How can you ensure that your business reflects the character of your family? Could an internal brand be part of the solution? The defining feature of a family business is the family – whether that’s a couple, siblings, or a multi-generational dynasty. Whatever the configuration might be, if you’re going to identify as a family business, you want to be able to see yourself in it. It might sound abstract and impersonal to talk about your family as part of a brand strategy, but ultimately it’s about ensuring that your business reflects who you are. What are you like? What are you passionate about? How do you work out what is most important to you, and embed those priorities in the company? Express What Matters As the Institute for Family Business puts it, “building a compelling family business brand necessarily involves bringing the values that define the company and the family to life.” The first step is to articulate what your values are, and why they should matter to your audience. Family culture is usually unspoken, but you have to be explicit about it if you want to pass it on. That means paying attention to your internal brand – how your employees perceive the company and what they think its characteristics are. Your employees see the workings of your business every day. They know whether it is living up to the rhetoric or not. You’re relying on them to express the company through their work, whether that is in marketing, dealing with partners or suppliers, or workplace culture. They are an audience for the brand, just as much as customers are. And if you are going to be the face of a company, especially one with your name on it, you have to know that your employees see it the same way you do. Pass It Down Family businesses often pass on their brand characteristics informally from one generation to another. For example, Lego began with a woodworker called Ole Kirk Christiansen. He made wooden toys by hand, and when he first moved to machine tooling, he made himself a reminder to maintain the same high standards: he carved the words ‘only the best is good enough’ and hung it on the wall. He expected the same from his son Gotfred when he started in the workshop. When Gotfred sent a shipment of toys with two coats of paint instead of three, Ole told him to bring them back and do it properly. Then he instructed his son to carve the motto out for himself as a reminder of ‘how we do things around here’. That’s what a brand characteristic is: how we do things around here. The difference is that as a company grows and the number of employees expands, the company needs to formalise those values and find new ways to express them. A few decades later, Lego bricks had gone around the world and imitators were beginning to emerge. Gotfred, now in charge, found a new way to articulate that original lesson: “no one must be able to do this better than us”. It set a standard for what was now a diverse workforce across multiple locations, giving them something to aspire to and take pride in. Quality remains one of Lego’s brand characteristics, alongside imagination, creativity, learning, fun, and caring. It was Ole’s grandson, Kjeld Kirk, who formulated those six principles into the brand Lego operates by today. Make It Real Like many typical brand values, ‘quality’ is very generic. What makes it authentic is the way the idea is brought to life and personified by the family story. As you look at how to express your family through the business, look for those stories in your history that demonstrate the principles. Identify iconic moments that demonstrate ‘how we do things around here’, or when key lessons were learned. A story will anchor those principles in employees’ minds, becoming part of company lore. Make sure those stories are illustrative and not prescriptive. There should be enough flexibility for the business to interpret their values in new ways and adapt without losing integrity. Try to demonstrate those principles through the founding family in visible ways. Use reminders to keep those characteristics in mind – your own equivalent of carving them and hanging them on the wall. Keep running your processes and business decisions past that brand framework to make sure that you are living up to what you think is important. Developing an internal brand for a family business takes time and investment, but it can be an inspiring project. In our branding work, we’ve seen many businesses reinvigorated by the process of working out their key characteristics and embedding them in an employee brand. It can create unity, pride, and a new sense of purpose.

Family businesses are vital to the UK economy and contribute hundreds of billions to the UK’s GDP. They have unique advantages including shared values, enduring trust, and a central commitment to the long term future of the business. However, like any other business they must also consider the challenges that confront them, and for a family run business, clear and sustainable governance can sometimes be a key challenge. There are of course two types of governance relevant to a family in business – corporate governance of the business itself, and family governance. This article focuses on the corporate governance, although in many families there will be cross over between the two and many of the principles discussed below will equally be relevant to family governance. Governance is central to ensuring a family business’s long-term profitability and sustainability. In this article, we’ll look at some tips for family businesses on how to conduct themselves in a way that fosters professionalism, openness, collaboration and allows the family to develop their business in harmony with each other. When family businesses are considering their governance, I suggest that we start with three core themes: structure, communication and planning. STRUCTURE From the legal perspective the structure of a business is crucial. The directors must know of and understand their legal duties to the company, and particularly where there is a group of companies, how to balance their duties (for example, to act in the best interests of the company) when sitting on the boards of more than one company in the group. Attention must be paid to conflicts of interest, which must be managed appropriately, and the company should have appropriate constitutional documents which clearly lay out the rights and responsibilities of both the shareholders and the directors. 1. Define clear roles and responsibilities Establishing clear duties and responsibilities is one of the key components of successful governance in any business, but particularly so where a business has both family members and non-family employees and executives. People, at whatever level, need to know what is expected of them, who is supervising them and what the chain of command is. Confusion over areas of responsibility can easily breed resentment and cause longer term difficulties. Businesses need their people motivated and working together, whether shareholders with executive roles, employees or directors. Having clearly defined responsibilities encourages professionalism, accountability and transparency, which then feeds into the bigger business picture by reducing the risk of tension between those with overlapping roles and promoting organisational efficiency. Having clearly defined roles will also assist in the legal sense of a businesses’ structure – both the company and the relevant individuals will know whether they have legal directors’ duties and to which company, because their role is clearly defined and they have a good understanding of which elements of the company they are responsible for. 2. Consider the value of independence in your governance structures Independent directors or an independent advisory function such as an advisory board are both governance structures that family firms can use to their advantage. Including outside experts, with a range of specialties and experiences, ensures objective decision making as well as offering new insights and a diversity of thought. Independent directors can offer direction, question presumptions, and even sometimes mediate during contentious conversations, minimising potential conflicts and being a great resource for growth. Again, the legal structure is crucial here – any director, particularly those who are new or non-family, must be clear on the board’s powers and responsibilities, what decisions the board is empowered by the company’s articles to take and what decisions are reserved to the shareholders. Without sufficient clarity on the legal constitution of the company, mistakes can be made and disputes may arise. 