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Consultants and Clients shouldn't be Friends!

Three is an awkward number . . . and a good illustration of the challenges of dual relationships!  Photo by  Vidar Nordli-Mathisen  on  Unsplash

Three is an awkward number . . . and a good illustration of the challenges of dual relationships!

Photo by Vidar Nordli-Mathisen on Unsplash

A Priori . . . Dual Relationships . . . to Conflict of Interest

My background is in the health profession—specifically mental health. Anyone training and practicing in this area is well aware of the limitations on what the profession calls “dual relationships.” A dual relationship is where the professional has both a professional duty to the client and has another relationship which might compromise that duty. It is strictly advised against, could be the cause of an allegation of unprofessional behavior and, at it’s worst, could be the cause of losing one’s license to practice. To say that it’s emphasis as the apex of ethical professional behavior in the mental health world is not hyperbole.

In the consulting world there generally is no such restriction. Consultant regularly seek to be engaged with leaders and develop relationships with decision makers that may turn into clients. They become gold or hunting buddies, spend time at social functions together, perhaps even becoming close friends. In business this is not seen as problematic for many reasons, primary among them is that the client is not seen as somehow vulnerable or at risk of being harmed through the dual relationship. Fair, I think, since business leaders are not, on average, as vulnerable as patients being treated by a professional.

Unrecognized Conflicts of Interest Can hurt everyone

But, does this mean there is no risk? Hardly. Consider this . . . a consultant I once talked to had been invited into an organization by his best friend— a conflict of interest with high damage costs if the project ends badly. He accepted the contract but found, when he got deeply involved in the organization, that there were a lot of issues within the organization, issues that were intimately involved in his friend’s interactions with others in the organization. Awkward!

What’s this consultant to do? Unfortunately, this consultant did not realize the risks, find a way to extricate himself from the contract, and refer the organization to someone who could help with the particular problems they were facing. The result of not doing this was quite dramatic for the organization and there friendship.

Politics may be the most egregious sector for embracing situations that should raise concerns about possible conflicts of interest. I would speculate, for example, based on an article from the Washington Examiner and another in the Post, that Alexandria Ocasio-Cortez’s Chief of Staff, Saikat Chakrabarti, may present one example. Reading about the numerous organizations Saikat was involved in—Brand New Congress, Justice Democrats, Brand New Campaign and AOC’s campaign (multiple LLCs and Pacs)— it is hard to imagine how he could avoid conflicts of interest in this complex network. The actual, or appearance, of conflicts of interest—perhaps even rising to campaign law violations—may have led to his resignation.

Leaders Beware!

Leaders—especially leaders of family-based firms, where relationships are particularly vulnerable—need to be very careful about using consultants that become “too close” to the leaders. Danger lurks when consultants and leaders become more than business partners, because . . .

  1. The objectivity the organization needs from the consultant is compromised . . . by the close connection the consultant has with the leaders. Consultants who become too close cannot help being influenced by those relationships. As in a family setting, decisions may be made based on the relationship itself and not on what is best for the organization.

    Consulting relationships naturally have a built-in conflict of interest. If I develop close relationships with the leaders, I may get more work. But consultants need to ask themselves, “What do I care about the most, my business or providing the best service to the organization"?’ Yes, building a friendship may be good for the bottom line but it willfully introduces risk for the leader and the organization.

  2. While you can argue that the close relationship may be a strength, and probably is in good times—trust is heightened, loyalty is built, decisions are informal and quick—often when a crisis hits it can be a big liability. The same strengths of trust, loyalty, informality, can paralyze or misdirect the consultant’s role and exacerbate the problems.

    It is often during a crisis when one of the real dangers of forming a “too close” relationship presents itself. For the same reasons that families can struggle during critical moments—taking away Mom’s keys, putting Dad into assisted living, or estate planning—emotions often cloud good judgement and damage relationships. The consultant’s role as an “objective outsider” is lost when they cross into a close relationship with the leaders.

  3. Consultants that are too close may not address the hard issues—choosing to remain on good terms instead of pointing out problems. Denial, avoidance, procrastination . . . there are many words that describe the tendency to not address problems—even ones that threaten the organization’s existence. Consultants who retain more distance can direct leaders and organizations to confront problems more easily.

    It may not only be at times of crisis that consultants who are “too close” may negatively impact the organization. The closeness also risks avoiding issues early on when they might be dealt with and a crisis avoided.

