“All you need is love,” sang the Beatles. But if the Fab Four had been family business owners, the lyric should rightly have been written, “All you need is trust.” Family business members often profess their love for each other while withholding their trust. When members of a business family don’t trust each other, they don’t communicate and they find it difficult to agree on a common direction. The result is an organization mired in toxic distrust, unable to discuss key issues, frozen in the face of crisis and, all too often, sickly and short-lived.

A Tale of Mistrust
Brown-Wilbert Co. is an 80-year-old Minnesota company that builds burial vaults. It’s mostly owned by COO Christopher Brown but controlled through voting shares by his father, CEO Jerry Brown, who has worked at the firm since 1960 after marrying the granddaughter of the founder. The company has $20 million in revenues, a solid market position and a well-established brand name. It’s also got a major problem with mistrust among the owners and top executives.

The father-and-son executives have sued one another for a combined total of several million dollars, each claiming that the other has misappropriated company funds for personal use or for investment in other ventures. The two trade charges of self-serving behavior, incompetence, malfeasance, inattention to duty and other failings in court as well as in the local media.

Will the company survive this intergenerational battle? So far Brown-Wilbert is bearing up. But similar struggles have destroyed countless other family firms. And at the least the martial mistrust has blocked communication, hindered cooperation, drained management attention and consumed financial resources that would be better devoted to strengthening the company.

For my purposes, however, the Brown-Wilbert case is a good one. It neatly demonstrates the risk and costs of mistrust developing in a family business, as well as most of the available varieties of mistrust and their most common sources.

Kinds of Trust
Five varieties of trust are relevant to family business. First is trust in the competency of family business members. Other members have to be able to trust that their peers are trained, experienced and capable of discharging the responsibilities entrusted to them. That is a basic kind of trust, similar to the trust all business leaders must feel in the people who work for and with them.

Ethical trust is another essential kind of trust. It’s vital that family business members can be counted on to behave ethically. This doesn’t mean merely following the letter of the law. It means following the spirit of the law, and the principles behind the corporate code of ethics. In a family business ethical trust also means trusting family business members to put the interests of the family and the organization ahead of their own.

When people have faith in one another’s reliability, that’s a different kind of trust. You can have the skills, and you can have the ethics, but if you can’t be counted on to show up, you won’t win trust.

Communication is the heart of trust. You can’t trust someone when you don’t know what he or she is thinking. Family members must be able to trust that they can talk about their concerns and be heard, and that others will talk about their concerns in a similar manner, before communication trust can flourish.

Trust in outsiders is a final form of trust that is uniquely relevant to family business. Family firms that can’t absorb people, practices and ideas from the outside will not be long-lived. It requires trust in foreign concepts and people for that to happen.

Building Trust
Building trust starts with communication. Family members have to talk candidly but tactfully with each other about their thoughts, feelings and even dreams. Of course, communication is more than talking. It’s also listening. It’s hard to trust someone to look after your concerns when that someone doesn’t appear to be listening to you when you express those concerns. So encouraging and institutionalizing both talking and listening are key to building trust. Family meetings are the most visible tool for building communication, although there are many others.

Talking the talk will build an element of trust, but walking it will build more. That’s why trust-builders must welcome genuine, meaningful participation by those with whom they want to share trust. Family members should be asked and encouraged to join in making significant decisions, even if just by gathering information or injecting an opinion. Showing trust in this manner will help to build it throughout the organization.

There are some things you shouldn’t do when you are trying to build trust. One is to trust blindly. It’s a mistake to believe that someone should naturally be trusted because he or she is a member of the family without any proof that the person is, indeed, trustworthy. Likewise you shouldn’t continue to trust someone who has repeatedly and clearly failed to warrant it. In addition to setting the enterprise up for betrayal, bestowing blind trust on the undeserving tells other family members that it’s not necessary to work hard to develop trust based on competency, reliability, communication, ethical behavior and openness to outsiders efforts.

On the flip side, don’t be too suspicious. When you monitor everything a family member does, you are creating an atmosphere of mistrust. Granting trust is a loose-tight proposition. Like holding a wet bar of soap, gripping too loosely will allow it to fall while gripping too tightly will cause it to slip away.

Limits of Trust
Trust isn’t a cure-all and does have its risks. For instance, trusting others doesn’t guarantee that they won’t disappoint you. You will be betrayed, make no doubt about it. And trust won’t overcome other management failings, weak markets, poor strategies or just plain bad luck. But it does help. And, without it, even superior management, markets, strategies and luck may come to nothing. From the perspective of family businesses, Elvis Presley may have come closer than the Beatles to the truth when he sang, “We can’t build our future on suspicious minds.”

 

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