3. Professionalise management and operations In some family businesses where governance has evolved over time, some thought might need to be given to the processes currently in place and how those might be strengthened or modernised to reflect the current duties of the directors, as well as the markets the business is operating in. Clear management structures, with high expectations for performance, robust decision making procedures, and fostering a meritocratic culture are all signs of a professional, results focussed environment. Family members seeking to join the family firm may wish to pursue education and experience outside the business first in order to bring in new perspectives and best practices. The business becomes more competitive, versatile, and better positioned for long-term growth by professionalising its management and operations. COMMUNICATION Promote open communication and transparency: All businesses must have effective communication, but this is particularly true of a family business. Transparency and communication are most effective when led from the top, and communication between family members as well as between family and non-family executives should be encouraged. Regular family gatherings, management reviews, and open lines of communication help to foster mutual respect and informed decision-making. Again, clear corporate documents, so that everyone is clear what decisions the board is empowered to take and what role the shareholders must play, is key in building transparency throughout the company. PLANNING FOR THE FUTURE Implement succession planning: Planning for succession is a crucial part of effective management in family businesses. The more preparation and effective management of the succession question that a company can invest in, the more likely it is to guarantee a smooth transfer, maintain continuity, and prevent potential disputes. The future leaders of the company should be prepared for the role and supported in taking it, with their skills already matched with the demands of the company. Succession planning can be complicated, but the earlier the conversations start and the more open board/family members are about their expectations and the process, the more likely the company will benefit from a smooth and well managed transition. In order to formalise processes around big decisions such as board members and succession one option is to consider a family constitution document, which can outline the goals and governing principles of the family business and serves as a compass for the family throughout generations as well as at key moments such as generational handover. A constitution can help to develop a family’s a common understanding of their collective objectives, plans for the family’s and business’s future, methods for resolving disputes, and more general decision-making procedures. Whilst often a family will wish to keep as much flexibility as possible, and not be tied down by very prescriptive rules, a family constitution can be as flexible as the family requires, whilst still assisting by formalising certain rules or processes and encouraging accountability, fairness, and transparency which can help to guard the long-term stability of the company. Family businesses are often entirely individual in the way that their governance structures and internal procedures evolve, and while of course each business’s governance systems are as unique as the business itself it is useful to think about how decisions get made, making sure the directors properly fulfil their duties to the company and that there is a clear division of responsibility and chain of command. This will stand the business in good stead for growth and any challenges that may lie ahead. About the Author - Emily Nicholson Emily is a Partner in Mishcon Private . Her practice centres on complex commercial cases and she acts for a wide range of clients including individuals, families, companies and not for profit organisations. She has experience across a range of commercial disputes and in a variety of forums, often acting for international clients in complex and multi-faceted disputes. In particular she has experience in breaches of contract, confidence and fiduciary duty, fraud claims and shareholder disputes. As a key part of her offering, Emily acts as a trusted advisor to her clients - assisting with any dispute that might arise including issues between partners (business and romantic), disputes over gifts/loans, problems involving privacy and data protection or issues with friends and family.

Anyone who has worked in a family business as a family member or as a non-family employee knows how challenging it can be when the business system and the family system collide! Without a lot of focus and an extra dose of professionalism, a lot can and typically will go wrong. Here’s a list of some of the most basic processes and systems that family-owned enterprises can operationalize to help them be as effective as possible. 1. Communicate Communicate – in fact, over-communicate. Don’t leave people guessing about what you really mean. Be precise, share your plans, visions, and expectations, and be willing to engage in constructive discussions when you disagree. Remember to communicate when things go well too and thank people for their hard work and dedication to the business and to the family. 2. Embrace Different Leadership Styles And Approaches Embrace different leadership styles and approaches. Rising generations will bring new perspectives and may not encompass the exact same leadership style as previous generations. Different does not mean ineffective! Groom rising generations to unlock their full potential by being the best versions of themselves, instead of simply trying to replicate the previous generation of leadership. 3. Create Solid Family Governance Create a solid family governance process that articulates the vision for the family and the family business, that spells out how future generations can become employed in the company and that addresses how the family and the business will operate in support of each of these systems. 4. Bring In External, Non-Family Members Be sure to bring in external, non-family members to take on key roles in the company. This external perspective will be ultra-valuable and will bring fresh and innovative thinking to the company. 5. Treat Everyone Like A Family Member Treat every single employee, family and non-family alike, as you would treat a family member. These are your most precious assets. 6. Optional Entry For The Next Generation Don’t make working in the family business an obligation for the rising generation. Give them the option and let them choose if they truly have the passion and drive to continue the family legacy. 7. Invest The Time Invest the time in articulating a clear vision for the company and communicate that vision to the rising generations. Along with the vision, be sure the family establishes its values that will be enduring for many generations to come. 8. Be Open To Change Be open to change. If your company is not changing and evolving, you won’t be prepared for the future and everyone around you, especially your competitors, will already be many steps ahead of you. Be willing to break things to see if you can put them together in new and innovative ways. Explore diversification and step out of your comfort zone, just be sure to do all of it after some good old market analysis and strategic thinking. 9. Set Boundaries Set boundaries and don’t compromise on them. Working in a family-owned enterprise makes it so easy to work all the time, which will have a negative impact on family relationships. Set up those boundaries and honour them. All of your family members will thank you for it. 10. Have Fun Have fun. One of the biggest benefits of being a part of a family business is the opportunity to work with the people that you love, especially your family members. About the Author - A founding member of Business Consulting Resources , Jean manages the human resource and organizational development activities at BCR. Jean brings over 40 years of experience to Hawaii corporations and family owned enterprises in organizational development, strategic planning and market strategies, human resources, executive coaching, team building and leadership development. Jean is an expert in workplace behaviours and in job-to-skillset matching. She regularly assists clients in employee selection, team building, training and development, motivation and incentives, internal communication structures and conflict resolution. In BCR’s family business practice, Jean plays an active role in guiding BCR’s annual family business research which BCR has been conducting since 2017. In addition, Jean leads the firm’s efforts in creating and growing the Women Leaders In Family Enterprises organization which is a non-profit organization designed for women in family businesses who are currently in leadership positions or growing into leadership positions, to navigate the challenges, biases and preconceived notions that women must still manage through, even in family owned enterprises.