  4. Most consultants come from business backgrounds and have little awareness of, and no training in, the risks of dual relationships—therefore, they may not maintain good boundaries and avoid these relationships. Any training in conflicts of interest also tends to give them only a cursory overview and little real insight into the potential traps. Ask a consultant to define the risks of dual relationships and you are likely to get a blank look. Ask them about avoiding conflicts of interest and you will get a general understanding of the danger . . . but little depth in what the real risks involve.

    Should the consultant attend the company party? Do they become “golf buddies” with the leaders? Do they circulate in the same social circles as the leaders or go on vacation together? If you are asking yourself, “What is the harm in that?”—then you may not have a deep understanding or the risks of dual relationships.

  5. A consultant’s loyalty, or other factors, in close relationships may prevent them from walking away from a toxic issue. In other words, a consultant with less involvement may, due to some over-riding disfunction in the system, may choose to “not help” by walking away. This “walking away” may be what the organizations needs to address a chronic issue they have been avoiding. Sometimes this separation is needed to help leaders or organizations grapple with the issue and bot become depended on others to fix issues they will not/ can not address.

    It’s a hard reality, but sometimes a helper needs to walk away. Some individuals, and organizations, in chronic conditions will not turn away from their “addiction” until they have no choices left. Consultants, at times, need to—for the sake of the organization—walk away. If there are unethical practices, persistent poor judgement, hidden abuses, the consultant can enable and support real damage by continuing to prop up the leadership and the organization. The proper course may be to make the problem overt and disengage from the organization.

It is easy to assume that the turbulence of dual relationships can be navigated safely. In truth, despite the hidden risks and undisclosed damage, they often are accepted eagerly (see the political-organizational hegemony in the U.S. for example). But the predominance of these arrangements do not suffice for “best practice” in consulting and do not protect the leader or the organization from its harmful effects.

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Prairie Family Business Association's Conference!

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Family Business Conference in Sioux Falls, South Dakota in April!

Are you interested in Family Business? Do you live in the upper-midwest?  Then you might want to check our the Prairie Family Business Association or PFBA!  They just released their full conference agenda. We've been members for a little over a year, attended the 2017 conference, will be at the 2018 conference as well. It's a great resource for anyone in business with the relatives!

 

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9 Common lies . . . Family Business Founders Tell Themselves

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9 Common lies . . . Family Business Founders Tell Themselves

1. Family members will appreciate the opportunities the family business provides.

2. We can keep the business separate from the family.

3. Our sacrifices demand loyalty . . . to the business.

4. I built it, they should follow my lead.

5. Lack of conflict is a sign the family is doing well.

6. Our family can avoid misunderstandings and hurt relationships.

7. Planning for succession means we don't need to think about "exit plans" or winding down the business.

8. You can't leave the family, but leaving the business is a simple process.

9. You don't tell yourself lies about the family business.

Family Legacy: Protecting family in family business.

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Mavericks . . . and Tips for Preventing Implosion at the time of Transition

Photo Credit: Ben White on Unsplash

Photo Credit: Ben White on Unsplash

 

After I had finished speaking, a family friend approached me.  He said, "I really enjoyed what you had to say, but I noticed that your parents walked out on you!"

It started like this . . .Several years ago I was speaking in a city near where my parents lived. It just happened that they had travel plans and were leaving from the airport in that city and told me that would swing by and listen to my "talk" . . . but, they would have to leave before I was done to catch their flight. I connected with them before the speech, started my presentation and, when they stood up--waving as they snuck out the back--I nodded in their direction to acknowledge the prearranged plan.

My response to my twinkle-eyed friend who delighted in putting me on the spot? I told him, "Well, that's okay, you can't teach your parents anything anyway!"

Which brings me to talking about Mavericks. Sometimes they are charismatic leaders. Entrepreneurial types. Visionaries. Sometimes they are ideologs--passionate about their mission. Sometimes they're family.

Too often the vary characteristics that make these Mavericks successful often sow the seeds that cause their work to implode once they are no longer "in the driver's seat." The dynamics of following a leader who was a "golden child" or domineering force are turbulent with threats of comparisons, resistance to change, and stress.

To make things more complicated, Mavericks rarely see the risk. After all, their nature tends toward confidence, maybe over confidence. They believe they can succeed where others do not--create a new product or market, improve upon the established product or service, out hustle and out sell the competition. The challenges of continuing that success beyond their reign seldom is a focus.

So, how do you help these Mavericks avoid an implosion that brings down the fortifications they have worked so hard to build?

