the family pillar are a family assembly, which really is the larger might meet less frequently, but basically it may be all the family or the family over the age of 14, but includes spouses, other people, and then the family council, sometimes called a family board, which is sort of a smaller decision making executive group that is more nimble and gets to know each other over time, and they work on behalf of the family assembly. But as Barbara Hauser has often talked about, there's sort of the rule of law, which is that the family council serves at the behest of the larger family and that they need to respect and do that. And the family council and the family assembly also maintain collaborations with the owner's group, and the board.
Dr. Jim Grubman
Somebody on the family council may come and talk with or have communications about what's going on with the shareholder's group at the larger family assemblies. Somebody from the owner's group may come and speak on the agenda and talk about how the business is doing. Somebody from the family council may have a seat on the board of directors, or vice versa, maybe a non-voting position. But basically this functions really well when you have good collaborations between the two pillars.
Dr. Dennis Jaffe
And let me just say something. The family assembly box is blank, but it's very much like the enterprise pillar. You have different branches, you have married-ins, you have rivalries, you have age cohorts, and things like that. It's a very busy group, and it gets very big very fast. The first generation may have a couple of kids who then get married sitting around the table, but by this third generation, or very soon, it doesn't even fit in one room anymore. And so it's more and more people. They have more and more diverse views. They act like a family, which means they argue, but they don't have a clear way of resolving the arguments. And so the family assembly becomes very unruly and very difficult. And in some ways, the family council has to come into being to organize it and to, as you say, make it a rule of law, not a chaos of family. And to make it operate so you have the family council, which is like the owner groups, trying to create order for all the things that the council wants to do and has to do.
Dr. Kirby Rosplock
So, Jim, maybe you can clarify what you would say is the primary purpose for the family council versus the assembly.
Dr. Jim Grubman
Here we have a listing because that's a very common question when people are looking at the two pillars and for their family before it's formed. A lot of those questions go to the why and the what of the family pillar, particularly a family council, which is, well, they don't know anything. What authority are they going to have? What are they going to make? Because they can't make decisions about the business. What good are they? The idea that there's actually a whole variety of tasks on the family side that need to be done. Planning for family education. As Dennis mentioned, conflict management is a very big one. Often there's shared family property that you have to create policies for. Talk about the nuts and bolts of it. Spouses and partners, including having a place where spouses, young people, non-owners, can actually sit and participate in family governance. It's the voice of the family regarding enterprise matters. And one of the things we can spend some time talking about is the role of what happens, for example, when there's an offer on the table to sell the family, the operating company, and the family has to really think through, do we want to do this or whatever?
Dr. Jim Grubman
And then opportunities for the rising generation and Next Gens. So there's a lot of things that need to be done, and that's the reason for having the family pillar and why that really should not just be, as I said in the beginning, shoehorned into somewhere here of somebody doing things about the family.
Dr. Kirby Rosplock
That's super helpful. I'm just curious. I don't see a family office structure on any of the pillars. How and where would you say that fits in the owner group versus the enterprise pillar versus the family pillar? Is it somewhere in the middle? Oh, there it is then.
Dr. Jim Grubman
There it is. You asked the perfect question and what this diagram addresses, because that often comes up. Well, what about a family foundation? What about the family office? There are a couple of different things and why we sort of list it here. First of all, the family foundation needs to be kind of in between, but legally, it also has to be separate in order to have its own directors, assets, and other things. It is an area of collaboration. So again, somebody from the family council may sit on and direct the Family foundation and report back to the family council on how it's going. The board may contribute assets, but to go into. But there has to be a place for the family foundation. And then family offices can be in a variety of places here, often on the enterprise side. It may be part of a holding company. There are multiple models for the family office, but we show it here with the idea that there may be a board that also oversees the family office. The family office may have an investment committee that manages the liquid assets, but by and large, a family office is somewhere in this range over here for most families.
Dr. Jim Grubman
Dennis, would you agree?
Dr. Dennis Jaffe
But I would say that the family office is a little bit more complicated. For example, I visited a lot of family offices in my time, and one of the things you see is that a family office is not just a business office. It's not like a bank branch. There's often a museum. There are often special offices for family members. There's a family gathering place, one family office. I know the first floor, you'll appreciate this first floor is a garage which has 17 classic cars in it.
