Sara Neidig, 48, an energetic entrepreneur, sold her successful upscale restaurant, Simply Sara's. She loved the business and enjoyed a loyal following but, as she said: "I had an offer that I couldn't refuse and I've been itching to start something new." With some of the profit from the sale of the restaurant, she started Goods to Go, a gourmet foods catering service, capitalising on the reputation and connections she developed over the 16 years since the restaurant's beginnings.
Jeff, 54, her husband and VP of sales and marketing at a local advertising agency, was considering a break from the corporate world. He told Sara: "I want to get out of the grind and try something different." Sara pleaded with him to join her. They have been married 25 years and have three children (Amy, 23, Ben, 20 and Anna, 15) who all worked at the restaurant during the summers, but joked that they were through with that, "especially if you and dad work together!"
Jeff said he wanted to wait to see how the new business did before he made any decisions, although he knew that his wife would be able to create another successful business. However, he was reluctant to work with her. As he told his brother: "She and I have never been able to work well together. As you know, I hate conflict and avoid it at all costs." He also said that Sara "enjoyed a good argument and had always been able to get her way."
Not surprisingly, Goods to Go was very successful; by the end of the second year, the number of employees had grown from 20 to 52 and sales were US$4.6 million. In spite of his reservations, Jeff gave his notice at work and joined Sara to be in charge of sales and marketing. He didn't want to tie himself down to a specific job description, but said he would work wherever he was needed. He also didn't want a salary, but just share the equity in the company.
This was fine with Sara who knew he was talented and a tireless worker. For the first several months, things went well between them. Then Sara began to make impossible demands of him, interfered with his work and wouldn't listen to his suggestions. Jeff placated her by trying to do whatever she asked but, by the end of his first year, he was exhausted and angry.
One morning, he finally got the courage to announce: "Sara, I'm going to have to leave. I am exhausted with all you expect me to do and can't have you second guessing me all the time." Sara stormed out of his office. She wouldn't speak with him for two days until Jeff apologised. Although nothing was resolved, they decided to hire a third partner who would relieve them of some of the work and, perhaps, help their relationship.
They hired Nigel, the former general manager of Simply Sara's. Nigel, 56, was looking for new challenges and always enjoyed working with Sara. He said he would join them if he could have equity in the business. A deal was made: Nigel would receive 10% of the equity, a substantial increase from his general manager's salary, and an option to buy another 10% at the end of three years. He took over sales and marketing and soon expanded business into the mail order and events planning markets.
By the end of the sixth year, sales at Goods to Go had increased to $12.5 million. But the problems between Jeff and Sara worsened. They avoided each other at work and instead would go to Nigel with their complaints. Before meetings, they would take him aside and say: "Jeff has some crazy idea. Please don't back him." And: "Sara has some dumb plan of cutting back on our advertising. Please vote against such a hare-brained idea."
Nigel was wearing out. He had invested everything he had in Goods to Go. He loved the work, cared for and respected both Jeff and Sarah, and wanted to stay. What can Nigel do?
"I've just been had and I'm not sure how," thinks Nigel, struggling to manage a business and not get stuck in the middle of his married co-owners. Nigel is experiencing a pattern familiar to family-owned businesses: the blurring of personal and business issues that interfere with corporate growth. This case highlights the presence of unhealthy family dynamics and unclear management practices.
The disruptive family dynamics are the "fights" between Sara and Jeff, the "triangulation" as Sara and Jeff each try to get Nigel involved instead of dealing directly with each other, Jeff's inability to deal with conflict and Sara's determination always to be "right". Sara may react to the stress of business expansion by picking a fight with Jeff rather than figuring out how to reassign tasks. Jeff retreats and may think: "I'm working for free…what do you want?"
Goods to Go can't operate efficiently because the management practices in place are those of a small start-up company and have not been upgraded to support the increased volume of business. Many small businesses enjoy the initial success that then leads to expansion, but later struggle or fail because they don't know how to take it to the next level. For example, there are no policies for compensation, no job description for Jeff, no accountability mechanisms or forums for staff communication. Jeff's role is undefined, as Nigel has assumed marketing and sales, formerly Jeff's responsibility.
So, what should Nigel do? There are several options:
- Determine who is going to do what;
- Decide who will report to whom and how this will be structured;
- Create job descriptions.
Jeff can legitimise his position by accepting a salary or agreeing that he will not use the lack of one as an excuse to become confrontational. Regular staff meetings will provide a forum to discuss policies and new ideas, and determine how decisions will be made, by whom and in what areas. Next, Nigel needs to remove himself from the triangle with Jeff and Sara. He can accomplish that by refusing to be caught in the middle and, instead, redirect Sara and Jeff to speak with each other.
Sara and Jeff need to learn how to "fight fairly". All families fight, sometimes fairly, sometimes not. A healthy fight involves using no manipulative threats or dismissive behaviour, not putting down the other person, retreating or attacking. It also includes good listening skills, realistic feedback, acknowledging the possibilities and agreement to the next step. Fighting fairly, updating management practices and staying out of triangles will create an atmosphere where Sara, Jeff and Nigel work collaboratively and in harmony to create and manage successful businesses, and have fun doing it!
Marty Carter specialises in communication and family dynamics with family-owned businesses.
Poor Nigel. He has accepted an exciting challenge without realising the minefield he has stepped into. Let's first examine some fundamental dynamics of husband/wife teams. Sharon Nelton, in In Love and In Business, reminds us that successful husband and wife businesses have several characteristics in common, including enormous respect for each other, that marriage and children come first, and carefully defined individual responsibilities.
It is not clear that Jeff and Sara share these traits. So what can Nigel do? His first task is to get Sara and Jeff to recognise that there is an issue, and how critical it is to tackle it. He can best achieve this by spending time with each of them, getting them talking and giving honest feedback about the impact of their behaviour on him, on the staff and on the health of the business. Nigel needs to make it clear that he is there because he thinks it's a great business and he feels a part of it.
Above all, Jeff and Sara need to agree to stop pulling Nigel into a triangle with them, but rather start to communicate directly with each other. Nigel needs an agreed mandate from Jeff and Sara that he may refuse taking on this role if he is ever asked to do so again. Beyond that, Nigel's ability to positively impact the Jeff/Sara situation is limited for several reasons. First, he has entered the situation too late (he needed to be there from the start) and second, he has too much baggage from his previous work with Sara. Furthermore, Nigel has conflicting interests – the outcome of any discussions will impact on his future and his share value.
To make a real difference, Jeff and Sara will inevitably need the help of an outsider, a consultant from the family business field who can spend time with them one to one and then facilitate their discussions. Nigel should encourage them to find such a person. This individual should be someone unknown to Jeff or Sara and who can work with them to allow them to examine key questions. Jeff needs to be sure he understands why he chose to go into the business. Sara needs to understand why she wanted Jeff there. Have they really told each other how much they respect the other's business skills? Clearly they do, but I wonder if they know it. What does Jeff want in the longer term? Only then, after examining some of these issues, can they work with the outsider to find practical solutions and to write down some guidelines for the future. These might include:
- Relative position of the business and the family in their lives;
- Clear definitions of roles and responsibilities;
- Clarification of Jeff's retirement wishes;
- Creation of a succession plan.
What are their plans? Does Sara expect to bring the children into the business? What should Nigel's longer-term expectations be regarding his role and his shareholding?
As King Vidor, film director, said: "Marriage is not a word, it is a sentence." But by following a few of these simple guidelines, they can prove it's actually a novel, with a happy ending.
Tony Bogod is South East Chairman of the Stoy Centre for Family Business in the UK. He was co-chair of the 2001 Annual FFI conference.