Leadership Traits You Want and Need

Looking around you, it’s easy to see that families each have their own style, just as leaders do, with as many differences as commonalities. The same is true of family enterprise. So, you can expect effective business family leaders to come in all stripes and colors. But there is a set of basic qualities that all family business leaders need to possess for them to succeed in their roles.

Family Elders, it’s primarily your job to learn how to identify and nurture rising leaders who demonstrate clarity of purpose; can make difficult decisions and exercise good judgment; can inspire and motivate those around them; who exhibit courage; and who can not only chart a path to achieve shared goals, but lead the group to that desired outcome.

Rising leaders, your enterprising family’s long-term survival depends on performing above average. That applies to leadership too. There’s no such thing as a “good enough” leader. You can always benefit from key learning points to help you become the best that you can be.

Let’s explore the roles and responsibilities of a business family leader and take a look at common traits that will tell us what a successful leader looks like.

Leadership Traits You Want and Need

Looking around you, it’s easy to see that families each have their own style, just as leaders do, with as many differences as commonalities. The same is true of family enterprise. So, you can expect effective business family leaders to come in all stripes and colors. But there is a set of basic qualities that all family business leaders need to possess for them to succeed in their roles.

Both leaders and followers have roles to play. They’re both performing from a script, often called a social contract. This isn’t about politics. It’s about the implicit agreement that followers are willing to be led. In order for that social contract to work, the followers need to feel that their leader is able to create plans beneficial to them. Followers need confidence in their leaders. They’ve got to feel certain that leaders can bring them along and achieve their plans. Leaders need to be responsive to changing needs. They also need to recognize how followers signal buy-in before cooperating—or not. In other words, followers have as much power as leaders.

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Mandate to lead

Hierarchy has given way to flatter organizational structures. It’s easy to see why the most sought-after leaders today govern by collaboration and influence. This approach is well suited to the rise of the sharing economy. It is the crown jewel of the millennial generation still shaping today’s youth culture. So, a company that clings to hierarchical, command style leadership will soon find it hard to recruit and retain the best talent.

Few organizations are immune to dramatic changes sweeping the economy. Few industries can hide from firece global competition. Large companies are getting larger, some with near monopoly status. They have the imperative to do the right thing for their stakeholders—employees, clients, surrounding communities, as well as owners—not because they are forced to do so by law or for profit, but for their long-term survival. If you think that’s an exaggeration, consider that in most marketplaces around the world, every customer has a smart phone with a camera and a microphone—and so does every critic.

Inside the family, the collaborative leader who leads by moral authority, role modeling, and cultivating others to perform tends to be effective. All Four Capitals (financial, human, intellectual, and social) are important to multigenerational success. Every family member has a reserve of some or all of these resources.

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By engaging with each individual family member to learn what is important to them, the family leader can channel those resources into the family enterprise and create the force multiplier effect. When family business leaders cannot master this aspect of the job under stress, it usually damages the whole family enterprise, sometimes beyond repair.

Governance roles

Industries are changing at such speed that legal frameworks and government processes struggle to keep up. In the A.I. (artificial intelligence) and blockchain spaces, frameworks for self-governance are being suggested that would involve the scientific community, leading companies, and other stakeholders. Whether the major players resist innvations in self- governance or adopt them, this is a sign of things to come.

Seasoned leaders know that it’s a new world where business leaders, not just governmental leaders, will soon need the social mandate to lead. A world where family companies must have a strong moral core to be authentic and to be accepted by the communities they profit from.

Driving this shift in leadership dynamics are global demographics. We see large business organizations with ever-younger CEOs at the helm. Naturally, there are pitfalls with younger leaders.

Be engaging with each family member to learn what is important to them, the family leader can channel those resources into the family enterprise and create the force multiplier effect.