Dr. Jim Grubman
Oh, yeah.
Dr. Dennis Jaffe
Another family office has a wonderful lounge and kind of gathering set for the family. So there's a personal side of the family office as well as a family side. And as you said, there may be a foundation. There may be a lot of committees. There may be a family entrepreneurship committee or a family education group, and they need to have an office. So there are offices for some of the family council and family assembly activities, as well as the business office. And the family office looks very different from a business with some families.
Dr. Jim Grubman
And I think that's a really good point. And why this is sort of tentative. Here is the idea, both positively and negatively, which is that the design of the family office needs to be very well thought through. It can extend too far and cover so much ground without sufficient staff or knowledge that it gets diffused and has difficulty. It can be so focused on only a few things that it misses opportunities again, for example, on the family side or whatever. And that one of the things that I look at when I work with a family is exactly your question, which is and where does the family office fit into the two pillars, and is that working well? Or actually, is that contributing to some difficulty?
Dr. Kirby Rosplock
Well, I'm really glad you're bringing this up because I think it's present on so many families' minds. But one thing I really like about the Two Pillar approach is the idea that there's an organization, really, from a family voice perspective, that excludes the distinction of ownership, having authority, and being an employee. So again, I think of Tagurian Davis's three-circle model. Right. The only thing that we're talking about is that family circle, not the business, not the ownership. And the family side of the equation is so often underrepresented in the evolution of the enterprise side because, right, you might only have one or two or maybe no family members directly involved in the operating companies. And likewise with the family office, more and more we see a lot of outside, independent, non-family running and operating family offices. So having a strong family foundation, really smart and prepared family members for potentially becoming owners, stakeholders, and engaging in other ways, is so powerful. Maybe tell us a little bit more about how you see the family pillar getting off the ground. Where would a family start? Why would they think they need to formalize a family pillar?
Dr. Dennis Jaffe
Well, I think, again, there's a lot of confusion because people feel like if you organize the business, you organize the family. It just kind of follows. And yet when you look at, for example, a family office, or family council chair, they have a lot of things to do. They have a lot of activities to organize, such as education, gatherings, family real estate, and often things like that. And so they need an office. The family council needs an office. The family council has activities and they have staff sometimes that help with family activities and family gatherings. So there's a lot of things that happen. And the reason we call it two pillars is because these are two different organizational forms of leadership, and they need different people in the family.
Dr. Jim Grubman
Hold up the family and the business.
Dr. Dennis Jaffe
Yes, they're pillars and they work side by side. The two of them are working. For example, here's a good example. Where does the family council get money? Well, the family council has to go to the owner groups and say, we have a budget of sometimes hundreds of thousands of dollars to do the things that we want to do. Just running a family meeting for 100 people is a big expense, getting people, so they have to get a budget and they have to use the budget and they have to account for it. So the family council and the family and the owners have to work together. They have to coordinate. If there's an employment policy for family members, there are activities that the family has to do to educate the next generation, and then there are also policies that the business has to carry out.
Dr. Jim Grubman
I would also point something out, which is that the family pillar can be a training ground and place for education to prepare people for the enterprise pillar. That leadership in the family council, a young person or rising gen junior board that prepares people, sits in on the family councils, participates maybe in family assemblies, and develops leadership skills and knowledge so that at some point, for example, when they become owners and they're able to sit on the shareholder's board or something, they already have had experience in understanding how boards work, how governance works. They've been educated. This is an area where education occurs to prepare people not only for wealth and issues with the family but prepares people for the enterprise. So it's a bit of a proving ground that each pillar benefits from the other.
Dr. Dennis Jaffe
We talk about the non-financial wealth of the family, the activities that don't involve creating further financial wealth, but are activities of the family. And this is where, for example, we talk about a family dynamics person, or a family education person or a chief learning officer. These are functions of the family pillar rather than the enterprise pillar, where either a staff member or a family member, or both working in partnership, have to act and have to do things and have to coordinate things. And there's a lot of work to be done in the family pillar.
Dr. Jim Grubman
Yep.
