Tag Archives: Elephant in the room

Taming the Black Sheep

When parents are not united in their words and actions, display conflicting messages and continue to tolerate the black sheep family member’s damaging actions, Prof. Eddelston correctly painted two scenarios:

  • The black sheep or “Fredo” will either withdraw from the family business and/or;
  • Lash out with selfish behaviors in an effort to gain compensation for their circumstances

Another aggravating scenario that will further add strain to the family is the tendency of the children to pit parents against each other.

On one hand, a parent, usually the mother, has the natural tendency to coddle underperforming family members by way of covertly supporting the children (financial and advice) often against the wishes of the father who in most cases is the disciplinarian.

Unknowingly, the actions of the coddling parent (rewarding/reinforcing bad behavior) will eventually lead to more problems effectively undermining an already strained relationship among family members.

On the other hand, the children who have communication issues with the stricter parent will gravitate to the coddling parent resulting in real conflict and constant clashes between parents and the children.

To mitigate the tension, the family will “sweep the issues under the rug”, ignore the tension and for most family members, would rather just “suffer in silence.”

This unstable “ceasefire” will allow a semblance of numbing peace but it will only be temporary. When a sensitive topic is raised and a raw nerve is touched, expect an avalanche of problems to come out in the open and a new round of discord is activated.

With the “elephant in the room” becoming so big but deliberately ignored, stress levels will continue to surge and one trigger, just one, can discharge another round of infighting. This event, if left unresolved, becomes a vicious cycle that consumes and zaps the energy of every family member.

At this juncture, the family is in a state of helplessness and on the brink of finally “throwing in the towel.” When left unresolved, this negative energy spills over to the business.

Unfortunately, when the parents are already old or are gone, you can expect the children (and in-laws) to slug it out, employing higher levels of relationship conflict. With their newly inherited ownership rights, the problems are compounded and another bruising conflict awaits the siblings. This highly charged situation becomes a precursor for family members to sell out and marks the beginning of the end of the family business.

Do you want to have a united and harmonious family? Do you want family members to become responsible owners and stewards? Eddelston offers some advice in dealing with black sheep and underperforming family members.

First, confront the child, either one-on-one or through an experienced advisor. Sometimes children do not realize the harm they bring to the family and the business so articulating the family’s clear position is important. Show that the bad behavior has major consequences and expulsion, suspension or demotion are options available.

Second, give the child another job – one that better suits his/her interests and experience. Sometimes an otherwise “good” family member can seem like a black sheep because the person is ill-suited to the industry and business.

Third, consider firing or buying out the child’s shares. Unfortunately, in reality, there are also situations when firing him/her is not practical since the person does not have career options and needs to provide for a family.

You are not alone. Having a black sheep family member is universal. Initiating these actions are unpleasant but in the end you just have to do what is best for the family and the business.


Dealing with a Black Sheep

I highlighted in my last column the word “elephant” suggesting that the issue or problem is so big and so heavy that no one wants to confront it or try to move it.

These “elephants” eventually become embedded in how the business operates and how family members interact at all levels. When ignored, a very large problem will continue to shadow whatever successes the family business has achieved and when the issues become emotional and highly charged, they can compromise the business and split the family apart.

For this article, instead of a black sheep, I will use “Fredo” as the “elephant in the room”.

Having a “Fredo” in the family is a result of inconsistencies that are far and wide. Fredo as a family member grew up with values such as unconditional love, being nurtured and equality among siblings while expectations of “Fredo” as a business manager or employee centers on performance, meritocracy and accountability.

Prof. Kimberly Eddleston explained it succinctly, “When this logic (of love and equality) transfers to the business, however, it can be dangerous since it encourages the family to compensate for the weaknesses and failings of family members and to forgive indiscretions.”

While it is indeed difficult for a family business leader to initiate change, it will always start with a firm resolve of separating the family and the business.

As part of my governance advocacy, every next generation family member interested to join the family business must demonstrate that they have something of value to contribute to the business. In short, the family member must apply just like any employee and be deserving of the employment.

We are aware that not all family members are capable, therefore I encourage leaders to resist the urge of including all family members in the business. Guaranteed employment may have been the practice of the founding generation but the growing complexity and the increasing number of family members have made it unwieldy to manage the family and the business.

