I’m often surprised at what business psychologists know, that ANYONE could benefit from knowing and practicing…
This content is #1 of 3 articles.
Title: The HERO Model: An approach for Navigating Organizational Changes in Family Enterprises
All leaders and advisors struggle with Organizational Change. How could our work be anything else? Family enterprises are infinitely complex. No one likes to be told to change. We all bring our biases and adopt heuristics to reduce that complexity. Attorneys say, “We mitigate risk.” Wealth advisors say, “We leverage capital assets.” Next Gens say, “We want to innovate.”
We all use heuristics (patterns for what works) to reinforce the structures that reflect our worldview for each family system. One common example is the multidisciplinary views of capital, that include financial, social, human, family, legacy, and intellectual views of capital. Those views of capital are resource-based, and the capital diminishes as we age. In my final years, for example, I will forget people and information, and my financial assets will be invested into healthcare… just like each of our clients.
What would happen if more practitioners adopted a more pervasive and universal view of capital?
Social psychologists (like me) know that Psychological Capital (PsyCap) is a dynamic, validated construct that can be used to describe our clients. PsyCap is defined as a construct based on 4 inter-related competencies: Hope, Efficacy, Resilience, and Optimism (see the APA link here, or read the book here).
As the primary author, Fred Luthans, recently stated to me, “PsyCap has and continues to take off across the world … I have over 166,000 citations of my research which has been awarded in the top 1% of all researchers in all fields in the world and ranks #1 in organizational behavior textbooks. In other words, I am very happy with how PsyCap research is going, especially in the global economy.” (direct communication 9.5.24).
The HERO model is more than a convenient acronym. The HERO-within model is a critical approach that practitioners can apply at multiple levels- individual, team/ family, and organizational/ societal.
I have applied the PsyCap model with countless clients for decades. You can also do so!
And ANYONE can apply this model to themselves.
Practitioners, by definition, need to practice new behaviors and share them widely. My opinion is that practitioners have a fiduciary responsibility to practice both new ideas (innovation) and celebrate strengths (stability) every day.
The purpose of these 3 short articles is to introduce the HERO model, like a new vocabulary term, and examples that can be applied by advisors in any discipline. I invite you to assess how you can apply these practical examples with yourself, your loved ones, and with the clients you serve.
Imagine that you are building a house with a garden that you hope will support generations of loved ones. Hope is defined as “the will and the way” to build a better future (read the book here). Every business founder believes “I can build this product or service.” Their hopes are often defined in founder’s history books or videos, vision statements, the stories told and re-told at gatherings. Efficacy is the capacity to build that new house, to get the job done. We all use blueprints such as values statements, family constitutions, charters, phased strategic plans for new projects. Resilience is our capacity to respond to adversity by returning to the same or a better level. Examples include our responses to global disease, market adversity, or loss of our loved ones. Optimism is our choice to believe in a positive outcome, such as well-being for our children and grandchildren. All four of these competencies can be measured, taught in under 90 minutes, and developed over time. The PsyCap impact is more significant when all four competencies are measured (a second-order effect) than when only one or three competencies are measured.
Here are examples for how we can accelerate PsyCap at three levels: Individual, Team/ Family and Organizational/ Societal.
Article #1 of 3: The HERO Model applied at the Individual level
We all need to look in the mirror at times. We all need to exhale. All good leadership development models start with self-awareness and lead to new actions, so it makes sense to start this list of activities with assessments, then several new behaviors that you can implement immediately.
A. Pre-Meeting or Annual Surveys. For years I’ve embedded these 4 questions into surveys so that I can provide a summary of PsyCap changes over time. Directions: On a scale of 1 (low) to 10 (high) how do you assess each of the following?
1. Hope. I have “the will and the way” to achieve my goals.
2. Efficacy. I feel confident that I know what I need to do to achieve my goals.
3. Resiliency. I can get through difficult times or challenges.
4. Optimism. I am optimistic about what will happen to me in the future.
When I share the data, I also encourage people to use these four vocabulary words regularly.
