Grand Designs

[Walid S. Chiniara]

Grand Designs

All fine architectural values are human values,

else not valuable.

(Frank Lloyd Wright)

I recently spoke at a Gulf Family Business forum on the matter of ‘Building Family Offices’. Some colleagues expressed shock when I mentioned that the length of one client mandate was 24 months. In response to questions regarding the stress and strain of such a lengthy relationship; I offered the following analogy:

Consider two architects. Architect A takes initial client briefings during typical office hours. Architect B goes and lives with the client for whom he will eventually build a new house

During Architect A’s traditional client briefing, he asks a series of precise questions and learns of the size and structural requirements of the family; the budget and planning permission that they have; and the basic layout and design that they wish to develop.

Architect B, during his live-in stint, learns (as well as everything A learns) that Dad’s knee has been playing up for years. This is why he now has to sleep in the noisy downstairs bedroom. He also learns that mum is slowly losing her hearing and doesn’t always hear the telephone or the doorbell ring. Over the course of his stay he learns many other details about other family members.

Architect A’s blueprint includes the installation of a spiral staircase. Architect B’s includes a lift between floors and a Smart Home feature, which replaces sound with light. This way both Mum and Dad can feel more in control of every day life.

Clearly Architect B can build something sustainable, whereas A will have to constantly return to the drawing board.

Gathering information in the way of B, although unconventional, means he can design the ultimate family home; catering to everybody’s needs. Architect A, however, simply frustrates both himself and the family.

Family Office Architecture

When we consider the vast amount of wealth managed under a family office, it does not seem unreasonable to equate its value to being (at least) equal to that of the family home. Similarly, the gathering of information prior to its design is just as crucial.

Every client for whom we design a family office structure is different. There can be no ‘one house fits all’ approach.

UAE Family Business Culture

Challenges facing UAE family business and creating everyday struggles include:

- Founders still alive and involved in the business even into their 90s

- Multiple wives

- Extended sets of children, often based in more than one country

- Large number of assets

- Sole proprietorship structures

- Faithful vs competent employee dilemma

- Blurred lines between owners and managers and personal and company finances

- Absence of career paths for family members

- Increasing behind the scenes frustration of G2/G3

- Lack of family communication

- Lack of transparency

- Traditional values vs modern ideals

- Primogenitor rights vs. meritocracy

- Uncertain role of Women

- Discretionary relationships with financial institutions

- Mistrust of political and legal institutions

- Over-leveraged family ‘brand’ names

- Jealousy, secrecy and opacity within society

- Ambitions of G3 ‘reigned in’

Creative Family Governance

Whereas architects use structural reinforcements to ensure the longevity of their structures; family business consultants use family governance. This is designed to complement traditional corporate governance. Laying the foundations of family governance often takes longer than the establishment of physical structures, such as family offices.

As with structural development, there is also a design element to family governance.

Firstly, family governance must work creatively for the family. In other words, we cannot throw the client a carbon copy of the last family constitution that we drafted. It must be crafted, using a language that speaks to the family that we have gotten to know.

Secondly, there are certain elements that it must include:

Primarily, the family governance system must be composed of policies to ensure the fair treatment of all family members and include a process for taking decisions based on group participation and consensus building.

Secondly, it must also include a mechanism capable of dealing with internal conflicts, to avoid break away factions forming in the family.

The rest is up to the advisor.

Don’t discount the value of time

Whether drafting a family constitution or designing a new family office structure, experience offers two key ingredients: Time and Creativity.

The greater the flexibility of thought that can be offered, the more likely we are to create a timeless masterpiece for our client family to enjoy.

© Walid S. Chiniara and Ciara M. Howie, 2009