The economic boom of the nineties encouraged complacency and avoidance in dealing with conflicts within the family-owned business. Issues that were in remission under the palliative salve of a high revenue stream have most likely been eating away at the infrastructure of many family owned businesses. As the revenue stream slows, relationship problems can no longer be relegated to the backburner. Family business owners are finding that if money cures all ills, the cure is only transient.
HAVE HOPE!!
From our experience in consulting to family-owned businesses we have developed a list of seven major characteristics that we know to be correlated with successful business practice and successful family relationships. Some of these attributes have also been cited by other experts in the field. By understanding these characteristics and implementing them within your own business, you can help your family owned business survive and thrive.
· ESTABLISH CLEAR BOUNDARIES AROUND THE BUSINESS AND THE FAMILY
The key to success in family-owned business is being clear on where the family ends and the business begins. Relationship issues and personal needs , if not attended to in the family, play themselves out in the business. If these needs for approval, respect, competency, independence and nurturance have not been recognized in the family, people look to the workplace for fulfillment. The business may then becomes the arena for the gratification of these needs. Business decisions may then be determined by emotional factors and sibling rivalries and jealousies are often acted out in the business.
Successful family-owned businesses treat business as business, and family as family
· DEVELOP A SUCCESSION PLAN
Successful family-owned businesses are busy making their plans for succession. The founding generation is looking ahead, planning and considering their own future and the future of the business. Passing the baton means that the owner is entering into new stage of life. As we describe it, it is not just a question of what one is leaving or retiring from, but what they are retiring to.
A succession plan, important in any business, is critical in a family-owned business. Succession planning always provokes critical business and family issues. At stake is who will run the business, how that decision will be made, and how that decision will be implemented. Succession planning forces family members to acknowledge the founder’s (parent’s ) retirement and the fact that he/she is not immortal. One apocryphal story has the CEO / founder , talking about succession, saying ‘and if I should die.’ Succession raises questions about parent-child relationships, the founder’s marital relationship, and evokes issues concerning dependency and autonomy. Succession planning is a major issue because both business and family transitions intersect, as both enter the next stage of their respective life cycles. Successful succession planning is a long term project; having the ability to take long range perspectives is one of the advantages of having a family-owned business. We strongly advise our clients…begin planning now!
· FORMULATE A BUSINESS AND STRATEGIC PLAN
As with non-family-owned businesses, strategic planning and business planning are critical to the success of the business. A family-owned business is more likely to have the flexibility necessary to anticipate and adapt to changes in the market place than a non-family-owned business. It is essential that family business owners learn from the experience of others as to the regular and predictable issues that will surface in the family-owned business. Developing and codifying job descriptions, entry criteria and compensation formula is helpful. Problems occur when family members perform multi-tasks without clear delineation of responsibilities, with either disappointment in compensation or unrealistic understandings about promotion ensuing. Sibling issues often arise when leadership refuses to address the issues of succession, nor make clear entry and compensation standards and job descriptions.
· HOLD REGULARLY SCHEDULED BUSINESS MEETINGS
Family-owned businesses, particularly smaller ones, tend to be run informally, the way one might run a family. Business meetings are held on a ‘catch as catch can’ basis. We cannot stress how important it is to hold regularly scheduled business meetings. Each meeting should have a formal agenda with an opportunity for all to talk. These meeting are a perfect opportunity for expectations to be clarified so that resentments don’t smolder and for the younger generation under the tutelage of current management teams to begin to take the responsibility for corporate initiatives.
· PLAN REGULARLY OCCURRING FAMILY GATHERINGS
We believe that ‘better family means better business’. While we certainly encourage having family councils and retreats to discuss family matters, there are dozens of naturally occurring opportunities for the family to get together, ie.holidays, birthdays, anniversaries, special events, weekends in the summer home, or just getting together for a sporting event or the theater. These gatherings, whether they be one-to-one or in larger groups, help insure that emotional needs are gratified within the family and that the business is not used as the arena for the fulfillment of these needs. Keep the focus on developing and maintaining healthy family relationships and preventing the business roles from enveloping the more basic familial roles.
· DEVELOP CONFLICT RESOLUTION SKILLS
All healthy people living or working in close proximity argue. It is impossible for mature individuals to coexist in perfect, total, and perpetual harmony. In the successful family-owned business, family and non-family members feel free to express their thoughts and feelings. Sometimes this leads to constructive arguing. In order for arguments to be constructive, certain techniques of good communication need be adhered to. Rather than list all the varied rules and techniques of communication and conflict resolution, suffice it to say that it is imperative that the founder/parent lead by example and encourage open discussion, questioning and even disagreement. Communication and the ability to fight constructively are skills that can be taught. Learn them.
· APPOINT AN OUTSIDE BOARD OF ADVISORS
Successful family enterprises have an outside board of advisors. The adage about not seeing the forest from the trees is never more appropriate than when considering one’s family business. Outside advisors are critical in helping to establish succession, compensation and entry criteria, diffusing sibling issues and in developing market strategy. Unbiased, non family professionals can give input and help business leaders make difficult, emotionally laden decisions. Also, they can identify for the business owners options and alternate resources, i.e.; consultants and other advisors.
No successful family-owned business should be without an outside board.
Founders and owners of family enterprises are typically highly invested in the business. This commitment needs to be balanced with investment in the family. We advise our clients: Don’t take the business for granted; don’t take the family for granted- be proactive in both.
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