B. Self-Assessments. Individuals and teams can clarify values using free tools like https://www.viacharacter.org/ or https://www.lifevaluesinventory.org/
Personality and behavioral data including strengths and derailers can be assessed from https://www.hoganassessments.com/ or https://www.discprofile.com/
C. 360-Assessments. The most valid form of assessment is anonymously collected from others and focuses on the behaviors of family and non-family leaders. See my process at https://assessnextgen.com/
D. Reflected Best Self activity. When I ask 10-15 people to describe my strengths and weaknesses, those details can help me identify how I can be “At My Best.” Our colleagues and loved ones may never have been asked to provide feedback or advice. (See details at https://hbr.org/2005/01/how-to-play-to-your-strengths).
E. Three Good Things. The gold standard in social science, with over 100 years of research, occurs when a random sample population repeatedly has a significant result from an isolated behavior. Imagine that you practice this new behavior for a week. When going to bed, write down or state out loud Three Good Things that happened that day. Simple activity, right? If we measured your subjective well-being (happiness) daily, it would increase. Related prosocial measures, like gratitude and kindness, also increase. If you extend your Three Good Things activity into a journal for months and years, then you can ask your loved ones if they notice any results. (read the book here).
F. Adopt a metaphor, such as building a new house with a garden where your great grandchildren can flourish. When we “design a future self or future house” then we can adopt that metaphor and practice flourishing. Ask any founder. Or ask any parent. When we hold newborn children, we always whisper our best intentions and hopes. Why not do the same for yourself and your clients?
Time to pause… what do you think?
Article #2 in this series will focus on the team/ family level.
Article #3 in this series will focus on the organizational/ societal levels of organizational change.
Conclusion
Like every practitioner, I’m regularly reminded of how little I know. I ask for advice, and read, and on good days I listen well. Then I try something new. The PsyCap term may be new to some readers. However, the words “hope, efficacy, resilience and optimism” are ancient and familiar.
If we embrace the HERO model for our loved ones and our clients, then we are practicing ancient wisdom, in a new way. (See my riveting dissertation here).
My experience is that Psychological Capital describes family-centric values over a longer term than any other measure of capital.
Please add your thoughts if you share that bias or want to continue this conversation!
Here is Annual Self-Assessment Form. Copy this. Print this. Post your notes with YOUR coach or accountability partner.
Date: _________
Step 1:
List the top 5 people who are most important in my life today.
Instructions:
For each statement below, imagine how those who know you well would score you. Use a scale of 1 (low) to 10 (high). After scoring yourself, add comments for additional insights or actions to improve.
Hope: “I have the “will and the way” to achieve my goals. Score: ____
Efficacy: “I feel confident in my ability to take on challenges and achieve desired outcomes.” Score: ____ Comments: ________________________________________________________
Resilience: “I can bounce back from setbacks and adapt to changes.” Score: ____ Comments: ________________________________________________________
Optimism: “I focus on the positive aspects of situations and believe in the best possible outcomes.” Score: ____ Comments: ________________________________________________________
Humility: “I value the contributions of others and admit my mistakes.”
Curiosity: “I actively seek new knowledge, ask questions, and explore diverse perspectives.” Score: ____ Comments: ________________________________________________________
Collaboration: “I work effectively with others, fostering trust, and contributing to collective goals.” Score: ____ Comments: ________________________________________________________
Accountability: “I take responsibility for my actions and follow through on commitments.” Score: ____ Comments: ________________________________________________________
Empathy: “I show understanding and compassion toward others’ experiences and emotions.” Score: ____ Comments: ________________________________________________________
Vision: “I communicate a clear and compelling vision that inspires others to act.” Score: ____ Comments: ________________________________________________________
Reflection Questions:
What do these scores and comments suggest about your current leadership strengths?
Which area(s) do you most want to improve over the next year?
How can you leverage your relationships with the five most important people in your life to support your personal and professional growth?
12 months from now, what are 1-2 important aspects of your life that you would regret losing? (These are the 1-2 aspects to focus on ahead).
Naturally, this self-assessment can be repeated at any time to track your growth and identify areas for continued development.