  1. Determine who, relative to the Maverick, has the position or relationship that will allow them to be "heard.  As my opening story implies, relationships impact how information impacts us. If it hadn't been my parents who left and my friend had said, "I noticed someone walked out on you." The meaning is very different than having your parents walk out. Will the Maverick trust the guidance of a long-time advisor, a colleague, industry expert, extended family member? Who delivers the message can be critical to its success or failure. 
  2. Acknowledge their willingness to take risks and the importance of their leadership. Mavericks often react to any implication that they are not willing to face changes or that their ego is too attached to being in charge. Once again, the confidence they often exude does not lend itself toward being self-critical. Acknowledging that they have been willing to take risks and change (certainly true) set up the next step.
  3. Use their experiences to frame the present as a challenge . . . in a series of historical challenges. By getting them to review the decisions they had to face, the risks they had to overcome, and the threats they faced you can highlight how a failure to act would have resulted in missed opportunities or even failure. 
  4. Explore how the current situation is like past challenges. Mavericks once again tend to have a wonderful focus. They know what they think and believe. They know what their end goal is. What they often don't do well is to adequately consider factors that go against their vision. But, they have a history that where they have encountered roadblocks and threats. They have met them and made adjustments to survive. Help them recall this and focus on how to be proactive to prevent future threats.
  5. introduce the need for facing the current risks. By now, you should have gathered enough information to tie their experiences into a well-defined "argument" for how the current situation calls for facing the challenge and  risks of change. Lay out your argument. But don't offer a pre-designed solution. 
  6. Don't back down. The Maverick's first response may be to challenge you. After all, they are confident in their own thinking and simply trust other's take on a situation they know better than anyone. Displaying confidence here will likely help them consider the idea more seriously. Vacillating will only send the signal that you are uncertain and the Maverick will likely see this as a need to provide confidence and control and stick with their own plan.
  7. If they agree, utilize them to come up with a plan. After all, these tend to be very capable people at least in some areas. Engage them in coming up with ideas. But remember to challenge their thinking in areas in which they are not strong. So in the case that follows the answer is not "the son needs to be like me!" the answer lies in "how to support the son's growth-with his own strengths--as a leader."
  8. Give them a role or job. I think of the typical Maverick as a "working dog." Like a Border Collie or similar breed they do best when they have a job to do. Whether that job is to develop a new product line, find the right advising team for the son, or become a philanthropist or community leader . . . simply stopping or stepping back is a harder concept than doing something new. 
  9. Be willing to give up your position to help the organization. Who ever has the task of challenging the Maverick needs to accept that this may "poison" the relationship with the Maverick if he or she is not ready to consider and accept this new challenge. So often this role needs to be taken by a board member, colleague, advisor, or and "expendable crewman" for the sake of the organization. A family member, especially in a family business context, may be the wrong messenger due to the fact that this may have irreparable consequences for the family

I once talked to a family business owner who confided that he did not think his son could make his own independent decisions. He feared that this son, and mid-life manager was overly-attentive to what others thought and therefore needed his continued supervision. I was incredulous!  In fact, the two men were very similar in personality and willingness to be "in charge" and run the business. The younger man however had more "sensitivity" to employees and did not "run rough-shod" over them in his decision making. I knew this younger leader, and in my opinion he in no way, demonstrated an indecisive, tentative, "people pleaser" leadership style.  I challenged the father. "So, you are telling me that you raised a son that can't think for himself and make his own decisions?" Thinking this would make him rethink his assessment. It didn't. He replied, "Yes." 

While I still did not believe the father's assessment was correct--I saw the son as trying to move toward a more collaborative and inclusive style of management perhaps as a reaction to the autocratic and forceful personality of his father and the father being over confident of the success of his management style--this father's "reality" was where we had to start. "If that's true," I rejoined, "then you need provide the right conditions to help him develop this ability."  He didn't disagree. From this, we began to talk about how the father's experiences helped to develop the confidence to make decisions and take prudent risks. We then explored his experience and his son's, noting how the circumstances were different for his son and began to craft a plan to help the son grow in his abilities--including a planned "backing out" of the father's role, some training, and continuing and increasing some industry-specific coaching they had begun to continue support for the son.

We can never forget that most Mavericks truly care about the future of the business in most cases. Even if that caring at times makes them "hold on too tightly." They generally are motivated to help the next leaders succeed. But they may have trouble seeing the practical steps that need to happen to turn this into success without their direct involvement and may need someone to help them find a way to let go of the reigns.

 

Ebook available: Family Legacy: Protecting the family in family business. No cost, no obligation.