Dr. Kirby Rosplock
So, Jim, I'm just curious, because I can imagine I'm part of this owner group, or I'm a family that has one or more operating companies, there's a liquidity event, and boy, we think we all know that we want to sell this and it's going to go swimmingly, and we're going to get two and a half, five x, whatever our return. And then there's dissension and a big chunk of the family isn't super in favor. I mean, talk to me a little bit about why establishing more formalized family governance might help deal with different transitions that a family is going through.
Dr. Jim Grubman
That's a great question. It's one of the most fundamental things as to why a good, solid Two Pillar Model tends to work, because, again, it goes back to, well, the family can't decide to sell the business. The owners do that. Why even have it? But very often, for a well-established, multigenerational operating company, the family has several things. It's a part of the community, and when there's an offer on the table or the possibility to sell the business, very often that moves over and there's discussion at the family council level in particular. Are we going to lose our identity? Are we ready for this? How will this change the family? What do we need to do to get ready for this massive change that's going on? There's going to be much greater liquid wealth. We're behind on family education. We need to accelerate and get the family ready to receive a lot more money than they're used to, or we're going to have a lot of disasters on our hands. So the idea that there are family issues to be evaluated in a particular forum that even relate to the enterprise pillar, like selling the business or merging, buying, going public, other things that are enterprise questions, but it really impacts the family.
Dr. Jim Grubman
And there needs to be a voice of the family to say, is this good? Do we want it? Are there things that we need to be prepared for?
Dr. Dennis Jaffe
And just to say the biggest question, we say the family has a liquidity event, the family this, the family that. But there is no family. There are many households and many families. And you have a sale of a business. Some people may say, wow, now I can buy the ranch that I always wanted to have in Montana, and now I can do the things I always wanted to do. And now we can set up and set up a venture capital arm or an investment arm. Other people say I don't want to do that. I want safe investments, and I want to live quietly. And so the question of, are we together? And what are we doing together? Comes up when there's a sale or a shift, and the family has to ask itself, what is our wealth for? What are we doing? Why are we together? It isn't a given that the family wants to stay together every generation. Some people want to leave. Some people don't like being part of a large entity. They want to be a small fish and have control. Other people want to grow their pie. Other people have different thoughts about it, what they want to do with it, social responsibility, community involvement, and how much to give to a foundation.
Dr. Dennis Jaffe
These are all non-financial things that while the owners are negotiating a price and whether to sell, the family is deciding, well, what will happen to us and what do we want to be when we grow up and what will it look like?
Dr. Kirby Rosplock
Go ahead.
Dr. Jim Grubman
If I may add one small thing, and consistent with what Dennis and I and Kristen Kepler have talked about with wealth 3.0, it really is the idea of there's family wealth and family business and family enterprise. And we're really emphasizing there's a lot more attention that needs to be paid on the family wealth side and the things that Dennis just talked about, but also tasks that need to be done. Again, financial education, wealth in relationships, discussing prenups, and wealth identity. There needs to be a lot of attention paid to family wealth, not just business. And the family pillar is often where more of those discussions occur and more of the education occurs. Can I make this go away?
Dr. Kirby Rosplock
We can go back to, let's go back and maybe we can dig into the mechanics because I know that there's a lot of folks curious about it? Well, if we're starting from nothing, right, do we have a working committee? Do we need to hire an advisor to come drive this? Is this something the family can self-organize and do? What have you seen that works and maybe give us some ideas of what you think doesn't work as well?
Dr. Dennis Jaffe
Well, I've watched a lot of it, in my research, I asked families, what was the first thing that you did to get started in governance? And pretty universally the answer is, the first thing that a family does is to have a family meeting where we talk about something that's important, usually what's our wealth for? Or what do we expect from each other, or what are our values, or what do we share? And when the family has a family meeting, that's a family meeting. When the family says, this was a really great meeting, we should have regular meetings and we need someone to coordinate them. All of a sudden they've created a family council. Family council is really a family that decides to meet regularly to deal with the complex things that it's responsible for. And when you have regular meetings and you make decisions and record them, that's a family council. And it's very simple and that's the way governance starts, with a family meeting that is successful and that people want.