Mahatma Gandhi said that “Honest differences are often a healthy sign of progress” whilst M. Scott Peck observed that “Life is a series of problems.” A more accurate statement was never made. But when it comes to solving them it’s important to realize that not all problems are created equal. All our difficulties fall somewhere on a spectrum; at one end of this spectrum we find routine problems, and, at the other end, adaptive challenges. A routine problem isn’t considered routine because it happens regularly, but because we have a routine for dealing with it – a protocol, a process, or expert on which we can depend for a reliable fix. A routine problem may be irksome and expensive, but at least we’re in familiar territory and know what to do about it. When we’re facing an adaptive challenge, on the other hand, we’re off the familiar trail in uncharted territory where there are no proven routines, protocols, solutions, or experts. To successfully negotiate an adaptive challenge we must work and learn with others to navigate the alien terrain. All the problems we face in life fall somewhere between these two distinct poles. Adaptive Challenges in the Workplace It’s easy to see these two types of problems in the workplace. If our corporate computer loses connectivity, for example, there’s a clear process for getting the problem fixed. It might be frustrating, but the problem is routine. If our corporate culture is trashing our strategy, however, we’re in highly adaptive territory, because, unlike the computer problem, there is no simple solution, no established process, and no ready expert who can solve the problem for us. Performing effectively in today’s world is increasingly difficult because the number of adaptive challenges we face is snowballing. The culprits driving this trend are well known – rampant technological, social, economic, and political upheaval, and all the unpredictable change, surging complexity, and expanding globalization that comes with it. Given this shift, it’s more important than ever to recognize the distinction between routine and adaptive issues because they each require a profoundly different problem solving approach. For a routine problem a bias for action is appropriate. We have a routine, we know what to do, so as Nike suggests, we should “just do it.” But for an adaptive challenge – where there is no clear routine, no proven process, and no ready expert who can save the day – a bias for learning is essential. Why? To navigate our way over unfamiliar ground we must roll up our cognitive sleeves and work with others to figure out the best way forward. We must orchestrate, in other words, a process of adaptive learning. The Key To Adaptive Learning The key to adaptive learning is leaning into difference – the act of seeking out and exploring conflicting ideas and views. “If people don’t engage across the divide of their differences there is no learning,” says Ron Heifetz. “People don’t learn by looking in the mirror. They learn by talking with people who have different points of view. In a sense then, conflict is really the engine of adaptive work, the engine of learning.” And a critical competence that enables our ability to learn from difference is something I refer to as conversational capacity – the ability to orchestrate open, balanced, learning-focused dialogue about tough, heated, adaptive issues. High conversational capacity transforms how we react to people with different perspectives and information because our bias for learning leads us to see them as opportunities to expand our awareness and learn, not petty nuisances to be avoided or attacked. Rather than cave in or argue when someone shares a different point of view, we get curious: “What can their perspective teach me about how I am looking at this issue?” This learning-focused orientation dramatically expands our ability to make informed choices, because, as Peter Elbow explains, “The surest way to get hold of what your present frame binds you to is to adopt the opposite frame. A person who can live with contradiction and exploit it – who can use conflicting models – can simply see and think more.” And when working in unfamiliar territory nothing is more important than the ability to see and think more. Abraham Lincoln understood this. Facing an adaptive challenge of historic proportions – a civil war and the utter failure of the American experiment – he did something unusual: he pulled into his cabinet people with political agendas that clashed not only with his own views but with each other’s. He didn’t create this hornets’ nest of conflicting perspectives because he yearned for comfortable cabinet meetings, nor did he do it because he wanted to get his way all the time. He did it because he knew a room full of contrasting points of view would help him make wiser, more informed decisions about the adaptive realities he was facing. The diversity of Lincoln’s cabinet helped him to see and think more. It’s no different in your organization. When you’re up against big decisions, conflicts, changes, and challenges, the potential for profound learning isn’t in the sameness around the table – it’s in the difference. If your team can orchestrate balanced dialogue that fosters open-minded exposure to the varied and conflicting perspectives of its members, you gain a huge advantage that is unavailable to less capable teams – the ability to think more expansively about your most pressing problems. You have a greater field of vision and clearer set of choices in an adaptive situation because, as Margaret Heffernan puts it, you have “thinking partners who aren’t echo chambers.” Adaptive Leadership Cultivating a strong bias for learning is particularly important when you’re in charge of a team. Why? Because your primary job is to create a context where people can bring their smarts to the challenges at hand. The more adaptive the predicament you’re facing the harder you should work to pull their unique perspectives into the problem solving process. In my book, Conversational Capacity, I shared the example of an executive who embodied this way of thinking. “In a hastily assembled meeting about a major problem facing the project he was leading, he explained to his team his current idea about how to address the problem, and then provided a quick overview of his thinking. He then tested his view; ‘I’d like to hear from others on this. But if you agree with me right now I don’t need to hear from you. I already know what I think. I’d like to spend the limited time we have hearing from those who don’t.’ That’s brilliant. Pressed for time, he recognizes he’s not going to expand his thinking by listening to people who agree with him, so he leans into difference by encouraging people with different data or interpretations to share how they’re looking at the issue. He’s not doing this to reach agreement, per se, but to see what their differing views might teach him about the problem so he can make wiser choices about how to address it.” But mere exposure to difference isn’t enough. Our differences only facilitate adaptive work if we have a bias for learning that is greater than our natural defensiveness to new and conflicting ideas. To truly learn from different perspectives we need the discipline – the conversational capacity – to balance candor and courage with curiosity and humility, to genuinely approach conversations with people who see the world differently as opportunities to trigger an “aha” moment – the exhilarating experience of having a blind spot in the mental map of our predicament unexpectedly illuminated. Because it enables us to think smarter, faster, and together, the adaptive learning provoked by leaning into difference is invaluable in any organization facing tough challenges (and what organization isn’t?). So let me leave you with a few questions to consider and discuss: What are the major issues facing your team and organization? What aspects of those issues are predominantly routine and which are more adaptive? When it comes to the adaptive challenges you’re up against, does your team have the appropriate bias for learning needed to do the necessary adaptive work? If not, what can you do to build their conversational capacity so they can engage these challenges in a more balanced, healthy, learning-focused way? About the Author - Known for his impactful work and his engaging delivery, Craig Weber is a sought after speaker, author, and consultant. His pioneering ideas about conversational capacity and adaptive learning are outlined in his bestselling book, Conversational Capacity: The Key To Building Successful Teams That Perform When The Pressure Is On (McGraw-Hill, 2013), his new book Influence in Action: How to Build Your Conversational Capacity, Do Meaningful Work, and Make a Powerful Difference (McGraw-Hill, 2019), and his popular Conversational Capacity eCourse. He is on a mission to help people build more healthy, engaged, and adaptive organizations.

When people leave organizations, they often cite poor workplace communication as a top reason for moving on. But in the age of the “Great Resignation,” it is far from the driving factor, according to Craig Weber, founder of The Weber Consulting Group and author of “Conversational Capacity.” Instead, he says individuals are asking more profound questions about life and job satisfaction; those answers rank higher on the “reasons to leave” list. But the exchange of information is the groundwork for nurturing the kind of environment that encourages people to stay. “Bad communication may not be the big reason they are leaving, but it is the big reason why they might stay,” Weber says. For Weber, conversational capacity is the key to attracting, retaining and engaging top talent in a way that supports good communication. “It’s the ability to engage in constructive, learning-focused dialogue about difficult subjects, in challenging circumstances, and across tough boundaries,” he said. The cost of bad communication Businesses depend on people working, and communicating effectively is key to that objective. It’s impossible to run meetings, make decisions, manage change, implement strategy, and foster creativity and innovation without good communication. “So many of these things are dependent on effective communication for it to work,” Weber says. “And yet, often people aren’t paying as much attention to that foundational aspect of it.” Poor workplace communication can also have costly consequences such as: Lower engagement and trust from staff. Frustrated employees and friction among team members. Reduced profitability and slower growth. Low job satisfaction and high turnover. What’s the solution? Increasing conversational capacity. But what is conversational capacity? Somewhere in between candour and curiosity lies conversational capacity, and it’s the core skill needed to develop good workplace communication and creating a culture people enjoy, Weber says. He defines the practice as the ability — of an individual or a team — to have an open, balanced, learning-focused dialogue about tough issues and in challenging circumstances. “The ability to communicate effectively, even in circumstances that make it difficult, is a foundational competence, and a lot of businesses and many leaders are missing it,” he says. An individual skilled at conversational capacity makes every conversation “smarter” by being a part of the discussion. That’s not to be confused with intelligence or good intentions — people with low conversational capacity can be brilliant but can be detrimental to the discussion, he added. Conversational capacity is also critical to teamwork. Those with high levels can succeed even amidst challenges, whereas trivial disagreements can quickly derail teams with low conversational capacity leading to missed deadlines, lower quality decision-making and other costly consequences. Signs your workplace suffers from poor communication A breakdown in the quality of conversation is easily observable. If any of these four signs sound familiar, it might suggest your organization has room to improve its workplace communication. 1 - No communication between team members : Weber defines these as undiscussable issues—those topics that are more likely to come up in the hallway than in a meeting. 2 - Ineffective conversations : People may be talking but not effectively or productively. 3 - Behavioural cues : Visible clues can reveal bad communication from leaders to staff. Reactions like retreating from the conversation, backing away from the table, dropping their gaze, pointing fingers, or adopting an aggressive approach are just a few signs an individual or a team is struggling. 4 - Low ROI : “The ability to have this open, balanced dialogue about inherently difficult subjects is essential if you want smart people working smart,” Weber says. “So, the question becomes how do you get access to the smarts you’re paying for, assuming you can get them in the door in the first place. 3 steps you can take today Improving your conversational capacity takes time and practice. Unfortunately, it’s often overlooked and lacking from many departmental, organizational, or leadership development plans. “Nothing lowers conversational capacity more than the presence of authority, and that is a serious problem for an executive,” he said. “The problem is that employees tend to pull away from it when you sit down. So you have to carry your authority in a way that lifts rather than lowers your team’s ability to bring their A-game.” Weber offers these three steps for improving your conversational capacity: Increasing self-awareness to recognize your defensive tendencies that can negatively influence a conversation. Adopting a mindset that prioritizes learning over emotional reactions. Developing a skill set of specific behaviours that enable productive high-stakes discussions. Prioritizing conversational capacity CEOs tend to focus on running better meetings, managing change and giving good feedback more than the baseline skill of communicating effectively, especially in difficult situations. Fostering good workplace communication is more than a consideration for understanding how to cultivate a culture people want to stay in. It is the basis for accomplishing an even deeper mission — supporting staff in personal development and having access to the full talents they bring to the table. “It doesn’t make sense to attract smart people if you can’t access their smarts through open, balanced dialogue,” says Weber. “It’s really important to get access to the smarts you’re paying for through good communication.”

