The children’s game of tug of war loses its charm when it is played verbally by adult siblings in a family business over a conference table. As adults, the rope may not be literal, but the emotional energy and competitive drive is as real as the children’s version.
An ex-non-family CEO commented, “After 8 successful years, I was the likely choice. I was promoted to CEO with all the fanfare that you might expect in a one-billion dollar business with international name brand recognition. The honeymoon lasted about a month when, to my deep regret, I realized just how significantly the two brothers’ rivalry interfered with the business. Very quickly I became an intermediary, a mediator spending my day attempting to referee their differences instead of a functioning CEO.”
Among siblings in a family business, conflict may present itself as personal animosities, strained relationships, or dredged up jealousies that have been allowed to smolder. Left unresolved, these strains in the family fabric often escalate into open disputes and estrangement.
It is not unusual for years of unresolved conflicts between siblings to erupt in an internal war of wills that can cripple a family business faster than any external force in the marketplace. Finding ways to resolve sibling issues in a family business is not an option but a vital necessity if a shared vision of the future is ever to become a reality.
Unknowingly, many parents create an atmosphere of competition among their children. And although competition does help to develop many desirable personality characteristics such as self-esteem, discipline and persistence it may also lead to the belief that success equals victory and that winning depends on another persons failure. If these competitive beliefs are carried into the family business and used against one another rather than against the industry competition, then ownership focus, as the non-family CEO above learned, is misdirected towards family problems rather than the business. A sure-fire sign of leadership crisis.
In most instances, an event triggers a sibling showdown. The death of the founder, conflicting management styles, compensation, ownership privileges, or leadership disagreements are common precipitating events. Knowledge of the range of ways to settle these disputes offer hope for resolving both family members’ concern and business’ interest. To help foster an atmosphere of sibling respect consider the following 10 actions:
1. Craft your own family’s mission statement. The most successful family-owned businesses are bound together by values and purpose rather than merely by business ownership. Family businesses that stress integrity and mutual trust tend to see business ownership as a vehicle to make a difference rather than allowing the business to run their lives.
2. Create your own family’s Decision Guidebook. Your decision-making process will be unlike any others because it will be developed and written down by your family for your business. Contents will vary, but here are some elements you may want to consider for your family’s book:
- How the family will make important decisions
- How successors will be chosen
- Compensation structures
- If or how dividends will be distributed
- Whether or not a board will be appointed and how it will operate
- Guidelines for handling disagreements between family members
3. Build family relationships outside work. Another idea is to plan ways to be intentional about family relationships. If family activities are not planned and protected the only thing the members of a family-owned business will have in common will become the business. Planning to learn together is a good first step. Taking vacations together is another way. And jointly planning your estates will help avoid surprises and build communication lines. The family that plans together stays together.
4. Plan for transitions in the business. Helping family members to understand the difference between family leadership and business leadership roles is a key insight. Many times those two roles reside in the same person, but not always. Each role is important to the well-being of the family and the business and both need to have continuity when that family member is no longer able to fill them.
5. Confront intergenerational issues head on. The clash of values that emerge from the transition from one generation to the next in a family business is full of danger. The older generation often interprets the efforts at change by the succeeding generation as a criticism of their life’s work. Finding ways to affirm the skills and accomplishments of older family members are important to the smooth passing of business leadership.
6. Anticipate bringing in outsiders. It may not be on the family screen yet, but chances are, your business will have to deal with the issue of recruiting outside talent. Families are often divided on this issue, weighing relying on the talent within the family against the benefits of bringing in non-family managers. Discussing this issue ahead of time can minimize or can head off conflict when outside talent becomes necessary.
7. Plan for graceful exits. When family shareholders feel imprisoned by their ownership of the company, they can become mistrustful or resentful critics of the business and everyone in it. Successful family businesses create a culture of support and understanding, communicating in a variety of ways that family members are free to leave the business if they choose. Effective family businesses establish a process of selling shares back (redemption plans) to the business or to other family members to offer a graceful and rewarding way out of the family business.
8. View employment as an opport-nity. Effective family businesses are selective in the family members who are
employed by the family business. This makes it clear to every family member that ability and qualifications are valued. Families have found that when family members feel obligated to join the family business, they are void of passion for the family business’ success. Discussing family employment policies and reaching agreement puts younger family members on notice that they must meet certain qualifications to gain a position in the family business.
9. Actively plan your culture. The atmosphere of any human organization is the result of thoughtful planning by those in it. While a family can choose to accept the default family culture, not expecting much out of anybody, more is possible. Some families have found it helpful to be intentional in how they want to relate to each other. Out of this commitment comes a new level of day-to-day cooperation which translates into a higher level of enjoyment in working together as a family.
Enjoy each other. It is easy to overlook the opportunity you have to work at a job that challenges you among people you love and appreciate. Those simple facts get overlooked sometimes. Family businesses can offer the best of all worlds or a place of inescapable torment. There are choices that families can make. The best family businesses willingly take the challenge.
These are but a few of the direct actions members of a family-owned business can take to avoid the inevitable conflict which emerges between siblings. Taking an active rather than a passive approach greatly increases the enjoyment of working together as a family and ultimately keeps you out of the courtroom.
Article By Ron Lint