Dr. Jim Grubman
To continue and to continue with that. In a sense, when I come in and work with a family or ask to be involved, that's often what I look for. Have you had any family meetings? How did they go? What do they look like? Or whatever? Because there are a lot of families that basically have never had a family meeting that was other than a shareholder's meeting. And they often either maybe somebody attends a client forum or they go someplace to a conference or they hear about family meetings and whatever, they get intrigued. They start to think, actually, maybe we need this. But a lot of it comes down to the how. Who do you invite? Do spouses come? Does everybody come? Only certain. There's a lot of fear and worry about the design of beginning to do family things because it's new and different. And so sometimes families want some help on how we do this. They're pretty much persuaded they want to, but they're really worried if we do this badly, it's going to have a big impact. We don't want it to go wrong. Sometimes other families have been doing it, maybe it's gone well for a while and then they have a blow-up or a conflict is arising in the family and they don't have a good, well-developed forum for working it out.
Dr. Jim Grubman
So they start to get scared. They're stuck, and they say, we need help.
Dr. Kirby Rosplock
Yeah, go ahead.
Dr. Dennis Jaffe
I just want to say the governance of running a family meeting is different than running a business meeting. A business meeting often has one presenter and everybody listens and asks questions. A family meeting is something where people participate, and where people have different opinions. Family meetings often don't have votes. They reach a consensus or they have things, whereas in a business meeting, sometimes you have to have a vote. Do we sell the business? Do we invest in this new plant? Do we do this? So there are different kinds of meetings, and the leader of the family pillar has to be a different kind of leader, more inclusive, more emotionally intelligent, more engaging of family members and inviting them to come than the business leader.
Dr. Kirby Rosplock
Well, that's a great point. I want to put a point on that because I think for a lot of families, the council doesn't originate or the energy doesn't necessarily come from the owner-leader group. Right.
Dr. Jim Grubman
Sometimes there's resistance. There's actively not coming from it. Yeah.
Dr. Dennis Jaffe
It's people who are dissatisfied with the business leadership that want to have more of a voice, an issue that's a challenge that they have to deal with.
Dr. Kirby Rosplock
The other thing I've seen, and tell me if you've seen this, too. Sometimes when families feel like that owner leader on the business side is saying, well, we need to do this on the family side, they're also not in favor because they feel like, oh, now he or she is trying to orchestrate everything.
Dr. Jim Grubman
You're going to run everything.
Dr. Kirby Rosplock
So tell me how you've seen it start. I mean, how might you inspire that voice within the family or get voices from different generations of a family? How might it get kicked off? You have this family meeting, you say, we want to do a little bit more self-organization. What might a family do next?
Dr. Jim Grubman
Well, I would say a couple of things. One is this is a great place we're watching. Who are the up-and-coming family leaders? The classic sort of family champion kind of person. And sometimes there are natural leaders starting to emerge and it's often a little hesitant. They worry about them. They may not have credibility, but you can see their options. I've actually seen a fair number where it was a spouse, male or female, who clearly had the family's interests at heart, and seemed to speak eloquently for the family. And I tend to sort of work with the willingness of who actually would like to be a family leader or help run the family council. Who wants to be? And I've often worked with different families. I can think of one family some years back where they were at exactly this point. And the question was, well, who do we start with? How do you form a family council? And it was a quite large family, there were five branches and the branches were fairly large. And it raises a lot of very normal questions, like, do you participate in the family council by merit? You're chosen or appointed because you have skills.
Dr. Jim Grubman
Is it simply representative? Every branch gets a seat and then from those seats, one person is appointed as chair. Is it whoever wants to be on it? Who's volunteering? There are different models and part of the work of a consultant very often is to help sort through the family's values, culture, what's maybe possible, whether there are skills around, because sometimes families are new to this, that very few people actually have the skills and a lot of the work is to begin teaching them. So the genesis of the family council can occur in many ways, and that's part of the work that needs to be done.
Dr. Kirby Rosplock
What happens with, say, a family where there's a lot of apathy? What if they don't know? What they don't know, or there's not a lot of energy or exhibited leadership? What do you do? Is family governance even feasible? Is it something that a family pillar can emerge? Or how do you inspire? I guess that is the other question.
