FAMILY DYNAMICS / GOVERNANCE

How to avoid a break in the family & business bond

Cheryl Doll

November 9, 2023

In working with many families and their businesses, I’ve found that every family has its own unique DNA, behaviors, values, and traditions. Yet, there is ONE theme that made all the families seem very similar…and that is the tension, angst, and, at times, a complete unwillingness to eat a meal together due to a lack of clarity around making business decisions for the family business.

How do I help families clear the air of business-related issues so they can share a meal together as a family without tension, drama, and strife? Governance and routine.

Family governance is a process or structure that educates and facilitates clear and open communication between ALL family members about the business. It’s the process of holding discussions and coming to an agreement around the following concepts:

• Communication: The how, when, and where business discussions occur
• Passing on the family core values: Values provide a clear set of expectations for family members and employees
• Problem-solving: It serves as a “manual” so that the right people are involved
• Conflict resolution:  A framework for dealing with conflict means everyone knows the rules of engagement.
• Employment in the family business: Your last name does not automatically mean you fit into the business.

By removing the “grey areas” from business decisions with your family, the needless strain that can damage even the strongest family bonds is removed as well.

For example, something as simple and benign as a working family member taking time off can cause a lot of unnecessary tension when there are no rules or governance around it.

Let me set the stage for you…

You are a third generation in the business. Your uncle (CEO) and father (VP of Sales) are equal partners in the business.  You have spent the last year in manufacturing, learning the ropes, and helping to manage the production floor. You are moving into your second year in the family business, with the idea that one day you will be the CEO. You moved up and are now the head of Quality Control, managing a team of five. In comes a text from your best friend who decides to quit his job to take a month to live in New Zealand and find himself – and he asks you to join him. This seems like a once-in-a-lifetime opportunity. As the son and nephew of the owners, certainly, it shouldn’t be a big deal to hold your position until you return. After all, it’s just 4 weeks…and your family.

See where this is heading?

The problem: There is nothing written about not being able to take a leave and some other family members have done so in the past, so the nephew thinks, “Why not me, too.”  While his father said it would be okay to take the leave, his uncle was against the decision due to production volume and non-family team members who were already approved for vacation during this time. It causes a rift between the brothers with no clear path to resolution. Feelings are hurt, terse words have been said, comparisons are made to past “exceptions”, etc…

Can you see why family gatherings are often the casualty of a lack of governance? This scenario is a very common one in family businesses, especially when there is no documented governance for working as family members in the family business.

How do you solve this stalemate? You may need a qualified guide to help remove the emotion and work towards a clear consensus – as a business and a family.

While the solution is simple, it is NOT easy – especially if the need for governance arises as a result of an existing feud.  Those take a bit more work, but it’s not insurmountable. You can get your happy family gatherings back.

Let’s see how our family in turmoil found common ground to move forward…

Together, with the aid of a facilitator, the leadership team gathered all family members and key executives to define the pathway for future generations to join the business, what taking paid time away would look like, and the circumstances surrounding both topics.

The owners (the uncle and the father) acknowledge their role in allowing the time off rules to be blurry and also made known there had been precedents set – at a time when the company was smaller – that did accommodate two other family members taking long periods away as paid time off with no loss of position (one for maternity leave and the other a personal issue at home).

Since there was nothing formal in writing, the brothers agreed to allow the nephew to go on the extended trip. He had built a great rapport with his Q&A predecessor, who volunteered to step back into the role for those 4 weeks. There was also a CLEAR understanding that this type of non-emergency reason for time off would be the last of its kind. Any future time off that was not covered by the disability insurance at the company, would mean forfeiting your position – family member or not.

Now with clear rules written, agreed upon, and openly communicated, the family could get back to business and back to being a happy family at the Thanksgiving table.

If you are missing Governance in your family business, the time to craft your document is BEFORE there is an issue. Not sure how to get started? Reach out – I’m here to help you navigate the growing pains of family business (which are good pains to have).