Soriano: Without communication, all else fails

Inside family business

IN MY more than a decade of coaching family-owned businesses in Asia, the failure to communicate is probably the biggest stumbling block family businesses face.

Business leaders not only callously ignore but tend not to equate communications directly with risk management. We all know that business involves a plethora of risks. While most major risk factors are beyond the control of the enterprise, communication is a major risk factor that family businesses all too often neglect but can control. It is not only unfortunate but tragic, as this obstacle impairs the many benefits that the family component can bring to the business.

When there is conflict within the family business ecosystem (family, business, ownership), you can expect the life span of the family business to shorten. As the transition happens from the founder’s stage to the sibling partnership and cousin consortium stage, the family members from each of the generations would have to remain united for the purpose of maintaining healthy family ties while simultaneously growing the business, navigating external shocks and pushing for survival and expansion through tough times.

On the other hand, when there is harmony, the family component becomes a major competitive advantage. This unique dimension does not exist over their non-family business counterparts. And part of the advantages of family-owned businesses is the family’s emotional commitment, their willingness to focus on the longer term and their ability to draw upon the family, including the extended family, to help them navigate through tough times.

The question is, what is going on with the family that makes it too difficult to be open, transparent and honest?

1. Important issues that are considered to be better left unsaid in order to keep the peace.

The family members tend to suffer with issues that they prefer not to talk about for the longest time. These issues could be very personal or about the way the business is run. When issues are avoided, it means that there is fear, embarrassment, plain apathy, and the thinking of having no power to stand against an individual that everyone consider as the leader.

In some cases, it is about topics that are a disgrace to the name of the family or to the image of the company. Such taboos might be pertaining to illicit relationships within the company, illegal transactions done by family members who have greater authority, favoritism and nepotism, over controlling attitudes of the president and/or other leaders in the family, being forced to join the family business for lack of other options or inability to assert one’s self, lack of confidence or doubts against family business leaders, salary and privilege demands, rights to ownership and many others. Eventually, the avoidance takes a toll, and the issues become larger and inevitable.

2. Family members do not meet together on a regular basis due to busy schedules.

Too much work eats up precious time for the family members to come together. Also, if they are assigned in different locations that are quite far, they may not see each other often enough. Lack of opportunities to see and converse with fellow family members on a regular basis alienates them from each other. Being unfamiliar to other family members’ ways and personalities hinders communication. As a result, working together can become difficult. Cousins, in-laws and even siblings may experience such.

To be continued...


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