I speak from experience when I say that whilst being born into and raised in and around a family business can undoubtedly be a blessing, it can also present itself as a poison chalice that can shatter the very bonds that were behind its conception. The founders of a family business will undoubtedly share hopes and dreams, have aligned ambition for its future and most likely share common vision that future generations will continue the business beyond their own life journey. But the very bonds that serve as the driving force for such enterprise can also form the foundation of huge potential risks, with so much more at stake than just the future of the business. So what happens when the next generation comes along, with their own ideas as to the direction the business should follow and the route it should take to achieve their goals? And what about when more than one member of the younger generation decide to follow in their parents' footsteps, but are not aligned with each other? In our case, my husband and his siblings were simply worlds apart in their long term visions for the third generation business as well as the levels of investment (both financial and personal) they were willing and/or able to make. These differing views and personal situations led to recurring disagreements, compounded by an inherited issue within the family whereby effective communication was painfully lacking. It is worth noting that this entire situation was practically an exact repeat of that which had arisen years before between my father in law, his father and brother (the three original founders of the business). In both situations, the outcome was a buyout of two of the parties by the third. Equally in both cases what followed was years of discord which naturally spread to the wider family and caused an immense amount of pain and heartbreak. Knowing what I know now, I deeply regret that there was never a suggestion or understanding of mediation (and maybe even some individual conflict coaching) as an opportunity for all concerned to be encouraged to take part and learn how to be open and honest with one another in a safe environment to promote far healthier working relationships that would have seen the family bonds survive the buyout. The truth is, conflicts within family businesses are not uncommon (quite the opposite in fact), and they can escalate rapidly if left unaddressed. The emotional investment in both the family unit and the business itself makes these conflicts particularly challenging, which is why it is crucial to recognise the signs of tension early on and take proactive measures to address them. It is important to remember that conflict amongst family members in business is not only distressing and difficult for each of them personally, but can (and often does) have a very negative and damaging impact on the wider team and the function of the business itself. Few businesses do not encounter issues at some time or another arising from differing views at director level, but in those without the added complication of deep family emotional ties it can be easier for those involved to work through their differences and reach mutually agreeable conclusions without the need for outside intervention. When it comes to family businesses, however, my best advice would be to seek outside support (maybe through a mediator, conflict coach, or perhaps a business coach) at the earliest possible opportunity in order to work through the challenges they are facing in an open and honest environment, which will undoubtedly set the path for more effective communication in the future and go a very long way towards securing the future success of the business for the next generation!! If you would like to know more about how mediation can help the sustainability of your family business, drop me a message to sarah@montage-mediation.co.uk

Family friction isn’t holding back the UK’s large family-run businesses according to the latest research from Investec Wealth & Investment (UK). Key Findings: Nearly 80% of large family-run businesses admit to bust-ups over entitlements and individual opinions But more than nine out of 10 say profit margins have increased in the past two years and 89% say the business keeps costs under control Around 4.8 million businesses are family-run, and they are estimated to contribute £575 billion to the UK economy Family friction is not holding back the financial success of the UK’s largest family-run businesses which are seeing strong growth in profit margins while keeping costs under control, new research with family-run businesses from wealth manager, Investec Wealth & Investment (UK), shows. The independent study with family businesses which have an average annual turnover of £7.81 million found conflicts over entitlements and individual opinions are very common. Around four out of five (79%) of the family-run businesses across a wide range of sectors say their firm has suffered from family infighting in the past five years with 35% admitting it happens a lot. Less than one in five (18%) say there has been no conflict. The bust-ups are not driven by intergenerational squabbling – around 92% questioned say there is a good or even excellent level of agreement between the different generations over how the business is run. Any family friction there is does not affect financial performance, the study shows. Around 91% say profit margins at the family business have increased in the past two years with nearly one in five (18%) saying profit margins have increased by 30% or more over the period. Financial health of family-run businesses is generally strong – around one in eight (12%) described it as excellent and 63% as good with a quarter (25%) saying the financial health of their firm is average. The study identified a strong focus on cost control – around 89% described their firm as frugal. Analysis shows around 4.8 million UK businesses are family-run – around 86% of all private sector businesses – and they employ up to 13.9 million people while contributing £575 billion to the UK economy. More than four out of five (83%) say the cost structure of their business is tight with 22% even describing it as extremely tight. However nearly half (49%) admit debt levels at their firm are high or very high. However the study found that the country’s largest family-run business generally believe they are good or excellent at retaining talent within the business. Around 19% described their firm as excellent at talent retention while 70% said they were good and 11% said talent retention at their firm was average. Marc Wright, Head of Entrepreneurs, Private Office, at Investec Wealth & Investment (UK), said: “Family-run businesses make a huge contribution to the UK economy and are a vital part of their local communities, so it is encouraging to find they are in strong financial health with profits rising and a strong focus on cost control." “Inevitably there will be disputes and disagreements among families and that applies very much to family-run businesses. Money can often be one of the most contentious topics even for close knit families, with inheritance a common cause for friction." "For family run businesses the focus is widened – this is not just about money, now, it is the ongoing direction of the business and thus the future of not only family wealth, but the well-being of employees so can be incredibly emotive." “It is important that families have trusted advisers around them who can take an objective, independent view of finances, ownership and business strategy so as to help their businesses continue to flourish.”

