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Family retreats: The reality

Katie Barker interviews three families to find out what happens in practice at a family retreat. 

Families have various different initial reasons for deciding to organise a family retreat, writes Katie Barker. For Sam Phelan, former CEO of US-based, laboratory rodent providers Taconic, the idea developed when the family faced that most common family business issue: succession. "There were three brothers who were involved in the business and we were all approaching retirement age," he explains.

"We had no clear successors in the next generation when it came to active management of the business. So we got in some consultants to assist with our succession problem and the idea of a family retreat to discuss business matters came out of that." The retreats also provided a rare opportunity for the Phelans, now into their fourth generation of family ownership, to bring together the separate branches of the family, although this was not the initial intention.

"Getting the whole family together to deal with business issues was a new idea and we had a lot of barriers to break down and needed to build some trust between the family branches. There were three separate branches of the family that operated almost entirely on their own," Phelan says.

For Juan Pelaez, third generation of the South American family behind healthcare company Grupo Familia, and his family, a retreat to bring the separate branches of the family together was key. "Our family business was based in a small town in Colombia, but because of the violence there we were forced to scatter across the country and even into other countries," he says. "Besides the family retreats we don't see each other so we actually get to have a relationship with our family, because before that it was non-existent."

Dominique Moorkens, CEO of Belgium-based motor conglomerate Alcopa, and his family had very practical reasons for instigating retreats; they provide an opportunity for the board and the shareholders to communicate. These channels of communication have become even more important as the family grows in size and spreads across the world.

In order to ensure both the board and the shareholders get adequate time to discuss the necessary issues, the Moorkens family runs two separate retreats; the first happens four times a year and is a weekend of just the board members when they discuss business issues, listen to external speakers within a formal framework. This takes place at a family property and includes various leisure and bonding activities scheduled into the weekend.

Second, the family holds a shareholder day once a year to which all shareholders are encouraged to attend. This is a chance for shareholders to get feedback from the board on the performance of the company, voice any concerns they have and find out any information they would like to know. It is much less formal than the board retreat as shareholders are encouraged to discuss anything they wish.

For their part, the Phelans do not feel such a separation is necessary; instead they go away twice a year with both family and non-family management for the weekend. The retreat is structured with the company management reporting to the family on Saturday, followed by either business or estate discussions after lunch and then leisure or sightseeing activities in the afternoon. Sunday is reserved for more informal business or family discussions.

The focus of the weekend is weighted towards business, although if family issues do arise Phelan says they will address them. The family has a separate family council to deal with purely family orientated issues, however the weekend is also about reconnecting with the family so they hold large dinners on both Friday and Saturday evening.

The Pelaez family also takes non-family management on its retreat, a bi-annual trip when they go away for 10 days each time. The first three days are business and the following seven are leisure. They often choose to visit areas based on whether they have business ventures in those areas, and tend to alternate between Latin America and Europe. The leisure side of the trip is heavily scheduled too and is packed with sightseeing tours, dinners and tourist activities.

When discussing their experiences of the retreats, a better family relationship was a benefit highlighted by all three families as important in both a business and a social context. "Actually having a dialogue with my cousins and my family is the most valuable thing for me," says Pelaez. "Because if we understand each other, where we are coming from, and see each other work inside our family, we will be able to handle problems in the future much better."

Moorkens believes the chance for everyone to express themselves is the biggest benefit, as it can lead to anticipating future problems. "Shareholders can explain their problems and frustrations so we can address them at their roots and stop them getting any worse," he says. "This is important as we have three generations and six family branches represented."

As many of the Phelan family are not directly involved in running the business, it is during the retreats that the management gives feedback to the family on company performance. Phelan believes this is crucial as it allows all the family members to not only be aware of the facts, but also understands what they mean for the business.

"Number one it is an opportunity for everyone to be working with the same set of facts, which is really important," he says. "Also the retreats provide an opportunity to discuss various aspects of the business or performance of the management with the entire family, so people can start to share not just the same facts but a common interpretation of those facts.

"The retreats are also an opportunity for all family members to get to rub elbows with senior managers at Taconic, which is critical for building trust and confidence," Phelan says. The more sociable aspects of attending a family retreat are equally crucial, as Phelan points out. "There is certainly a camaraderie and social element to the family retreats. Also the benefits of having the next generation get together and develop their own social network is important," he says.

The experience these families have had of their retreats was very positive, although they did identify some ways in which they could be improved. Phelan explains some of the changes they have already gone through as the retreats have evolved to suit the family's specific needs: "Initially at the retreats it was just family. The idea of getting management involved came along two or three years after we first started so we could increase their involvement," he says.

From this the family decided to get the next generation sitting on board committees and generally more involved in the business management and governance. As a result of the retreats, the family has decided to form a holding company in order to better manage the family's wealth.

Moorkens outlines some of the areas his family is trying to make their retreats more effective. "It is a serious challenge for future generations to remain close to the business. As the family becomes bigger you get much further away from the original business so these retreats are a way to keep shareholders connected.

"We have been working on improving these links for 14 or 15 months now and personally I think it is going quite well," he says.

Pelaez admits not everything is possible. "I would like everyone in my family to be involved but it is almost impossible to get them all together," he says. However, involving as many family members as possible is vital for the success of the retreats as Pelaez goes on to explain. "You can't expect a large family to get together and suddenly agree on everything, be of the same opinion and be happy. Families are not like that, they have a lot of problems," he laughs.

But it is for precisely these reasons he would recommend other families in business go on similar retreats. "We are starting to realise that we as a family have to protect the family business and the only way to do this is by getting to know each other.

"I would recommend a retreat because it is a very gentle process, a way of bringing the family together and in agreement. But it should be allowed to happen slowly so you can make the business your core – it will evolve from there," he says.

Moorkens reiterates his view that preventing conflict is the biggest benefit of the retreats and so why he would recommend them to other families. "My main experience in the family business is that you have to anticipate problems. The retreats are a great place for communication where you can anticipate and diffuse any potential problems. It may seem like you are losing time, but in the long term you are saving a lot of time," he concludes.

When asked if he would recommend other business owning families attend family retreats, Phelan was single-minded in his assertion: "For any family that desires for the business to remain in the family over multiple generations and multiple branches, it is critical." 

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