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Tuesday, February 19, 2019
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Soriano: If we talk, we solve’

Inside Family Business

WHEN family members do not talk, they will never solve their problems.

Unresolved problems confronting family-owned businesses are the biggest reason that 70 percent of family businesses don’t make it to the second generation and 88 percent won’t make it to the third generation. My advice is straightforward: The more difficult it is to talk about an issue, the more important it is to talk about it.

What does this have to do with talking about difficult issues? In a well-written article by the Family Business Consulting Group (FBCG) entitled “The Business Golden Rule,” it mentioned that “it is communication that leads the list as the most important element to make things work. The typical problems that plague family businesses, such as lack of trust or failures to professionalize, are usually the result of poor communication. As these problems can literally take down the business, good communication is essential. However, the problem is that communication in a family business is not a simple task. In fact, you must be able to simultaneously effectively communicate as a manager, owner and family member. These roles are difficult, and each requires different skills, tactics and processes.”

Why is there a breakdown in family relationships?

The biggest differentiator between the families that last and those that fall apart is open, honest and transparent communication. And that means getting into the difficult conversations. Applying these values in your family business is the best advice for success in every situation since it reduces assumptions, mitigates perceived unfairness and builds trust.

This is not easy work but fortunately, there are ways of improving communication. For families mired in conflict where members have not had authentic sibling communication for years, the solution is not through prayers alone, but through a deliberate effort in getting every family member back in the saddle , with rules that will manage the “reintegration” of what was once the family’s shared vision and values introduced by the founding generation when they were still alive.

When the senior generation member is no longer capable of leading the enterprise or is incapacitated due to old age, it is important that the next generation offspring (usually the eldest sibling or administrator) assume control and reign in his or her siblings. The objective is to re-energize the family commitment, design a contingency plan and prepare the long and challenging process of ownership, business and wealth transfer. Delaying the process is setting up the family for failure.

Critically, planning ahead in anticipation of a future event like death of a key shareholder will minimize the predictable dangers that can compromise relationships. Any of these events from misalignment of family values, managing a “black sheep” sibling, major fight or rivalry between generations of family branches can jeopardize the business.

So how can a family business transform into a completely open and honest communication platform? I am recommending several initiatives that family members can use as part of the conditions in creating a solid communications plan.

· A “we” is bigger than “I” mindset for those who will participate in family or business meetings

· Agreeing on a covenant that all family members will be fair, honest and transparent

· A “no blaming” policy during meetings. Blaming a family member is not only stressful and counter-productive, it can also lead to permanent scars, fuel more conflict and inflame past hurts.

· Use a third party non-family advisor as resource facilitator because he or she can provide objective, unbiased and sound advice to family members.

To be continued.


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