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How to ensure success by mastering family dynamics

Governance : family dynamics

Shaping a successful future for business-owning families means dealing with the specific dynamics between the interdependent spheres of family, business and assets. Once balance is achieved, an atmosphere of trust, consensus and satisfaction can follow.

Family business conferences naturally aim to cover family business-related topics, but can always be reduced to three main areas of interest: the family, the business and assets. Although this may sound simple, it's not because we are talking about a most delicate system. Only if all these areas of interest are managed adequately will the business family be successful in the long-term.

If, on the other hand, the diverse interests cannot be reconciled successfully, conflicts and tensions inevitably build up. As a result, the family, the business and their assets become increasingly vulnerable.

The triangle of "love, power and money"
It is, therefore, important to deal with the very specific dynamics between the spheres of family, business and assets, which are inherent in all family businesses. I usually call this the triangle of "love, power and money". However, dealing with these dynamics also means knowing about the basic interdependency between the spheres of family, business and assets, and resolving the (potential) conflicts arising from this interdependency.

In many cases, not all the family members of a business family are also company owners; however, all of the owners are family members. Of the owners, only a few actively manage the family business. Owner interests can vary from family interests, while a manager's interests usually also do – and in a lot of cases they are also different from owner interests. Therefore, even if the company owners belong to the same family, there is a lot of conflict potential.

Just imagine the change that occurs from the birth of a new child or a marriage. How do you handle such an event without unleashing the conflict potential? It is important not to forget the implications with respect to the company and the company's impact on the family. An additional twist that requires attention is that the dynamics not only prevail between these areas of interests but also within them; plus, they are subject to continuous change. Bearing all this in mind, it becomes obvious that these dynamics increase the interdependency, which is fuelled by an ever more demanding business environment thanks to globalisation.

It makes sense to deal with these interdependencies and their dynamics, so that they can be recognised in time and managed adequately. This means making constant adjustments and constitutes the quintessential task of a business family. In order to fulfil this lifetime task, a basic three-step model has proved to be very effective.

Step 1: Identify the causes  
Whenever "shaping the future" is on the agenda, it is important to do a SWOT analysis to identify the potential strengths, weaknesses, opportunities and threats. When looking for causes, look into the family first because the family holds all three areas of interest; the family is the company owner, materially and emotionally, and often manages it. Because of the different roles resulting from this – as family member, owner and/or member of the management – it is inevitable that there are different needs, viewpoints, expectations, values and goals already within the family, let alone those aspects relating to the company and its assets. This in turn brings about varying personal (and sometimes "hidden") agendas, disagreement between family branches, rivalry, "old scores" between family members that remain to be settled or even a material dispute. So, start looking for causes within the business family first!

Step 2: Develop solutions
Once it is clear what influence the dynamics between the three spheres inside a business family can have, it is easier to get to a solution that is shared by everybody. Asking the "right" questions of the family and working in a methodical manner – always against the background of family, business and assets – is an important step in order to clarify principle positions, improve communication within the family and to get to a consensus on needs, viewpoints, expectations, values, goals, competencies and corresponding roles. A practicable method is to depart from the past to the present and then map out the future (ie, Where do we come from? Where are we now (status quo)? Where do we want to go? And how?).

Step 3: Shape the future
Finally, all these efforts make it possible to start shaping the future. A first step is to ensure that the resulting strategies and family values are communicated and discussed properly, before being implemented in the company and the management of assets. This transparency is necessary so that everyone can respond to the goals and values. Transparency also means that a proper controlling system, with quantitative as well as qualitative aspects, is put in place; for example, using a "FIS"© (Family Information System) as guidance with regards to a family member's role and needs, encouraging proactive (instead of reactive) thinking and a shared sense of responsibility.

Once this shared responsibility is made possible and implemented, the ideal of living for something (in the sense of "support") instead of living with something (in the sense of "endure") is within reach; the spheres of "family, business and assets" cannot become a source of irritation, but can be turned into a source of motivation. And any tension between "love, power and money" can be transformed into an atmosphere of "trust, consensus and satisfaction".

Bernward Brenninkmeyer hails from the founding family of European clothing chain C&A. Bernward left the company in 2001 following a reorganisation and set up family business consultancy Brenninkmeyer Seyer & Partner. 

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