If you have advice on how to improve this self assessment, please comment or reply directly.
Yesterday a client said, “We’re too small. We can’t afford consulting. We make less than $1M in annual revenue. We build decks and patios. This business pays the bills. I guess it’s my retirement plan…”
Sound familiar?
Yikes. It sounds short-sighted and dangerous to me!
People provide solutions… and customers buy solutions. That’s the bottom line.
This business leader does not ONLY build decks and patios… Not really. That would be short-sighted. He creates “outdoor living experiences for loved ones.” Something remarkable.
How much would you invest in a backyard party for your child’s birthday? Or your family reunion? Or your weekend football game party? Or that special bottle of wine or bourbon?
If you invested $30,000 into an outdoor living redesign, wouldn’t you expect decades of priceless experiences with your loved ones? That solution is priceless.
Case Study: Joe
A second business leader said, “I don’t think I have anything valuable, so when I retire, I’ll just let it shut down.”
I asked, “What’s your annual revenue and earnings?”
He said, “Our revenue is about $1m/ year and I make about $250,000 year. Everything else goes back into capital expenses and employee compensation. We’ve had a good life. I’ve raised my family.”
I asked, “What if you assumed 4x earnings, and someone offered you $1,000,000 to buy your business next week? Would you retire?”
FACT: Most business leaders don’t know their value and succession options.
Market Analysis Figure 1:
Check out these details… do they look familiar to you?
Segment
Annual Revenue
Avg. No. of Employees
Avg. No. of Owners
FTEs
Strengths
Weaknesses
Key Problems
Small Family-Owned
Less than $1M
10-50
2-3
5-25
Strong community ties, family unity
Limited resources, dependency on few customers
Lack of growth strategy, succession planning
In every corner of the world, in every business sector, small businesses define the success of every economy. They are the social fabric of communities. They define success. They create over 65% of jobs and GDP in the US, and a higher percentage in Asia.
Most of the time, business leaders quietly pass on their business to family members or capable leaders. Sometimes there is conflict because of bad communication. Those succession planning discussions require expert advising from consultants.
“Do-It-Yourself” consulting or “Consulting From a Book” always leads to failure. Don’t waste your time or money.
I hire experts to build outdoor living experiences. Or to do any plumbing, electrical, legal, and financial work. Don’t you hire similar experts?
Market Analysis Figure 2:
How much would you expect to invest in a consulting solution?
Consulting Needs
Consulting Fee Range (Phase 1)
Consulting Fee Range (Phase 2+)
Representative Business Types
% of U.S. Economy, approx. #
Familiar Family-Owned Businesses
Business planning, succession and leadership coaching
$5,000 – $15,000
$10,000 – $25,000 annually
Local restaurants, niche retail, craft breweries
~10%, 3.1M
Zabar’s (NYC), King’s Hawaiian, Goorin Bros.
There’s no need for confusion about pricing. That approach only leads to distrust.
• Consulting Needs are problems that require external solutions, such as conflict resolution, strategic planning, or leadership coaching.
• Consulting Fee Range (Phase 1: Initial Discovery/Assessment) includes the initial consulting phase, such as discovery, assessments, and strategic recommendations.
• Consulting Fee Range (Phase 2+: Annual Consulting Phases) covers ongoing consulting needs in subsequent phases, including implementation of solutions, leadership coaching, and strategic execution over a year or more.
Back to the first example of the business leader named Joe, who doesn’t know the actual value of his business. Joe has three options:
No investment in consulting. When Joe retires the business dies.
Small investment in consulting, $15,000- 40,000 over 12 months. When Joe retires the succession plan may enable the business to continue.
Larger investment in consulting, $75,000 – 200,000 over 5 years. When Joe retires the succession plan may provide over $1,000,000 in real value to the owners or their benefactors. The community retains jobs. The business legacy may continue for generations.
Sound familiar?
The solution for most family-owned business leaders is NOT venture capital or private equity investors. They will extract value and disappear within 3-5 years. That would be short-sighted and dangerous.
The solution is to invest in consulting solutions, such as “family capital for loved ones.”
