[Family Business] Avoid a Family Feud

If you work with your family (or for someone else’s) you may wonder how people so genetically similar can be such strangers. Or, you may be amazed at how such an un-business-like business actually can make money. Money makes the world go ’round, but family business can make your head spin if you don’t proactively and responsively control the chaos.

FAMILINESS FACTOR. The technical term for a family company’s competitive advantages of goodwill, telepathy, all-for-one-and-one-for-all feeling is “familiness.” To be high in that factor is to say you make it look easy to govern yourself without whipping yourself, plan without careening off track, and, as the UMass Family Business Center motto advises: “Treat your family like a family and your business like a business.”

But if like many, your policies are too lax, your strategic plan is composed of the hunches of your reigning parents or siblings, and your compensation strategy is based on personal needs rather than contributions to the bottom line, it may be time to rethink the way it’s always been done.

CHALLENGING SACRED COWS. You’ll only arrive at the right answers if you ask the right questions. In a family business, this may challenge some sacred cows that are based on antiquated, convenient assumptions. It may feel dangerous to discuss that the business is coddling family members, enabling bad behaviors and serving the family to the detriment of the business. The problem in many family businesses is that so many policies were made on the fly, rather than based on good theory. Brave and determined family members need to take the time to build a solid company and a supportive family. In many companies, “unlearning” is needed to get smarter, and some demolition and rebuilding is required for structural integrity.

QUESTIONS TO ASK. As with many situations, admitting the problem is half the solution. Prepare for an honest, confronting, liberating discussion of some very core issues, usually improved by skilled, objective facilitation by someone who is neutral, but informed. Have faith that the truth will set you free (if your aim is to identify what needs fixing and your determination is to repair and progress). Your answers to the following questions should include precise processes to cure what ails you through ongoing honest inspection and systems.

How do we reward family employees, and what message does it send? Do we pay equally; scared to admit some family members contribute more than others? Do we think paychecks indicate how much we are loved? Have we given minority stock to non-participating family? If you reward only talent and production, including non-owners and non-family, you’ll attract the best and lose the rest. Think about what you need done today to have a meritocracy in five years, and do it.

Do we hire family to keep them in the nest and off the streets, or only if they have passion and talent for the business? How can we communicate that joining the business is a privilege and not a right? To really live in a land of opportunity, realize that not every job is the right opportunity. You’re still family, and we cherish you, but follow your dreams, not your nightmares.

Do we tolerate family’s misbehavior, entitlement or mistreatment, or create clearly defined roles and expectations, insisting that family comply? Maybe it’s unfair to say family must be twice as good to get half the credit, but there’s no better lesson than a good example. Your family’s good example can be the better mousetrap that attracts great employees.

Does our senior generation make the important decisions, limiting sensitive discussions; or encourage and empower us to broach “undiscussables”? How can we stop assuming and have the bravery and honesty to talk about death, money, emotions and power? Everyone’s thinking it, so you might as well talk about it more accurately, and make important decisions and sign important documents in the near future.

Can’t we acknowledge there are inevitable conflicts of interest? What estate planning can achieve our wishes, recognizing our children have varied needs and our success has created some complicated scenarios? How can seniors feel protected and preserve their wealth without hindering the ability of their children to take needed risks? Bring the experts into a conversation about solving the problems that will only fester if ignored, and may have more win/win solutions than you realized.

Are our multiple generations prepared to pass and receive the torch and enjoy their next life chapters? Are successors mentally, financially and managerially ready to step up to the plate? Are seniors equipped for this next stage, both financially and with a sense of purpose? It won’t kill you to state your gratitude, acknowledge your fear and get a bit of coaching or counseling.

CONCLUSION. These questions — and their answers — can provide the breadcrumbs and signposts that lead you to your best-case business scenario. Working on your business and your life, not just in them, means taking time to examine challenging issues. Turning the crank is easy. Turning the tide is harder.

The author is director of the UMass Family Business Center, Hadley, Mass. Visit www.umass.edu/fambiz for more information.