Table of Contents
On July 7, I will be speaking at the STEP (Society of Trust and Estate Practitioners) Global conferences on the topic of Modern Families. STEP is a global professional body comprising lawyers, accountants, trustees, and other practitioners who help families (especially business families) plan their futures. This emanates from an article I co-authored with my esteemed colleagues and mentors, Dr. Dennis Jaffe and Dr. James Grubman, on the transitional shift in the set-up of global families of wealth. Family businesses have the unique trait of being able to last for multiple generations and outlive all other business models due to the element of family and the complexity of the values that come with it.
One of the unique traits is that a family business at its most basic format is an interaction of the business system and the family system. These systems have to find a way of co-existing where the systems complement each other as opposed to conflicting or opposing each other in a way that can be destructive for either system or both systems. Every family that runs and owns a business has its own culture as a family. Dr. Jaffe and Dr. Grubman are psychologists who have worked with wealthy families from different regions across the globe and in various industries.
For the purposes of this article, I would like to focus on the book the two published titled, “Cross Cultures: How Global Families Negotiate Change Across Generations.” The book offers a framework for understanding the three cultural approaches that the two say prevail in family businesses. These cultures can be found in specific regions and are influenced by several factors in the micro and macro environment as well as the evolution of the regional cultures. The cultures as unpacked in the book are:
- The “individualist culture” tends to be clustered in North America, North America, Northern Europe, the UK, Australia, New Zealand and Western Europe. This culture focuses on self-worth based on personal dignity. People in this culture are equal and have individual rights, which are above those of the family. The culture values assertiveness, directness, and transparency. At times, these do not encourage diplomacy. With individualism, everyone should be heard in decision-making regardless of age or rank. Shared leadership is possible and encouraged within a family. Trust is built by what you do as an individual.
- The “collective harmony culture” view prevails in parts of Asia, China, Hong Kong, Singapore, Korea, Southeast Asia, Japan, and some parts of Indonesia. This culture views family and business as an integrated whole. Self-worth is collectively determined and maintained (face is to be preserved). The family and community are pre-eminent. An individual in this culture should respect and fulfil one’s place within the family over all things and situations. Issues and conflicts usually remain ambiguous and unspoken. Decisions and relationships are hierarchical in nature, and trust is built more on relationships.
- And the “honor culture” dominates in Latin America, Southern Europe, the Middle East, Africa, India, Russia, some parts of Indonesia, and elsewhere. This culture places primacy on family loyalties. Self-worth is based on reputation, maintaining the honor of self and family. At times these cultures are contending with unstable governments and the rule of law. Transparency can be potentially dangerous. The structure is hierarchical, based on family relationships and birth order. Communication is somewhat ambiguous yet can be emotional. Trust is built on relationships and networks, somewhat on personal tasks.
Although certain regions have certain cultures prevalent, it is highlighted that movement, environment, and globalization have seen some of these cultures in and across the world in different regions. In the book, Jaffe and Grubman encourage and support the understanding of the cultures. This understanding can make it easier to resolve intergenerational or cross-cultural conflicts that arise as the business matures and expands and families become blended.
How does this impact the African Families of wealth? We have seen African families sending their next generations to learn outside the continent for many years. The aspiration is that these next gens go to the best educational institutions and hopefully be able to run the family businesses better or be able to establish their lives for better opportunities and networking linkages to more established economies. In the beginning, during, and after colonialism, many families sent their children to the global west. Influenced and impacted by the colonial powers that governed their homelands or America because the American dream was marketed as the aspirational goal for most developed nations. We also cannot overlook the influence of the industrialized Americas.
Many next-gens landed in Europe or America, searching for better education, networking, and culturalization. This came with its own challenges with time. The next gens either came home and managed to bring the desired investment into the family business or set up their own successful family business. However, in other cases, the next-gens did not manage to be reintegrated into life at “home” and found themselves in conflict with the family and business systems at home. This caused frustration and had next gens instead choosing to settle in the new-found homes abroad. Why? You may ask. Because the individualistic culture is worlds apart from the honor culture that the homeland had to offer.
Furthermore, when there is no effort to understand this different cultural conversation, an apparent rift can become more significant with time. The honor culture demands that the next-gens uphold the elders and the matriarch or patriarch of the family, and the individualistic culture focuses on self-advancement and success. And not only is this culture introduced via the next gen’s education in the west. It now comes with the intermarriages of next-gens with spouses that grew up in this culture and bringing this culture with them into the greater family circle.
With time, as the global focus has shifted from west to east, Africa’s ties have grown stronger with Asia. Trade, education and collaboration have increased with the Asian markets. Ultimately some of these wealthy families have shifted their alliances and focused on sending their offspring to Asia to get education, skills, networks, and trade. As this has happened, we have seen the harmony and honor of cultures interact. With a majority of Asia being entrenched in the harmonious culture, which is more tolerant and familiar with honor cultures, there has been a new conversation in the modern families emanating from this alignment. When intermarriages happen, although culture clashes are found, the harmony culture has lent itself to being more collaborative with the honor culture. Not only have these family cultures found the ability to work together from a relationship perspective, but we have seen that from a collaborative perspective, the African families are starting to prefer to work with their Asian counterparts.
This is not to say that one culture is better than the other. As we have seen, all three cultures have their merits, and a next generation that can borrow the best from all the three cultures can combine the strengths to form a robust and inclusive family system and an agile business system. Global capitals of wealth continue to shift on a daily basis. A learning family that is intentional at exploring the opportunities available to it can thrive in this dynamic global village. What is most important as the blended families’ conversation evolves? First and foremost, it is to understand what a modern family is and where it applies. A recent study by STEP on modern families has categorized some of these types of families as follows but not limited to:
- Traditional family: A married heterosexual couple with biological child/children.
- Blended family: A family unit where one or both parents have children from a previous relationship, and they have combined to form a new family.
- Cohabiting family: A family unit where the parents live together without being legally married or in a civil partnership.
- Multi-jurisdictional family: A family unit that is spread out globally, residing and holding assets in different jurisdictions.
- Multi-ethnicity family: A family unit that combines different ethnicities and cultures.
Whichever category a family falls into and evolves into, it is important to understand the various aspects that impact the family personally and professionally. Families need to look at the different legalities and cultural intricacies that the various family members find themselves exposed to. Discussions about prenuptial and postnuptial agreements, location of marriage, and the different types of marriage.
Understanding ownership as well as inheritance laws of the various regions they expand and settle in. Taxation and trusts, as well as immigration, play a significant role in the everyday lives of the families. Setting up robust advisor networks that can assist in navigating these issues is essential. The key to this is engaging in family governance to allow communication, conversation, and collaboration to be the key to family relations that will make the cornerstones of the wealthy global families.
Tsitsi Mutendi is a co-founder of African Family Firms, an organization that aims to facilitate the continuity of African family businesses across generations. She is also the lead consultant at Nhaka Legacy Planning and the host of the Enterprising Families Podcast.
