THU 20TH FEB 2020


Bringing the family business community together

Relationships KEY To Family Business Success

17th May 2015 Wayne Rivers, Family Business Institute Inc

Perhaps the single most important element in the success or failure of a family business is the relationship among key members of the business family.

Most businesses can survive the threats of competition, economic cycles, changes in technology, or other factors, but the deterioration of interpersonal relationships will devastate the business and tear apart the family.

Both the direct and opportunity costs can be monumental. If family members spend just one hour per day bickering, avoiding each other, or talking to others about family problems, the cost of lost productivity is measurable based on a person’s salary. Perhaps even more costly can be the opportunities which will be missed because of the conflicts.

Keys to Success in Family Business

Edwin and Colette Hoover in their excellent book, Getting Along in Family Business: The Relationship Intelligence Handbook, define a family company as any business in which business and family relationships have significant impacts on each other. Whatever impacts the family is likely to reverberate through the business and vice versa. Unfortunately, little is taught about how to build good relationships. Yet there are skills which can be taught to make working together and living together more rewarding and enjoyable. These skills form a pyramid which, if implemented, will help improve relationships within the family and the business.

The foundation for building good relationships is open and honest communication. Often poor communication is the biggest problem, and work done on this element can pave the way for improved relations. Parties must be willing to address issues that might be touchy or controversial. Avoidance only makes the problems more severe when they surface… and surface they will. Equally damaging is silent agreement just to keep the peace. Find ways to disagree without belittling or enraging the other party. Communication must be built upon honesty, otherwise the other party(ies) can have misunderstandings which will ultimately damage the relationship more than the initial confrontation.

Remember that about 70 percent of all communication is non-verbal. Your body language may negate your words and call into question whether your communication is honest. Your tone of voice often conveys more than what you say. Take care to remove sarcasm, anger, doubt, and superiority from your speech. Active listening is another vital part of good communication skills. Seek to understand rather than be understood… a good axiom to follow in building relationships. Like a building constructed on a faulty foundation, relationships that do not start with honest and open communication are doomed to crumble.

The next block on the pyramid is the agreement on common values. What values are important to you? Ask the other party to identify those values he orrr she believes important. Match them up. Values like honesty, trustworthiness, stewardship, loyalty, hard work, harmony, tolerance, and courtesy are some common qualities most t family members admire. Seek agreement on values.

What shared visions do the parties have in common? Families in business with each other rarely talk about shared vision, but to build a meaningful and caring relationship with someone with whom you work and live requires agreement of outcomes you would like to see. What is your vision for the future of the business? How about the future for the family? Spend time talking with the other party about his or her vision and look for common ground.

It is also important to reach agreement about expectations, both within the business and the family. It is reasonable to expect family members to show up for work and stay on the job for an appropriate number of hours. It is fair to expect family members to appear at family functions. What specific expectations should you have of someone with whom you have a relationship? Differing expectations are great sources of misunderstanding and conflict between people.

Identify the roles you are expected to play, as well as the roles of others. For instance, in a typical family of four there are a total of seven different roles that can be played out. There is the husband and wife relationship. They are also father and mother. You can have mother and daughter, as well as mother and son. Then you could find father and daughter and brother and sister. If this family works together you must add the roles of employers, employees, co-workers and owners. This could increase the number of roles to fourteen. Sometimes in family businesses, one party might need to begin a conversation by identifying the role he or she is representing. Is this a father talking to a son or a boss talking with a co-worker? Because it is difficult separating roles, this factor complicates good relationships in family businesses.

Another essential building block is accountability. Family members must be accountable for their actions within the family, just as they must be accountable for performing certain responsibilities within the business. Every member must be accountable for his or her actions. Most family businesses have no written job descriptions for family members; therefore, there are no written performance expectations or accountability requirements. To whom are you accountable? Spell it out in order to achieve better relationships.

What attitude do you carry into the relationship? Is it one of concern and care for another, or do you demonstrate a disregard for their interests and feelings? The attitude you demonstrate goes a long way toward establishing mutually fulfilling or broken relationships. Again, attitude is often demonstrated through body language and actions as much as through what you say. Genuine attention and interest in other parties will encourage them to demonstrate the same in return.

To have a good relationship with others you must have contact with them. Spending time together helps strengthen bonds, especially when that time is out of the office. Make certain that you have agreements not to discuss business during family social settings. Playing together is just as important as working together. Social settings often help you understand the other party and learn more about the factors that impact other areas of his or her life. Conversely, if all contact is in an informal social setting, it is difficult to gauge how a person will perform in a work setting. Like all other areas of life, balance is important.

Understanding the decision-making process will go a long way toward improving relationships. Historically, in the home and at work, a strong leader made all the decisions with other family members expected to concur. When family members enter the business, they are less likely to automatically accept these dictates leading to strains on relationships.

Business families need to understand what authority will be shared at home as well as at work. The ideal model would be to establish how far leaders can go in making decisions, which decisions need agreement by a majority of family members and which might need a “super majority” to concur. One patriarch observed, “We don’t have time to turn this business into a democracy and take a vote on every decision.” This is exactly why everyone needs to understand the process for making decisions, who can make them and when they can expect to be involved in the process. Those who feel they have input in the direction of an organization will feel better about their relationships with other members of the organization when their input is solicited and valued.

What do you do when conflict arises?
Any family that denies that it has conflict is either in serious denial or else family members are afraid to disagree. Either alternative points to serious relationship problems in the future. How do you resolve conflict? Do you pretend it doesn’t exist? Do you get together with the proper person and discuss it? Call a family meeting and resolve it? If the disagreement persists do you call in an independent third party to help in mediation? Again, a written understanding of this process before conflict arises will help prevent misunderstandings and bad feelings when conflict occurs. A good family meeting can be held on the subject of how to resolve conflicts when they do occur.

Do family members understand that compromise is necessary? Constantly being on the short end of a win-lose relationship will only encourage problems between family members. In order for win-win solutions to surface, parties must be willing to seek compromise. No one would suggest that you compromise values, but finding common ground on solutions to disagreements doesn’t generally require giving up one’s basic values. Problem solving exercises can help demonstrate how to seek compromise.

Mutual respect is essential. The best way to receive respect is to conduct yourself in a consistent and honorable way. You must also treat others as persons of worth. Do you communicate honestly and openly? Are you accountable for your actions? Do you demonstrate as well as verbally embrace the values that are respected by others? Do you show respect to others? If you talk down to others or treat them in a disrespectful way, do not be surprised if others do not treat you with respect. When mutual respect is present in a relationship, a sound basis is established for ironing out any differences which exist between parties.

Trust is something you earn over time. Trust can also easily be broken through mistreatment of others, dishonest communications, conflict, and other intentional and unintentional actions. Once the trust relationship is broken it is difficult to rebuild, so great care must be taken to be trustworthy at all times. Another important element is forgiveness. When someone admits a mistake and asks for forgiveness, we must be willing to move forward with the relationship, understanding that the trust element might take a while to repair.

The implementation of these skills will improve existing relationships and help build new relationships that are lasting and fulfilling. Keep in mind that none of us is perfect, so we must constantly work to build goodwill and improved relationships. Families that work together and live together are mutually dependent on both the business and the family. Good relationships will cement the successes of both. 



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