They may grasp technical systems and hardware better, but do you trust them to do the right thing? Their lack of life experience can lead the company into trouble. The fall of Uber’s co-founder Travis Kalanick is one example of youthful hubris. When problems at the company came to a head in 2017, Kalanick, at forty, was considered an experienced leader, almost an “elder statesman” in Silicon Valley. Then came accusations that he fostered a toxic culture and turned a blind eye to reports of sexual harassment at Uber. It led to his resignation by the end of the year. Good leaders take time to develop, not just for the purpose of advancing their skills but also to deepen their moral discernment and exercise good judgment.

Versatility and cultural sensitivity

Versatility is also becoming a critical leadership quality. It has always been true to say that a successful leader will face many different types of situations over the span of their career. In our increasingly globalized world, leaders must immediately confront the limits of their native styles and norms, and then also be willing and able to adapt.

Different cultures will always nurture different kinds of leaders. For example, the model leader in China is often portrayed in movies as a fatherly figure, a paternalistic influence on business and culture. In times of trouble, he is expected to “go down with the ship.” The reasoning goes that he should save others before saving himself, sacrificing himself in a crisis for the common good. His focus is on tomorrow. In the West, however, the model leader is often a hero focused on today who saves the day and survives at all costs.

The path a leader takes toward any trusted decision depends on the context, too. In the U.S., a business leader “makes a decision” at a meeting, where buy-in can be attained at the same time. Public buy-in and timeliness are what Americans value and trust most highly. In Europe, the leader “takes a decision” after the meeting, getting the buy-in he or she needs in private among key influencers. That method is more highly valued and trusted in many European cultures. In East Asia, decisions made among strangers are usually not regarded very highly. It is important for Western leaders to invest significant time and other resources in building relationships before coming to a trusted decision when working with Asian partners in the Eastern context. This slows down the process, which can hurt a Western leader’s reputation for decisiveness in their home context. The global family business leader of today must have the skill to make decisions and gain trust in multiple cultural contexts, which adds to the complexity of their decision-making process.

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Today’s successful leader may operate out of several geographical bases. The leader travels a lot. Wherever they wake up on any given day, they know how to tap into the culture around them. The leader has a firm grasp of their moral compass in that society. He or she understands the influences of education, law, religion, philosophy, and other factors in constructing the accepted norms.

Cultural sensitivity is especially important for the leader who needs to provide oversight over global businesses and build unity within a global family group. Consider a family group with branches in America, Europe, and Asia that includes interracial marriages, plus cousins who grew up speaking different native languages and being exposed to different cultures. This is increasingly the reality of large, successful multigenerational business families. Followers need to know that leaders are comfortable in the followers’ context. So, to summarize, here are four qualities of exceptional leaders:

1. Good judgment—knowing how and when to make a decision;
2. Moral authority—acting and deciding based on knowing right from wrong;
3. Building trusted relationships—behaving consistently and keeping your word;
4. Character and attitude—having persistence, curiosity, versatility, cultural sensitivity, an entrepreneurial spirit, and the fortitude and boldness to take big, calculated risks.

Leaders You Need

To achieve family wealth creation success, you often need more than one type of leader. Broadly speaking, at least three common types of leaders are needed in a typical family enterprise:

1. Business leaders who oversee the growth of family resources and make meaningful financial investments for people to thrive;
2. The family leader who manages family governance, talent development of all family members, and conflicts among family members as they relate to the family enterprise; and
3. Social entrepreneurs who lead and coordinate the family’s overall efforts for doing good in communities.

Each of these leaders needs to have a spike in a certain skill area. Business leaders must be business savvy, able to spot opportunities, and aware of the changing nature and value of the resources you possess. They need to have a strategic mindset. They don’t need a full time senior management role; they can be non-executive chairman. They should be versed in finance and accounting, strategy, and have some general understanding of all other areas related to running a business such as marketing, sales, legal, IT, and/or manufacturing as applicable. The biggest challenge in selecting and cultivating business leaders is that the business itself is a moving target. Our world is changing so quickly, the business landscape in ten years’ time will surely be very different from what it is today. A traditional “up-theladder” training program may or may not be the best approach. So, keep an open mind and focus on the rising leader’s level of curiosity, willingness to learn, and problem-solving skills

The biggest challenge in selecting and cultivaing business leaders is that the business itself ia a moving target.