Family businesses are often seen as the epitome of unity, shared values, and long-term success. However, beneath the surface lies a complex web of relationships and emotions that can be challenging to manage. When sensitive topics—often considered taboo—are ignored, they can become significant barriers to growth, innovation, and the long-term success of the business. I will explore some key steps to addressing these uncomfortable topics in your family business. The Importance Of Addressing Taboo Topics In every family business, there are topics that are rarely discussed, often due to fear of conflict or upsetting the delicate balance of family dynamics. These topics may include succession planning, compensation, or conflicts between family members. Ignoring these issues can lead to misunderstandings, resentment, and even the eventual breakdown of both the business and family relationships. Addressing these topics is not only crucial for the health of the business but also for the well-being of the family members involved. By confronting these issues head-on, families can create a culture of transparency, trust, and mutual respect. This proactive approach can lead to better decision-making, improved relationships, and a stronger, more resilient and thriving family business. Acknowledging The Elephant In The Room The first step in addressing sensitive topics is to acknowledge their existence. This requires courage and a willingness to face uncomfortable truths. Whether it’s the future leadership of the business, the fairness of compensation, or unresolved conflicts, these issues need to be brought to the forefront. By acknowledging the “elephant in the room,” family members can begin to have open and honest discussions. This transparency is the foundation for resolving issues and moving forward together. It’s important to remember that these conversations, while difficult, are necessary for the long-term health of the business and the family. Fostering A Culture Of Trust And Psychological Safety One of the most critical aspects of addressing these topics is creating an environment of trust and psychological safety. Family members must feel confident that they can express their thoughts and feelings without fear of judgment or retaliation. This sense of safety is essential for open and honest communication. To build this culture, it is important to actively listen to each family member’s perspective, validate their feelings, and ensure that everyone’s voice is heard. Encouraging diverse viewpoints and fostering a spirit of collaboration can help create a more inclusive environment where sensitive topics can be discussed openly. Strategies to build trust can include regular family meetings to discuss both business and personal matters. This helps to normalise difficult conversations and ensures that issues are addressed before they escalate. Show genuine interest in each family member’s opinions and concerns. This builds mutual respect and trust and be open about decisions and the reasons behind them. This transparency helps to prevent misunderstandings and builds confidence in the decision-making process. The Role Of Professional Mediation And Facilitation When sensitive or challenging topics ignite strong emotions or entrenched positions, it may be beneficial to seek the help of a professional mediator or family business advisor. A neutral third party can provide an objective perspective, help family members work through complex family dynamics, and ensure that conversations remain productive. Experienced family business advisors can also help to diffuse tensions, bridge gaps between differing opinions, and facilitate agreements that are acceptable to all parties involved. Their expertise in handling sensitive topics can be invaluable in maintaining the harmony and effectiveness of the family and the family business. By bringing in an expert, your family business can really benefit from a neutral perspective, as they will offer an unbiased view, helping to balance the interests of all family members. They are experienced in managing conflict and can help prevent disputes from escalating and can guide discussions towards finding mutually beneficial solutions. Establishing Clear Communication Channels Clear and consistent communication is essential for addressing challenging topics in a family business. By establishing formal communication channels, families can ensure that sensitive issues are discussed in a structured and respectful manner. Regular family meetings, retreats, or one-on-one discussions can provide dedicated spaces for these conversations. It’s important to create an agenda that allows for open dialogue, active listening, and the freedom to express concerns without fear of retribution. Set a schedule for regular family meetings, consider spending time outside of the business to focus on strategic planning and relationship building and encourage individual conversations between family members to address personal concerns privately. Embracing Continuous Improvement Addressing challenging topics is not a one-time event but an ongoing process. Families should adopt a mindset of continuous improvement, regularly revisiting and reassessing the issues that need attention. This approach ensures that the family business remains agile and responsive to changing circumstances. By consistently fostering an environment of trust, open-mindedness, and compassion, family businesses can strengthen their resilience and ability to navigate future challenges. Celebrating milestones achieved through open conversation can also reinforce the importance of this ongoing commitment to improvement. Using Uncomfortable Conversations For Transformation Uncomfortable conversations, when handled with bravery and compassion, can become powerful catalysts for transformation within a family business. By addressing taboo topics, families can unlock new opportunities for growth, innovation, and strengthened relationships. These conversations help to break down barriers, foster a deeper understanding of each other’s perspectives, and ultimately create a more unified and resilient family and family business. The potential for transformation lies not only in resolving specific issues but also in the process of building a culture that values open dialogue and continuous improvement. In the complex world of family business, addressing uncomfortable or challenging topics is essential for long-term success. By acknowledging these issues, fostering a culture of trust and safety, seeking professional advice when needed, establishing clear communication channels, and embracing continuous improvement, families can manage these challenges effectively. The result is a family business that is not only resilient but one that thrives.

