The Chicken or the Egg?
If you are in a leadership position in a family firm then you face the dilemma of, “which comes first the family or the business?” But,“Wait a minute! You can’t just arbitrarily separate the two. It’s not as simple as just asking yourself, “Which comes first?” Okay, you’re right. This dichotomy is a distortion . . . that’s true. But not asking this question can lead some family owners to poor management practices such as management by fear, over-committing to work, and to the demise of the family. Later, I’ll share 10 tips to help you preserve the value of your family business, a task that is indicative of understanding the integration of the family and business. . . . .
But first, consider this . . . If I audited your business, which part would I find gets the most attention and resources--including cash--spent on it? Which domain has the largest share of advisers? I just recently attended a social for family businesses where one owner indicated that they were about to have their "first ever" family meeting to plan for the future. "First ever!" for a large on-going firm with multiple family generations working in it. This, unfortunately, is the norm not the exception.
Now ask yourself, this, "Which part of the family-business world gives you the most worries? " Are the biggest worries the business decisions you face? Or, are the biggest concerns for the family and the impact the business will have, good or bad, on the individual members and the family relationships? Family-based businesses that thrive find ways to preserve the value of both the family (including ownership) and the business.
But many family leaders don’t pay adequate attention to the family dynamics and as a result the family suffers from unresolved conflict, damaged relationships, or all out family war.
I have seen it happen in so many ways . . .
- brothers who can’t get along, each trying to one-up each other and prove their value to the firm;
- sons who feel entitled to taking over the firm and having a guaranteed career only to have that taken away (and then regretting not pursuing other careers;
- daughters who can’t move on due to the loyalty and needs of the parents;
- in-laws at conflict with their spouse’s family, each suffers from the grind of working, playing, and fighting together on a daily basis;
- parents who have given control over to partners to hold for their minor children only to find the partners and children at war over control of the company;
- husbands and wives at odds over a looming family crisis and how it should be handled.
No mixing family and business is not easy. The very closeness and complex relationships that can be its strongest asset make family firms much more emotional environments than traditional organizations.
Still, family businesses are the most common type of businesses world wide. Many labor toward common goals, dealing with the family baggage well enough to survive . . . but living in the heightened emotional crucible of family-business tension. Others face transitional points (children entering the business or passing the baton) but have no road map for how to successfully deal with that transition. Yet many family firm leaders will tell me that the family is the business’s greatest asset.
Preserving the Family Business
So how do you preserve the value of the family business? By taking the task of growing the “family assets” as seriously as you value the “business assets” of the company. Here are ten ideas on how do accomplish it:
- Develop a family constitution, mission statement, white paper, or some other guiding document for your family. When my Dad died a few years ago (after working in one organization for fifty-one years!) I found a list of goals he had set for himself early on in his career. It was remarkable how many of those goals had been met! We shared it with the President ofthe organization and he shared it at the funeral. It was interesting to me that not all of the goals were business goals, some were personal goals and others familial. It became clear how he had stayed in a leadership position for over five decades…
- Have regularly scheduled times (family board meetings) to focus on the family aspects of the family business.
- Develop a strategic plan for the families’ growth.
- Deal with baggage that is threatening the family and/or business quickly.
- Identify and use family advisers. No not your accountant, lawyer, or banker. I’m sure they are all competent professionals. But there competence lies in accounting, the law, and banking. Not families. Look for a family therapist (who understands business), a family-firm consultant, or another type of mental health professional.
- Develop a clear understanding of the risks associated with each developmental stage of the family business.
- Create a family “balance sheet” of the pros and cons of the family-business interaction and examine in annually.
- Find ways to clearly distinguish “family time” from “work time.”
- Proactively market the family business to family members.
- Demonstrate the ability to be transparent, vulnerable, and forgiving.
If you own or work in/with a family based business, what has been the single best thing you have done to preserve the value of the family business?