Family leaders are individuals who work to support family unity by (1) being active in the family governance structure (e.g., family council), (2) engaging with each family member individually, and (3) developing the next generation family group. They may also lead the agenda of the family owners. Family leaders can be the business leaders, but as business families evolve, they tend to be well-respected family members who do not hold formal roles in the wealth engines. Their responsibilities may include oversight of annual distributions; family employment policy; hiring and firing of a family CEO; compensation or perks for family managers; and the future direction of the family’s wealth engines. The family leaders have a very important role in family enterprises transforming into an ecospere by building a Quantum Machine that creates a multiplier impact from the family’s collective resources. These leaders need to focus on (and become skilled at) developing and engaging every family member.

Social entrepreneurs may be involved with the family foundation or institution, non-profits, impact investing, or other community activities focused on doing good. They are the family’s face in the communities. Families whose wealth engines and social entrepreneurs coordinate on some levels often experience a multiplier impact in both areas.

How to Be an Exceptional Leader

Does it seem massively challenging to become the kind of multignerational enterprise leader that you aspire to be? It won’t be easy. But that doesn’t mean it has to be complex. Basically, you need to possess or acquire three key qualities.

Key Learning Point #1: Develop your self-awareness. Understand yourself as a leader, along with your strengths and weaknesses. Use your strengths well to further your family enterprise’s goals; make up shortcomings by improving on those leadership skills or find someone with a complementary skillset whom you can work with.

Key Learning Point #2: Seek to develop your sensitivity to different contexts: the kind of cultural, emotional, educational, and functional circumstances that may shape your colleagues’ thinking. This “pool” of influences will determine how motivated others are to embrace your leadership. Be mindful of particular fears, in yourself and in others, that may make people resistant to following your direction.

Key Learning Point #3: Widen the range of your leadership skills by learning how to interact with people in different “microcontexts.” For example, a family organization leader might need to negotiate highly technical contracts with corporate lawyers, while also being able to lead collective bargaining with union workers, where the tenor of communications is completely different.

Key Learning Point #4: Exercise good judgment in terms of select-ing key hires to fill your team and play roles in key decisions.

How to Measure a Leader

A successful leader is in control: she may be guiding the family enterprise overall with multiple capital resources that she is juggling at once, or she may be guiding a part of the family enterprise focused on developing one or two types of capital. She is constantly taking stock of these resources and knows how, where, and when to use them. She also has a handle on when to develop more of each resource (financial, social, human, or intellectual). In summary, she is good at developing and allocating capital.

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Above all, the effective family enterprise leader is the one leading a healthy, personally fulfilled life with psychological balance. Without such equilibrium, leaders do not have the stamina to serve for long periods, nor the ability to make measured, thoughtful decisions in challenging circumstances.

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Works Cited

• Tsai, Florence C. “Phoenix Rising: Traits of Exceptional Leadership.” Phoenix Rising – Leadership, Chapters 3, pp. 64-74
• Based on a real case study, but made anonymous to protect the privacy of individuals.
• Taylor, K. 2017. “40 ofthebiggestscandalsin Uber’shistory.” Business Insider. November 24, 2017. www.businessinsider.com/ubercompany-scandals-and-controversies-2017-11#february-2017-afemale-engineer-who-used-to-work-at-uber-publishes-a-blogpost-about-sexual-harassment-and-gender-inequality-at-the-company-21 (accessed January 11, 2019).
• Yurieff, K. 2018. “Uber’s HR chief steps down after discrimination probe.” CNN Business. July 11, 2018. https://money.cnn. com/2018/07/11/technology/uber-hr-head-resigns/index.html (accessed October 31, 2018).