Dr. Dennis Jaffe
There are two extremes, there are two poles. One is the pole where there's so much conflict and everybody wants to be involved in everything and everybody's in everybody's business, and then there has to be some kind of order and understanding of what your role is. And because you're an owner doesn't mean you get to vote on everything. So there has to be a kind of cooling of the excessively involved family. On the other hand, You have people that they're not interested and you have to go back and say, why aren't they interested? If a family has millions of dollars of investments, they have all this impact on the world. It doesn't have to be the center of your life. But why wouldn't you be involved? Why wouldn't you want to come to family meetings? Usually, the biggest reason is that they get the feeling that they're being tolerated rather than really respected and they're not listened to. They say I came to meetings and I tried to ask questions and nobody followed up, or I never heard back from them, or they didn't even ask me my opinion.
Dr. Jim Grubman
There's that kind of learned helplessness after a while. Why even try?
Dr. Dennis Jaffe
And the other is there's just a lot of people, and there's no clear way to get together. The people are all over the place. It's hard to get together. So someone has to organize them, and somebody has to say, what are we doing? If some people think they're not interested because they don't want to work for the business, but then they say, well, we're going to start a foundation and help the community. We're going to have family learning sessions. We're going to do things together. We're going to celebrate and write the history of our family. All of a sudden, there are other things to do that are not business. And a person who's, let's say, a social worker or a teacher or something has a role to play. They don't have to be venture capitalists. There are reasons why family members aren't involved. And the effective families find ways to not pull everybody in at once but to begin to pull people in and show them that there's a meaningful experience. And then more people come in, more people from that branch of the family, more people from the next generation. They come in and they have a good experience, and they talk to other people, and other people hear about it, and it begins to snowball.
Dr. Dennis Jaffe
It isn't a quick process where you say here announcing, we're having a family meeting. Everybody shows up. They have a lot of things to do in their lives, and you have to show that this family meeting is a good use of their time.
Dr. Jim Grubman
I think if I think back over the families I've worked with over the years, probably the number one catalyst that I've seen is a generational transition that, again, we've talked about how you start to kind of like a lobster bumping up against a shell that has to start molting and growing. The family is bumping up against the limitations of the governance model and not having the family pillar and things and the generations are going on. There are young people coming up, and at some point, very often the motivation is we need to start educating young people. Then often there are practical things. We're starting to do more prenups and should we do an education session on what is a prenup and what's a good prenup and how we're going to do it? Wealth and relationships and dating, people starting to get married. There are new kids that at some point the family is growing enough and starting to bump up against needing to understand and learn some things and develop some skills. Maybe there's some conflict, but I would say very often there are some families that are proactive and look ahead and say we're going to need something on the family side.
Dr. Jim Grubman
But often the impetus is we are growing, we have things to do, and younger people coming up. What is it that we can do that would help all that?
Dr. Kirby Rosplock
So I don't want to go in a completely different direction, but I want to bring up something I recently heard on loneliness and the power of family governance to support culture and connection. Something like two-thirds of young adults today identify as being lonely and actually not connected to their family or to their peer groups. And I just want you both to speak a little bit about why family governance, and particularly this family pillar, can also potentially make big inroads into building bonds, building connectivity, and feeling a sense of identity. If I don't relate, because I don't work for the company or the family office, maybe I really still relate to my cousins or our heritage or something that we're part of that's bigger than us. So maybe you can speak to that, too.
Dr. Dennis Jaffe
Well, I would say that this is a wonderful opportunity that's open. People have pointed out that there are two poles and that the very wealthy that have this family enterprise can get together and can create a community, can create connections, can do things together to really give people a sense of belonging. Even if they live all over the place, they have the means and the money to get together every year. And then the very poor, because they have nothing, they have to stick together, they have to support each other. They do it. So it's in the middle where people are losing connection with their family. They're moving away. They're not connected. And so I see these large multigenerational family groups as being a real community of meaning and a community of connection. And when they really work, this is where the family enterprise could be much more than just a financial business entity. It could be a place to have an identity. It could be a place to contribute to society. It could be a place for people to learn. It can be a place for people to connect and share ideas together. All kinds of things can happen in these families beyond just being a money-making financial entity.
