Unique Challenges of Family Business

January 29, 2016 | Roger and Susie Engelau

And What to Do About Them

Madeline and Michael are 2 of 3 siblings that own a local manufacturing company. They sought my help because they were unable to resolve a major disagreement… Madeline wanted to aggressively expand and Michael wanted to stay local and work on strengthening Unique challenges of family businessoperations. From our first meeting I observed that both stated and restated their positions, not listening or seeming to hear the other’s “story.”  They proceeded to manage separately as if they didn’t know the other one disagreed with their actions.

 

Michael in particular fought Madeline at every turn, accusing her of being oblivious to details, not having a deep understanding of procedures. Inconsequential things like whether to put an automated hand dryer or paper towels in the company restroom caused arguments. In one of several discussions we had together, Michael accused Madeline of having an easy life, citing the time they were both in the same physics class which Madeline easily aced while Michael worked hard only to manage a C. This, he said, was a recurring theme throughout their childhood… Madeline learned things more quickly, drew conclusions sooner, and scored more achievements and “firsts” than Michael.  And this dynamic was present in their adult relationship.

 

There’s something about working in a family business that brings a lot of joy:  the pride of building something that could last for generations, the satisfaction from knowing your family name means something to the community.

 

On the other hand, family dynamics can derail even the most profitable company. I see it in my business coaching practice daily. Here are the 3 top challenges I see with my family business coaching clients and what you can do about each:

 

1.A long history of relationships and incidents that influence company conversations, dynamics, and decisions today. Employee relationships go back a few years in non-family-owned companies but in family business, tightly interwoven, deeply layered relationships go back to childhood, even to previous generations. That means there are many more forces and intricacies at work. As with Madeline and Michael, these will surface in adult business interactions, often in undetectable ways.

 

What you can do:

There’s no way around it—it’s painful, even scary, but this must be discussed and underlying issues must be surfaced!  Yes, it’s a bit like family therapy. A couple of ways to make it easier–

A.Use a structured process. You may be able to do thisyourselves. Here’s a process I like:

  • Describe/define the problem.
  • Allow time for each side to explain his/er position… while everyone else listens.
  • Establish a common objective–a 1-sentence statement.
  • Brainstorm solutions—without evaluation or criticism.
  • Rank the solutions, combining some if possible, high—medium—low, then choose the best one

B. Establish groundrules. Three I like–

  • Keep all comments in the room and never outside the meeting
  • Seek first to understand and then to be understood. Give everyone equal amounts of uninterrupted air time.
  • Decisions need not be unanimous but must be 100% committed after mad

C. Hire an outsider. Invest in a good business coach.

 

2.Hiring the right skills and talent. Among the top challenges family business owners identified, concern about finding talented workers rose from 46% to 60% between 2012 and 2015 according to a PwC’s Family Business Survey 2014-2015.This is concern for most every business owner I work with right now, family-owned or not.

 

What you can do:

I outlined a thorough process for small business owners recently. Check out my blogpost “A 7-Step Process; How to Hire Great People” where you can also download a handy eTool.

 

3.Keeping Pace with Innovation. Innovation is a must-have; it’s no longer a nice-to-have. It takes someone with great vision and strong technological know-how who can inspire others. This is particularly difficult in family businesses. Over 1/3 of current family-business leaders worry that this style isn’t necessarily baked into the family’s DNA. On the contrary, their hunch is that having family members in key positions at the company can make the firm less open to new thinking and ideas.

 

What you can do:

A. Because innovation resides in a high-level spot in your company, it’s best if your innovator can be a family member. 53% of family-owned business leaders believe that family businesses reinvent themselves with each new generation—a form of innovation in itself. Identify family members who have the desire and talent, groom them, and put them in a position to utilize the talent. In my example, we did just that with Madeline.

B. Hire it from the outside. This can work just as well though it’s dependent on your ability to hire well.

 

For more insights on family business, see the Family Business Survey 2014-2015—US here.