Relative Solutions Image - Thought Leadership - Lo-Res 00022477.png

The Family Enterprise Sustainability Index

istockphoto-1017193718-612x612 - CROP 3.png

The family enterprise sustainability index

We created the Family Enterprise Sustainability Index (The Index) to answer a central question: “Is my family enterprise prepared to bridge multiple generations in an enduring manner?” The Index looks at five areas our extensive research attributed to successful enterprising families:

  1. Family Legacy and Connection

  2. Governance Structure and Processes

  3. Financial Accountability and Management

  4. Human Capital and Leadership Development

  5. Generosity and Gratitude


The Goal of the Family Enterprise Sustainability Index

The goal of The Index is to provide enterprising families with a beginning understanding of what they are currently doing to support sustainability and whether they agree or disagree about the whether they are achieving their vision for it. Ultimately it provides the an individualized family roadmap with milestones to achieve. You can expect the following: 

  • Anonymously allow any number of family members of a multigenerational family to login, participate in The Index, and instantly view their results compared to those of other family members.

  • Encourage review and development of behaviors that will increase the likelihood of your family achieving sustainability.

  • Lay the groundwork for the family to create a strategic plan to achieve sustainability of its financial and human resources, including family relationships and intellectual, emotional and spiritual capital.

Index Layers and Laptop.png

The Five Dimensions of Sustainability in Enterprising Families

Family Legacy and Connection

Families tend to think that sustainability is a matter of maintaining the legacy of the business established by the founder, often failing to acknowledge that legacy like the family itself is a living thing that changes and must adapt and grow. And legacy is more than history of the business, it is the lifeblood of the family.

There are several areas in which family legacy and connection can address and advance sustainability, all of them touching on understanding the conditions that are necessary for the family to deal with each other on a collective and collaborative basis.

The questions in this section are around purpose: What is our vision? Why are we together at all? What are we doing? What do we want to do together, if anything? This idea of purpose raises the basic question of do we want to remain together—and if the answer to that is yes, then what are the ways that we want to do that and what are the capabilities we need to do so? This section will also address questions around communication, such as: How do we communicate? Are we efficient at being together as a family? Are we respectful and thoughtful, and are we able to collaborate effectively?

Governance Structures and Processes

The second dimension addresses the structures and processes, or the roadmap and directions that enterprising families use on their journey to sustainability.

In the early stages of a family enterprise, the founder usually handles all matters having to do with governance. But as families grow and as their joint assets and enterprises grow, founders need to broaden decision making and make it more transparent. Families must develop governance structures that match the complexity of their membership and their assets. Though there is no “one size fits all,” approach, the need for family representation or voice as well as ownership becomes increasingly important. 

As family members begin to find their voice, this translates into questions: What do we have to decide together to achieve our purpose? What are the structures and who should be making decisions in those structures? Who serves on the board, those who hold shares or any family member who has the capability and what are the capabilities to serve? At what level does the board serve the family and its holdings? How does the family voice get heard and on what issues? What structure represents the family? How does the family go about communicating its wishes and wants to the family shareholders? What are the policies and processes that permit a greater number of family members to have access to decision making around joint ownership of assets? As well as many more.

Financial Accountability and Management

The third dimension along which an enterprising family must have a plan is in financial accountability and management. This includes having practices and guidelines in areas such as oversight, financial responsibility and the continuation of wealth into the future.

This is often a crucial dimension, particularly for older family members who may feel as through the lack of fiduciary understanding, responsibility, and oversight in the next generation is what “keeps them up at night.” However, establishing policies and reporting that permits financial oversight, learning to share joint risk and/or opportunity, and collaborating with other family members within and across generations can greatly assist in the generational transfer of wealth.

In addition to family assets, educating and preparing for financial ownership increases responsibility and decision making. It gives family members the chance to be accountable for their own fiscal lives, and provides long term learning by experience and academic expertise. 

To ensure sustainability, the next generation must not only maintain but build the family financial resources, because as families increase in size, the need the financial resources also increases. Except in the very wealthiest of families, the need to be able to work/provide a living for oneself is important, as it may directly or indirectly increase the family’s ability to be sustainable.

Human Capital and Leadership Development

The next dimension concerns human capital and leadership development and therefore has everything to do with the intellectual, social, emotional, and spiritual capital of the family. Just as one can have a financial balance sheet, families can produce a balance sheet for this dimension which permits them to assess and build family capabilities over time. 

Family members serve as the long-term investors for their family firms but as time goes on, few family members tend to work in the family enterprise. Family members need to feel valued and to derive a sense of satisfaction from their patient capital. The more family members become investors, the more the family must provide for connections in terms of their education and learning. Participating in joint activities that promote the development of all family members not only increases total family capital balance sheet but also increases the potential for learning how to work and make decisions together.

Though not every family member can or wants to be a leader, ideally every family is able to make a contribution. Enterprising families can provide for this through positions for a large number of family members to develop their own capacities, not just those that directly enhance the family enterprise.

Generosity and Gratitude

The last dimension is generosity and gratitude. Being generous is not just about financial generosity. It has to do with the ability to be generous in your heart, to act from abundance and depth. Gratitude is about being able to see that others contribute to our well-being and success in many ways and to be appreciative of all those contributions. Having a good sense of these two concepts goes a long way to balancing out a belief that one creates his/her success on their own and decreases the sense of entitlement that often accompanies that. 

To renew and sustain itself, families must focus on meeting their needs versus satisfying their wants. Because focusing on wants tends to use up precious resources, often to the detriment and loss of the essentials. It also means focusing simultaneously on the current situation and the future situations—where you are and what you need for now and where you want to go and what you will need for that moment.

Generosity is also about responsibility to the greater world beyond the individual. Enterprising families understand the concept that a rising tide lifts all boats, and strive to adhere to Churchill’s adage that with great wealth comes great responsibility or to those who are given much, much is expected. 

With many young people in enterprising families leading the way, the focus on generosity and responsibility has increased and changed overtime. Families are rethinking giving only of their wealth, and are placing a high value on other forms of generosity and philanthropy, particularly in areas that the government is no longer highly supporting—like social reform.

Generosity and gratitude increase a family’s sustainability because these areas add to their sense of purpose, and adding to the overall family collaboration.


Your First Step

Please contact us using the short form below. We will schedule a call with you to learn more about your situation, challenges and goals, and discuss The Index in greater detail with you.

Name *