To operationalize these initiatives, the enterprise must also invest in HR consultants and professional managers so they can formulate “best practices” policies and introduce an environment that promotes accountability, transparency and consequences for bad behaviors.

I am suggesting a few rules to avoid or deter a “Fredo” from creating problems for the family business:

  • Avoid hiring a “Fredo”
  • Develop and communicate rules of entry and exit for family members
  • With the guidance of an HR consultant, establish minimum standards for entry such as education level and years of experience. The rule of “No Nepotism” must apply
  • Do not create jobs for relatives. Avoid becoming an employer of last resort
  • Don’t force family members into the business if they are not interested. You are compromising the business by having demotivated, unfocused, dispassionate employees who happens to share your bloodline and last name
  • Do not reward bad behavior

Kim Eddelston also pointed out several points worth mentioning, “if you feel you must hire a family member with questionable abilities and drive, place him or her in a job where the rewards are based on commission, such as sales.

She also added that “having clear job requirements tend to decrease the prevalence of “Fredos” since they know what tasks are expected of them and how their performance will be evaluated.

And finally, Eddelston cautioned business leaders by raising the alarm bells regarding this issue: “do not allow family employees to have special privileges. This creates an us-against-them mentality with non-family employees, spurring feelings of injustice. It also encourages a sense of entitlement among family”

Don’t Ignore the Elephant in the Room

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One of the most common and pervasive causes of family tension that I have learned over my years as a Family Business consultant is that every family business has what is commonly referred to as having “elephants in the room.”

According to Wikipedia, an Elephant in the room is an “English-language metaphorical idiom that means that there is an obvious problem or risk that no one wants to discuss, or a condition that people do not want to talk about.” This has been a challenge for me coaching family businesses. They find merit in pursuing governance but when it’s time to talk about forbidden issues and I press them to let these “elephants” out of the room, they become uncomfortable and prefer to share the issues individually and in complete confidence.

For the sake of discussion, the word “elephant” suggests that the problem is so big and so heavy that no one wants to confront it or try to move it.

By virtue of its size, it takes up so much energy, time and productivity. The phrase “in the room” implies that the issue is large that no one can help but notice it. And since it is in the middle of the room, it means that family members have deliberately avoided and walked around it and worse, pretended it is not there rather than deal with it.

For family enterprises, the term refers to a question, problem or controversial issue that is obvious, but which is ignored by family members especially the business leader, generally because it causes embarrassment and may “rock the boat.”

Rocking the boat means stirring up trouble where none is welcome, disrupting things, promoting disharmony, upsetting family members and causing disagreement.

There are qualitative truths that business leaders (usually patriarchs) must understand about elephants in the room:

  1. Ignoring the elephants in the family business does not make them go away. In fact, once they have found a home, they tend to stay for good
  2. Baby elephants tend to get bigger over time. Most of the time, the problem starts small and escalates into something weighty
  3. I am also highlighting the top “elephants” that must be addressed immediately lest setting them aside can cause disruption and will throw the family business off-course creating unnecessary frayed nerves and strained relationships:
    • A “Fredo” or a black sheep family member causing problems
    • Sibling rivalry spilling over to power struggle
    • Next generation sense of entitlement
    • Patriarchal Shadow (refusing to hand over power to the next generation)
    • Misaligned ownership
    • A wide array of Conflict of interest and self-dealing among family members
    • No succession plan in place
    • No estate planning
  4. Having an elephant in the room is demotivating to the family and the business as well as to non- family members especially the professionals who will not hesitate to abandon ship when these issues are wantonly ignored by the patriarch
  5. If the elephant is not dealt with, the leader/patriarch is perceived as weak, ineffective, bias, and lacking in leadership skills

The consequences of ignoring “elephants” are extremely risky! And the “do nothing” attitude, aggravated by a procrastinating mindset among family members should never be an option! As a business leader and family member, it is important that you deal with these elephants with the help of experienced family business advisors before it’s too late.

Therefore, as the head, perhaps it is high time to ask yourself: Are you ignoring and tolerating “elephants” in your family business?