Avoiding family wars (Part 2)

FAMILY businesses are complex as these go through different generational phases. As a family business transitions from single ownership to a multi-generational ownership, expect plenty of opportunities for conflict, covering a plethora of issues and between a range of family stakeholders.

I want to continue my article with the last four rules:

Rule No. 4: Communicate honestly and openly. Open communication is a concept that almost all companies claim to value, but very few truly achieve.

It’s amazing that some well-educated, innovative executives can develop brilliant plans to improve shareholder value but struggle in communicating with the very people they need to help them implement their turnaround plans.

Don’t keep it a secret or hide the fact from your staff that you have relatives or friends working for you, says McMillan; otherwise when it eventually comes out, and it surely will, you’ll appear like you were being deceitful. To foster a better climate among employees and improve continuous two-way communications, consider holding company outings for fun and camaraderie. Attend training seminars or industry workshops with family members and employees to bond with them, establish genuine communications and build teamwork.

It is highly recommended that regular sessions become part of your weekly gathering. In any book about management, it is often referred to as an informal way of resonating your plans and gaining some form of buy-in.

You may call it any name you want such as “Morning Session with the GM” or “CEO Session”, but it is important that you invite key family executives and staff to gather regularly, hear briefly from management and ask questions.

Make employees and relatives realize that opinions are heard and respected. Set a regular schedule or when your “doors are open” for consultations and honor those commitments. Make it a point to find time amidst your busy schedule to address urgent needs.

What is needed to nurture an environment of open communication?

Trust is earned and not given. All high-performing teams, whether in the sports arena or in the business world, are built on a solid foundation of trust. Trust grows over time and is based on individual members of a team making and keeping commitments.

In short, good communications mean good business. It is absolutely important that staff from the most senior on down practice behaviors that facilitate information exchange and encourage honest input from every level.

Rule No. 5: Professionalize the family business. Don’t meet personal family needs using business resources.

Avoid letting family members borrow company vehicles or allowing them to ask the company’s IT person or repairs and maintenance personnel to do home-related repairs and installation. If you can’t avoid it, create an SOP (standard operating procedure) and consolidate them in a manual handbook for family members and senior executives to follow. It’s also a bad idea to pass off personal expenses such as family vacations as business expenditures.

Rule No. 6: Establish healthy boundaries/distance between family and business. This especially applies to husband-and-wife teams. Running a business together with your spouse is a balancing act. Agree and adhere to some kind of system. For instance, some couples refuse to talk about business matters at home, on weekends, or during family vacations.

Rule No. 7: Use family councils to address family matters

A family council is composed of members who may be owners but not necessarily company employees. They meet monthly, quarterly and/or annually for the strategic planning of the business over the next year to the next 10 years.

The council does not micromanage the business but addresses family issues or concerns relative to the business. If a family member is working in the business buts needs to borrow money, the council will decide if it wants to create a fund for the purpose of granting family loans.

In a nutshell, conflicts are often costly—financially, emotionally and relationally. It’s important to remember that there are many strategies we can use in conflict situations, but each of us tends to habitually use some strategies more often than others.

To most effectively resolve a conflict, we should use the strategy that is most appropriate for that particular conflict situation but in the end, setting in motion any form of intervention related to family, business and ownership governance will minimize unnecessary conflict.

Prevention is a whole lot better than the cure!

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