Family businesses often stand out for their unique blend of personal relationships and professional ambitions. While this dynamic can create a strong foundation of trust and commitment, it can also lead to conflicts that threaten both family harmony and business success. The key to navigating these challenges lies in effective conflict resolution strategies that turn potential stumbling blocks into opportunities for growth and improvement. Common Sources of Conflict in Family Businesses Understanding the root causes of conflicts is the first step in resolving them. Familiar sources of tension in family businesses include: 1. Role Ambiguity : Unclear job roles and responsibilities can lead to misunderstandings and power struggles. 2.  Generational Differences : Conflicts often arise between older and younger family members over differing visions for the business. 3. Financial Disputes : Disagreements about compensation, profit distribution, and reinvestment strategies can strain relationships. 4.  Emotional Ties : Personal issues, rivalries, and unspoken resentments can spill over into the workplace. 5. Succession Planning : Tensions frequently emerge during discussions about who will lead the business in the future. Strategies for Effective Conflict Resolution Addressing conflicts constructively requires proactive strategies prioritising communication, fairness, and the well-being of the family and the business. Here are some actionable steps: 1. Establish Clear Boundaries Define roles and responsibilities to minimise overlap and confusion. Separate personal and professional relationships to reduce emotional spill over. 2. Create Open Communication Channels Encourage regular, transparent conversations about goals, expectations, and concerns. Use structured meetings to discuss business matters, keeping personal issues out of professional discussions. 3. Develop a Family Constitution Draft a formal document outlining the family's values, mission, and vision for the business. Include guidelines for decision-making, conflict resolution, and succession planning. 4. Leverage Third-Party Mediators To navigate sensitive issues, engage neutral facilitators, such as business consultants or mediators. External perspectives can provide impartial insights and help de-escalate tensions. 5. Implement Conflict Resolution Training Provide family members and employees with training on negotiation and conflict management. Equip everyone with the skills to handle disagreements constructively. 6. Focus on the Bigger Picture Remind everyone of the shared goals and the importance of preserving both the family's relationships and the business's success. Prioritise long-term sustainability over short-term wins in disputes. Turning Conflict Into Opportunity While conflicts can be disruptive, they also present opportunities for growth, innovation, and stronger relationships. Here's how family businesses can transform challenges into positive outcomes: 1. Foster Innovation : Disagreements about the direction of the business can lead to creative solutions and new ideas when approached collaboratively. 2. Strengthen Relationships : Resolving conflicts transparently and reasonably can build trust and deepen familial bonds. 3. Enhance Business Resilience : Overcoming challenges together equips the family and business with the tools to handle future obstacles more effectively. Real-Life Examples Many successful family businesses have turned the conflict into a catalyst for growth. For instance, a multi-generational business might use a generational disagreement as an opportunity to blend traditional practices with modern innovations, creating a unique competitive edge. Client Case Study: A Catering Company Clarifies Leadership Roles A family-owned catering company struggled with decision-making because multiple family members tried to lead simultaneously. This led to confusion, missed opportunities, and interpersonal tensions. Resolution: The family engaged advisers to assess each member's strengths and weaknesses. This helped them create a clear organisational chart and assign specific roles and responsibilities. Defining leadership positions and formalising decision-making processes significantly improved efficiency and morale. Conflicts in family businesses are inevitable, but they don't have to be destructive. By addressing issues proactively, fostering open communication, and focusing on shared goals, families can turn conflicts into opportunities for improvement. With the right strategies, these businesses can achieve professional success and lasting familial harmony, creating a legacy that stands the test of time. About the Author - Kim Adele-Randall is a Business Growth Consultant helping to unlock growth, drive transformation and empower businesses to scale and succeed. Find out more here

In family businesses, trust isn’t just a virtue—it’s the cornerstone of success. While strategy, financial discipline, and innovation all play critical roles, it is trust—deep, often unspoken—that underpins the resilience, cohesion, and longevity of family-run enterprises. Unlike corporate environments where contracts, formal hierarchies and performance metrics define relationships, family businesses often operate within a more informal framework. Decisions are influenced not just by balance sheets but by bonds of loyalty, mutual respect, and shared history. In this context, trust becomes both the glue that holds everything together and the engine that propels the business forward. Trust As A Foundational Asset Family businesses are inherently complex. They blend personal and professional relationships, often across multiple generations. In such a setting, trust operates on multiple levels: Between generations – where experience must be valued and the future respected. Between siblings or cousins – where equality, fairness and capability are constantly negotiated. Between family and non-family employees – where trust must extend beyond the inner circle to inspire loyalty throughout the organisation. When trust is high, decision-making becomes smoother, succession planning more transparent, and conflicts more manageable. The business can focus on growth and innovation rather than internal politics and doubt. Conversely, when trust breaks down—through favouritism, secrecy, or unresolved disputes—the damage is often far greater than in non-family businesses. The effects can be both personal and financial, tearing at the fabric of the company and the family itself. The Role Of Transparency And Communication Trust thrives on open, honest communication. Yet in many family businesses, difficult conversations are delayed or avoided altogether in the name of harmony. This can be particularly dangerous during times of transition—such as succession, restructuring, or generational change. Families that prioritise transparent communication often establish formal mechanisms to manage sensitive issues. These may include: Family councils to