Imagine a business that is prospering and whose family owners have more money than they know what to do with. From the outside they have "made it". In reaching this point, however, there is a trail of broken relationships, family members who are scared and hurting, family members doing work that they don't like or not working at all, and a family that, overall, is adrift with no sense of purpose. What does this family really have? And would you trade your own situation for all that money and a host of broken relationships?
Though it is tempting to think we can excel in one area of life and get away with benign neglect in others, this approach rarely works. Many successful business owners have figured out how to build excellent businesses, and by default let the other aspects of their lives take care of themselves.
However, neglecting family relationships both within and outside the family business carries one of the highest prices of all. Family leaders often dislike the soft issues of human, intellectual and social capital because they are not quantitative or easily
measured. But you ignore the "soft" family capital at your peril.
If you are surrounded by family members who are hindered by resentment, jealousy, lack of respect for generations other than their own, distrust of others, poor communication skills and lack of personal identity and strength, your family cannot thrive. Your business will ultimately suffer as well.
Family members who lead a company usually share a passion for that business's purpose and goals. Other family members may not have the same passion for the family business. This doesn't have to be a problem as long as those not running the business find a passion that gives purpose to their lives and goals to pursue.
But if the other family members have not found their life's purpose, those in the business must not ignore the situation. Business leaders should encourage all the family members into opportunities to develop purpose, strength and direction even if it is not related to the family business. Ultimately,
family dynamics are just as important as business dynamics.
A successful family-owned business brings with it liabilities that risk family well-being. Some of these liabilities, such as taxes, are unavoidable. Others, such as the ones listed below, are negotiable. The challenge is to prioritise those liabilities that you can negotiate.
Trust relationships: This is the single most important area of concern. If your family lacks trust, you and your business are vulnerable. Though it is scary to begin building trust, the reward is that all other areas of concern will benefit.
Secrets: Harbouring secrets can be a destructive force in families. The vast majority of family secrets are better let out of the bag. Watch out for the atmosphere of distrust based on secrets. Gather your courage, hire a facilitator, and get the information on the table.
Communication: Though some will openly value this more than others, each and every family member benefits. Outliers can be included via talking, and you will be surprised to find out what resources you have in your family.
Sibling rivalry: This can be a showstopper. Get the rivalry out on the table, and talk about it. This is another great place to use a facilitator.
Family governance: Make sure there is a clear system of governance. If you don't yet have one, develop one. Get everyone's input on what is fair and open the discussion to all family members.
Mission statement: There are two huge benefits to writing a family mission statement. The first is that you and your family will affirm your values, purpose and goals in doing so, and all family members including future generations will benefit. The second is that drafting the statement will bring you closer.
Financial education: The basics of financial literacy must be a mainstay in successful business families. Include allowances for younger children and perspective on income for older children, savings and investing (as in "what is compound interest?"), philanthropy, credit and budgets. The main objective is teaching family members to reflect on how they use these financial strategies in their own lives.
Development of human, intellectual and social capital: Family members can grow into the strong positive individuals we all enjoy knowing. Often they need guidance to acquire the education and experience they need to build competence based on their talents. Encourage education, community involvement, work and positive relationships. If you tackle these liabilities in a sustained and methodical manner then the benefits are clear: a stronger family business and a stronger business family. Happy family members are far more likely to support the work of those leading the business than unhappy family members are.
The best approach is to tackle liabilities in times of peace and calm, when it's easier to do the tough work of strengthening communication, openness and trust. It is a good idea to establish a tradition of annual retreats or schedule a series of meetings to address one liability at a time. Here is an easy step-by-step you can follow:
– Schedule a meeting, possibly in a retreat setting.
– Hire a facilitator.
– Based on your knowledge of your family, choose a relevant topic. Popular places to start are: the psychology of wealth; vision, values and mission statement; parenting children in business families; intergenerational communication.
– Brainstorm next year's topic before the meeting ends.
– Ensure everyone leaves with an action plan (of their own crafting) and an accountability agreement for it.
In the successful business family, family characteristics and dynamics are amplified. If family members are resourceful, they will be very resourceful, but if family members are petty, they will be very petty. If family leaders are preoccupied with themselves and their business, distant, strained relationships in the family will be clear to everyone and broken relationships will be the norm.
The good news is that family characteristics and dynamics can be redefined. You can be the one in your family to take charge and call a family meeting to begin the tough work.
As family members begin to understand their own psychology and relationships with each other, as they tune up their parenting, and as they develop philanthropy together, they will reap the benefits of investing in family relationships, which are the source of a family business's success.
If your answers to eight or more of these questions is "no" or "I don't know" you have work to do. Schedule a meeting, choose a topic and dive in.
– Do you find time to take care of family relationships? How?
– Do you know the consequences of neglecting the emotions in the family?
– Do you know your family values? Can you name them?
– Are you willing to designate an annual meeting for family relationships?
– What are your family strengths?
– What is each family member's greatest strength?
– Can you handle the different needs of younger vs older family
– Do you have a family mission statement?
– Have your individual family members taken charge of their lives?
– Are your individual family members happy?
– Are your family strengths evident?
– Is your human, intellectual and social capital increasing?
– Is your family capital stronger than your family liabilities?
– Do you encourage, support and expect competence from the next generation?
– What have your children learned from you by your example?
– Do you know how to get started providing family wealth education?
– Should you do it alone?
– What is your legacy? For what will you be remembered?