Dr. Jim Grubman
And here, let me tell you about a very touching example and situation I had that speaks exactly to what you said. Kirby worked with the family years ago. One time, large multigenerational family. It was into g three, and they had survived g one and g two, pretty much. It was smaller and on their own, and they were a nice, proactive family. Looked ahead and said, we need the family pillar. They got me involved. We held the first family assembly, and the cousins in particular, the g three s, were there between the ages of about 15 and 28. And at the first break, one of the nice guys, a young guy, about 23, came up to me, and he had tears in his eyes. He's moist. He said, I'm so glad our family is doing this because this is the first time I actually could sit in a room and talk with people who understood my situation. Who else can I talk to? I can't talk to people I date. My friends don't understand or actually have feelings about rich people. It's a very isolating life, and to sit in a room and talk openly and in a relaxed way with people who understand and are knowledgeable about these things, this is such a relief.
Dr. Jim Grubman
And he was incredibly grateful. And I think that that's part of the value of family assemblies and family councils is a place where people can actually talk openly and work on these things, which are incredibly private and often difficult for anybody else to understand.
Dr. Kirby Rosplock
Well, this has been such an amazingly rich discussion on this Two Pillar Model, but specifically this family pillar, because I know it's of keen interest to many families that I have come to work with. And as closing, I just wonder if you could give us some insights to a family looking back maybe one, three years, the evolution that they've gone through. What would success look like? What do you see as markers of success? Successfully built family governance structures?
Dr. Dennis Jaffe
Well, I think one thing that comes up a lot is, are we doing more than just making money? Do we have some sense of connection? Because everything about the family pushes people to kind of go off to their own nuclear family and to keep it going. So having a larger family identity that gets together, that does things, e. G. Having the family pillar is a mark of success because they're doing more than just being a bunch of investors that happen to be family members. So that engagement is one common purpose, knowing each other as more and more people come and finding common ground, those are all the things that have to do with the family that are not business related.
Dr. Jim Grubman
And it's funny because I hadn't really thought of it, although I'm actually working on an article right now that speaks to some of this. I think one of the best markers is when the family creates its first policy. Policy creation is really important. Part of what I'm writing about is the movement from person-based to policy-based decision-making. Instead of people saying, well, what do you think? Well, I think we should do this. And what do you think about this or that move to make policies that apply to everybody, endure over time, and are independent of the individuals involved? For families to form a policy and to have it be wise, fair, and well thought through, even if it's pretty small, there's a sense of satisfaction and completion. When you make your first policy together. You need negotiation skills, you need conflict management. You need to listen to each other and have values. And the first policy is often a real marker of growing up in the family pillar. And the more you gain experience after your third and fourth policy and working on constitutions and stuff, people begin to really grow into the idea of being able to make decisions together on behalf of the family, and there's nothing like it.
Dr. Dennis Jaffe
Absolutely.
Dr. Kirby Rosplock
What a great way to wrap this discussion up, because I couldn't agree with you more that even to get to making a policy or convening folks to weigh in, that means that you have established a process. You probably have a set, like regular meetings or cadence of when the family council might meet or when you have a regular family assembly. So all of those would also be building blocks to getting to that policy formation creation. And then there's a sense of consensus that we need this and that we're willing to concede our own individual interests in every situation for a greater whole, which is something that we all know, Jay Hughes has taught us, and that so much of family of affinity is about conceding my individual interests, knowing that there's a broader context that we're trying to solve for. I'm so grateful. I am so thankful that we could get together and have this conversation, and share your wisdom. We will be promoting the link to your white paper. We'll obviously be giving your contact details as well for anyone who wants to reach out to you, possibly engage or talk to you further about how you might be able to help with their family governance needs. And I just want to thank you both for just this wonderful time together.
Dr. Dennis Jaffe
Well, Tamarind has a wonderful platform, and it's a community-building tool itself. And what you're doing is moving families in the direction that we're talking about. So it's wonderful to be part of this effort and working with you on this.
Dr. Jim Grubman
Absolutely. Thank you, Kirby, for the opportunity for this, because again, families need to hear these things. These are natural dilemmas and challenges and opportunities, and to be able to spread the word and explain it with this level of detail. Thank you for giving us the opportunity for that and for spreading the word.
Dr. Kirby Rosplock
And thanks for being our featured guest on the Tamarind Learning webinar. So with that, I'm going to wrap it up.
Dr. Jim Grubman
All right, thank you.