Succession Advisory Teams
The only way to win a football game is expertise on the offensive team, the defensive team, and the special teams. Each team measures success differently to “put points on the board” or “hold them to three downs” or “run it back.”
In the same way, a Succession Advisory Team brings multi-disciplinary experts together to achieve a win.
Lawyers provide risk mitigation and contractual agreements. Accountants provide business valuation and options. Wealth advisors provide investment options. Business psychologists (like me) facilitate the process.
There are many opinions about the top strengths of family business leaders.
One of my recent projects answers that question.
We (Kent Rhodes, Ed.D) and I recently developed and validated a 360 assessment process for next generation family business leaders. See www.AssessNextGen.com for details. We determined the top 50 items.
Our recent research found that the number 1, top strength, or Career Catalyst for family business leaders is Item 13: “Keeps confidences about family business wealth.”
Hmmm. On a scales of 1-10 how well does your family business keep confidences about family wealth? Here are some quick thoughts about how to apply this finding to your family enterprise or family business consulting.
For more details contact Doug Gray, Ph.D. at Gray@theFBCG.com or Kent Rhodes (Ed.D.) at Rhodes@theFBCG.com
Here is the transcript for your reference and sharing:
Title: What is the most important strength for Family Business leaders?
Description on YouTube post: A quick research update from www.AssessNextGen.com. We can now answer that ancient question, “What is the most important strength of Family Business leaders?” Here are some tips for your family enterprise or consulting.
Transcript of video:
Sometimes people wonder, “what are the top competencies that family business leaders need?” And I’m happy to report some early results from the Assess Next Gen Family Business Leadership 360 assessment. This data is from 163 responses in the last few months. Here is the top score, in other words, the Career Catalyst, the behavior that is number one. I’ll give it to you and then I’m going to ask you to reflect on it.
The top score, the thing that our raters said others ought to do, is item number 13: “Keep confidences about the family business wealth.” To repeat, the most important strength of Family Business leaders is to “keep confidences about family business wealth.” What does that mean for you and your family or your enterprise?
I recently asked that question of a friend of mine, John Broons, who’s in Australia, who is pretty brilliant. And he said, “family wealth needs to be part of the conversation. It’s too often not discussed.”
I agree. We need to prepare for risks, like a transition or a succession or continuity or another line of business. And too often family members don’t have any idea of what’s next. There’s the core business. Perhaps there might be other lines of business, but family wealth conversations should definitely stay within the family.
Many of my clients have a charter or clause which states, “This is what we will say, and to whom.” They may have a conversation with the wealth advisor and estate attorney, and they may not have that conversation with somebody like me, a business consultant. The family members are the only ones who have access to that information. This is to protect them from journalists or politicians or inappropriate people seeking to learn something about that wealth. And often this confidentiality clause is written in an agreement. So we’re really talking about the two first words here…
Keep confidences. The most important strength of Family Business leaders is to keep confidences.
How do we keep confidences? I think we need to reinforce some useful guidelines. My clients require trust guidelines. Let me give you a quick example. One of my clients has eight G4 children on this side and four children on this other side. Potential conflicts, right? So they made an agreement in writing, and verbally reinforced it in every one of their meetings, about what could be shared with Doug as the family business consultant working with that G4 generation. My focus is on leadership development. Part of my job is to reinforce for them what’s confidential and what they need to keep confidential.
It’s a bit like driving a car when you’re driving down an unfamiliar road. You’ve got the white lines on the right side, the yellow lines on the left side. Like a good driver, we need to keep confidences. We don’t want to go to the edge of those lines. We don’t want to go off the center of the road. We certainly don’t want to go in the dirt or the gravel on the side.
So, my invitation is to keep confidences about family business wealth. Keep that conversation sacred. There you go. Tip of the moment.
For more details on the Assess Next Gen Leadership 360 process, see www.AssessNextGen.com
In this episode: Rod Zeeb & Doug Gray, Co-Founder of Assess Next Gen and a Consultant with The Family Business Consulting Group, discuss trends in both qualitative and quantitative assessments that are available, information for access to the assessments, and collaborators to help you if you need it.
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