 

 

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On Independence Day . . . Visiting relatives . . . at the family business!

The Amboy Cottage Cafe, Amboy, Minnesota (Photo from website)

The Amboy Cottage Cafe, Amboy, Minnesota (Photo from website)

So our family--or those of us still at home--just returned from our mid-summer vacation. We went a wandering to the north shore of Lake Superior and then on to Apostle Islands this time . . . and the experience was a good reminder of the value of family.

Later, I may tell you about the families that lived at the lighthouse for an entire season since the only way to access the spot was by boat, or of the Nebraska families that helped settle Madeline Island, or of going to school across the "ice road"--but today, I'll tell you about a part of our extended family and their business.

The historical stories of family and the time our "core family"  spent together were a good reminder of the value of the family--always easier to remember when away from the bustle of chores, work, and such--but an even more delightful reminder came when we visited relatives.

"Visiting relatives on vacation" always evokes a feeling of an ominous, discordant, chord in my head--I probably was too influenced by Disney as a kid. But the truth is, my family often visited extended family on vacation. Most of the time it was the vacation. So, I really only have good associations with the events . . . despite Walt's affects. This time would be no different . . . .

The last time we visited Lisa in Amboy, our cousin, on my wife's side of the family was on the roof. (After 36 year in the family, I claim them, and I guess, they claim me too), Why was Lisa on the roof? Because the roof needed shingles. So there was Lisa on the roof shingling this remodeled gas station in preparation for opening her own cafe. Now, many years later, the cafe is a full-fledged thriving operation and obviously, to an outsider's eye, a critical part of the community.

I'll spare you the details of setting up the visit but suffice it to say that both Lisa, and her mother, made concessions to allow the visit to occur--after much of the following: "exactly what day and time will you arrive?" And scheduling and rescheduling a round-trip drive to Amboy for our Aunt Maria who lives 45 minutes away but still bakes pies for the cafe.

The thing my "consulting mind" noticed right away--after our brief "hello" and settling into a table at the south end of the cafe while Lisa hurried back to the kitchen--was all the marks of a successful venture.

The Amboy Cottage Cafe us a very busy place for one thing. In a very, very small town. It was not early, most people would already be at work, yet there was a full house and a constant caravan on customers the entire time of our visit.

The customers going in and out of the cafe, I noticed, regularly go out of their way to connect with Lisa--sticking their heads through the swinging door into the kitchen, bantering about their last visit or preferences--lots of connecting and evidence of strong relationship-building in full view. This was verified by the rows and roes of special mugs (see photo) that line the wall--evidence of how many customers had taken advantage of, and paid the $100 fee, to join the life-time free first cup of coffee club. (I lost track somewhere around 125-ish)

Coffee club mugs. Each personally crafted for the customer. I think we we came away with 6 or 7 ourselves.

Coffee club mugs. Each personally crafted for the customer. I think we we came away with 6 or 7 ourselves.

I wasn't at all surprised to find evidence of success at "Lisa's shop"--despite the cafe being in a very tiny town (2010 census lists it at 525) with too few people to support a cafe. Lisa's family has always been high achievers with an amazing blend of intelligence, creativity, and insatiable curiousity--the kind that creates that feeling of  "they-can-do-everything-better-than-me" that would make you would want to avoid them just to protect your own sense of self-worth . . . if they weren't such great and personable people as well. (By the way, it's not just my assessment. Two of Lisa's brothers worked for NASA)

Finally, after waiting for Lisa to prepare breakfast for all her regulars and us as well, Lisa sat down to chat with us. Here are some of the things my consulting brain noticed:

1. This wasn't just a cafe . . . it was a community. The customers were there for the food and coffee no doubt. But they were really there because of Lisa. The plans of a recently result antique bridge were in display (Lisa headed up the push to get it restored). She was part of the fabric of the town and local area. (See a Star-Tribune article and picture of the bridge)

2. Lisa talked like a business owner. In our short visit she mentioned profit margin, her five year plan. Her eventual goals for the business and her life. She expressed a wish that my wife was closer so she could make use of her organic, sustainable produce and edible flowers.

3. She demonstrated that the business was about the people. Yes, it is great food. Yes, the decor is perfect. Yes the creativity is evident--where can you go that you can order your pancakes made into any shape you want? Or get Maria's homemade pies?

4. She works hard. i noticed the cafe is open seven days a week. Many days are long opening at 6 am and closing at 8. Lisa, of course, will be there earlier and later than the "official hours."

