The golden rule for the success of any family-owned business is to be transparent and have an open, honest, and straightforward line of communication.
While communication is critical to the success of any organization (or relationship), it is even more so in a family business, where relationships are not limited to the boss-subordinate type and go far beyond that. Family-owned businesses present unique communication challenges owing to family dynamics. In a family-owned business, emotions get intertwined easily with business. To further complicate things, even the family members who do not work in the business can affect the company ecosystem.
Furthermore, family members tend to make assumptions about their role in the business and how other members might react in certain situations that can become particularly problematic.
Therefore, you need to put measures and practices in place to ensure clear communication. There is much more at stake in a family business, and to keep relationships healthy, it is essential you follow these four tips for better communications as advised by our TAB members.
1. Reconnect around non-business first.
Your relationship with every family member is unique and vital. Those relationships become even more significant and more complicated when both are involved in the family business. You can often accomplish critical communications about the family business over a common interest, hobby, or activity you both enjoy. Common interests might include golf, fishing, cycling, attending a ball game, etc. If you don't have something like that in common, pick something your family members enjoy doing together.
Reconnecting at that level first reminds all parties who the other person is, what they believe, and what their values are. This is truly an advantage family-owned business have over other businesses. Don't forget the "family" in your family business.
2. Schedule strategic planning sessions led by an outside professional facilitator.One of the most effective tools I have seen to get family members on the same page in a family business is to schedule a day-long strategic planning session that a non-family coach or mentor professionally facilitates. A professional facilitator will draw out the thoughts and opinions of every family member, even the quiet ones that may feel overshadowed by a parent or sibling. Every member of the family must have equal opportunity to express their thoughts and opinions.
3. Stop assuming that communication has taken place and set up two communication channels.
George Bernard Shaw said: "The single biggest problem in communication is the illusion that it has taken place." The complexity in a family-owned and family-run business is that there are two relationships: the business relationship and the personal one. Family members think that because they see each other regularly, communication has taken place. This may be a misconception if important matters are not aired. To ensure proper communication, set two communication channels in place:
- Formal meeting: As regularly as needed (but no fewer than twice a month), a formal meeting discusses the business's operational, tactical, and strategic nuts and bolts. Set an agenda with specific outcomes and action items, similar to any other management meeting.
- Informal meetings: Set up an informal business meeting once every second week with no agenda, no topics, and no structure. Discuss the business and business life; feel each other's temperature. Have a coffee or have a beer if it's on a Friday afternoon. Then go home and leave work at the office.
4. Follow these four steps to prevent situations where family members are at war.
#1. Reestablish common motivators and values. I find that family members attribute evil motives to behaviors that are opposite to their profile. Opposing behaviors fuel conflict, and positions become embedded. Group behavioral debriefs done with humor and fun build self-awareness, but that reestablishing the common motivators and values brings about an environment where love is rekindled, and family bonds create a powerful force for good in the family business.
#2. Develop a family constitution. Each member needs to understand the journey of their five roles, rights, responsibilities, and boundaries for effective and efficient governance:
- As a shareholder,
- As a director,
- As an executive employee, and
- As a sibling/relative/parent
#3. Protect your family assets. Put risk assets with potential into family legal entities in the next generation's names to efficiently maximize wealth transfer.
#4. Resist the temptation to transfer assets with strings and caveats. These will be a recipe for friction in the future. With crystal clear communication channels and clearly defined roles, you can enjoy the many benefits of creating a family business, by keeping friction and conflicts at bay.
5. When you hire new team members, let them know you are running a family business.
I would say you should be clear with existing employees and new hires that this is a family business. Sometimes, family business owners want to portray their business as running just like any other company when that isn't the case. New hires are often not clear of the family dynamics. Maybe they question why a particular family member is in a specific role. This puts the family member in a difficult spot. If the business owner explains to new hires that their business runs like most other businesses, but they do have a family member environment — and some decisions may be made in the interest of the family and not the company itself — I think it will help the other employees understand and accept these elements. This makes it a better environment for the other family members in the business as well.
To aid communication among family members involved in the business, start by setting some ground rules. Sometimes it might be handy to contract an external facilitator to help develop these rules.
At TAB, we do this using a system called TABenos™. The word TABenos™ comes from the ancient Greek word temenos, which means sanctuary. TABenos™ creates a sanctuary—a safe place—for communication. It does so through a series of interactions that effectively lower the natural defenses people raise in response to perceived attacks from others. Once each party in an exchange starts lowering their defenses, communication can, and does, improve.
The concept is simple. Start asking the group what makes communication impossible and what causes them to feel unsafe communicating in a group. Someone might say, "When I am talking, I get annoyed when people multi-task and look at their cell phones." The family may agree that at any business meetings, no cell phones are allowed. Another family member might say, "I get annoyed and defensive when we start speaking about business at personal family events like birthdays; it feels like all we talk about is work, and my kids suffer as a result." The family as a group might agree to no business talk at certain family events. Another team member might suggest, "I get annoyed when I don't get asked for my opinion. I love you, my brother, but you always interrupt me, and dad, you never ask my opinion."
Getting these out on the table and getting an agreement on how and when you should conduct important business meetings and communications will ensure the family understands how best to communicate with each others.
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