When we were done with our visit we drove out to see the reclaimed bridge. While we were there a car approached, stopped, and out jumped my wife's Aunt Maria. Had we forgotten something? No, She was bringing out the Fedora my 11 year old had admired in the local thrift shop. She thought he should have it, so . . . she bought it and set out to catch us before we left town.

I don't think Lisa's done. By that I mean that I don't think the cafe is her final goal. The cafe is a means to an end . . . to an independence to pursue her dreams. But in pursuing those dreams, she has created a successful family business

Hope you all enjoy your holiday . . . and the family.

Own or work for a family business? Check out our free eBook: Family Legacy: Protecting Family in Family Business.

Are you a social science professional? Are you interested in developing private contracts to provide services outside the insurance market? Dr. Miller has just formed a private Facebook group to provide a place for conversation and sharing our experiences and lessons learned. If you would like to be a part of this group, contact Bryan and he will send you an invitation to join. Limited to professionals or students in the social sciences only!

 

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It's Here! . . . It's Free! Our newest eBook.

Well, it's finally here. Our new eBook on Protecting the Family in Family Business. We apply our knowledge and experience with families, business consulting, and work with family businesses to five our readers ideas on how to minimize the risks and maximize the advantages to the family who works together.  We hope you enjoy it!

You can also get our other free eBooks below . . .

Engaging Your Team: A Framework for Leading "Difficult" People

Private Practice through Contracting: A path away from insurance dependency.

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New eBook almost here . . . and it's free!

Here's the cover . . . Credit Andrew Miller

Here's the cover . . . Credit Andrew Miller

I just got the final version of our new free eBook--Family Legacy: Protecting Family in Family Business--and it looks amazing! Thank you to Andrew Miller, graphic designer at Andhedrew. Once we have the download set up we'll send out a link to where you can download it.

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Don't leaders know?

What is it You Do?

When I explain to people what we do . . . use intensive interviewing to understand work teams and assist leaders through the development and implementation of action plans  . . . I often get the question, "Don't leaders already know what is going on with their employees?”  Good question. I think implicit in this question is a common misunderstanding.  I think what is being asked in this case is often something like, "Do you really think that there are a lot of leaders out there with no idea of what is going on with their employees?"  If this, revised, question is closer to what they are really asking, then the answer is an emphatic, "No!"

In fact, I trust that most leaders have a good idea of what is going on with employees. I believe that the majority have spent significant amounts of time trying to understand their employees and the impact of their leadership decisions on those employees.  (This is why I think that consulting approaches that do not see the role of the consultant as a collaborative one are often misguided!) But . . . consider this . . .

Parents, arguably, know more about their children than anyone, yet often "what they know" can become the seeds of problems between them and their offspring.  "You don't understand!" is a common complaint among those children. People are complex. Couples, likewise, know more about their partner than they know about any other of their relationships . . . and often have more trouble. Regularly it is at least partially because their knowledge invites them to assign blame and an unwillingness to make changes. Each person’s history of learning to cope and maintain their own psychological safely is unique and employee’s learn to lie . . . to themselves and others.

Knowing isn’t Understanding . . . Or a Plan of Action!

No, simply "knowing" is not enough. Leaders need to continue to challenge what they know--testing it to check it's validity. Leaders need a vision of where they want to go but they also need a clear understanding of where they are--without the polarizing lenses of self-deceiving "knowledge."  The gap in a leader's "knowing" is reflected when a leader proclaims of his/her team "we are a family" only to have an employee mutter "a dysfunctional family."

Examples of Things Leader’s “Know” that Sustain Problems

 Here is a list of things that leaders "knew" when we were contacted by them or began working with them. In each case, this knowledge proved to be a barrier to knowing rather than an accurate understanding of the situation.  

  • people understand my irritability because I come from a different part of the country . . . it shouldn't effect how they view me as a leader

  • we provide information about employee benefits in a number of ways and times so employees can't have issue with that

  • if we tell employees about the financial status of the company they will have worse attitudes than they do now

  • my daughter is just stressed but she still appreciates working in the family business

  • the way we interact with employees works . . . its these particular employees attitudes that are the problem

  • we have a plan that all the leaders have agreed to and support

  • if I'm not in the room bad things happen (leader who refused to leave when board talked about his job performance, salary, etc.)

  • we already fane a (financial) consultant we can just use him to help us figure out the people issues

  • our family can handle these issues without getting an "outsider" involved (family business member now in litigation with siblings)


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Learn more . . .

HSC provides free and low-cost resources for leaders. Here are some of our related posts:

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