discuss business matters in a structured, neutral environment. Family constitutions that outline values, roles, and expectations. Clear governance structures, including advisory boards or independent directors. Such practices help ensure that trust isn’t based on assumptions or sentiment, but on accountability and shared understanding. Trust And Leadership In a family business, leadership is not always earned through external credentials. Often, it is built over time through the demonstration of integrity, competence, and commitment. Older generations must trust that younger family members are ready and capable of leading. Younger generations, in turn, must trust that their elders will allow space for growth, evolution, and innovation. This balance is delicate, and without mutual respect, it can quickly deteriorate into micromanagement or disengagement. Trust is also essential when delegating authority. Family founders, in particular, can struggle to relinquish control, especially if their identity is closely tied to the business. However, by learning to trust others—whether children, siblings, or professional managers—they allow the enterprise to evolve and adapt, rather than remain stagnant or overly dependent on a single figure. Trust Beyond The Family A family business cannot thrive on internal trust alone. It must earn and maintain the trust of employees, customers, suppliers, and the broader community. Employees, especially non-family members, need to believe that promotions and decisions are based on merit, not bloodlines. If they feel sidelined or undervalued, talent attrition can undermine growth and stability. This is why many successful family businesses go to great lengths to build inclusive cultures where everyone feels their contribution matters. Customers, too, respond to trust. Family businesses often trade on their reputations for quality, personal service, and consistency—values that are cultivated over generations. Once lost, that trust is difficult to regain. When Trust Is Tested Even in the healthiest family businesses, trust will occasionally be tested—whether through financial pressures, personal conflicts, or changes in vision. What separates resilient firms from failing ones is their ability to confront these issues head-on. Disputes are inevitable. But when handled with empathy, transparency, and a commitment to the long-term wellbeing of both family and business, they can be overcome. Many families engage mediators, counsellors or external advisors to help navigate difficult terrain, recognising that sometimes an outside perspective is essential to restoring trust. Building A Culture Of Trust Ultimately, trust in a family business is not something that happens automatically. It must be cultivated—through shared experiences, clear communication, fairness, and consistency. It requires humility, patience, and sometimes the willingness to put the greater good ahead of individual interest. The strongest family businesses are those that recognise trust not as a soft or sentimental value, but as a strategic asset. It enables long-term thinking, binds generations together, and allows the business to operate with confidence, even in uncertain times. In the fast-moving world of commerce, trust may seem like an old-fashioned idea. But in family businesses, it remains the quiet force behind lasting success. More than capital, more than contacts, and more than contracts—it is trust that gives family enterprises their true competitive edge. When families trust one another—and are trusted by those they serve—they create businesses that are not only profitable, but purposeful. Businesses that endure, generation after generation.

An Employee Ownership trust ('EOT') is a special form of trust that holds shares in a company on behalf of its employees. It facilitates employee-ownership of a business, and the framework was introduced in 2014 as part of a government policy in support of this ownership model. Robert Davies from Foot Anstey LLP explains more. The government consulted in autumn 2023 on a number of potential changes to the operation of EOTs, but have yet to present the results of that review. The more notable proposals are covered in this note. The key benefits of an EOT are: Employees can indirectly buy shares from the owners without using their own funds, providing a succession opportunity where there is no obvious third-party purchaser. There is no capital gains tax or inheritance tax payable on qualifying disposals of shares to an EOT. Employees can be paid income tax free bonuses of up to £3,600 (these remain subject to national insurance). How Is It Different To An Employee Benefit Trust (EBT)? An EOT is a specific type of EBT. An EBT is a trust that holds company shares on behalf of a class of beneficiaries. EBTs are commonly used to acquire and hold shares that will be issued under employee share schemes, provide an internal market for shareholders in an unquoted company, or one of several other common purposes. An EOT has tighter requirements and a more specific purpose. How does an EOT work and what criteria must be met? An EOT is established in the following way: A trust is set up with a company as the trustee. The owner will sell their shares to the trustee company (at an external valuation) in return for a debt owed to the owners from the trustee company. The debt will be repaid to the owners out of future profits of the business (that are paid up to the corporate trustee), or in some circumstances using third party financing obtained by the business. In order to qualify for the tax advantages, the following criteria must be met: Trading : The company must be a 'trading' company Control : The trustee must hold more than 50% of the share capital and voting rights in the company and be entitled to more than 50% of the profits available for distribution and assets on a winding up. All employees : The shares must be applied for the benefit of all eligible employees on the same terms (see Equality). Certain employees are excluded – broadly anyone who already holds or has held more than 5% of the shares in the company (or is a close family member of such a person). Equality : Differentiation from the 'same terms' is permitted only on the following bases: remuneration level, length of service and hours worked. Staff can be excluded for the first 12 months of service only. What Are The Advantages For The Current Owners? An EOT can provide a mechanism to transfer ownership to employees if this is a motivation for personal reasons for an owner, or because there is a limited market for a third-party sale. No capital gains tax is payable on a qualifying sale of shares to an EOT (this does not apply to corporate shareholders). This provides a tax saving of up to 20% of the tax that may otherwise arise on the gain. The disposal is treated as a no gain/no loss disposal for capital gains tax, so if the company is sold by the EOT in the future the deferred gain would crystallise. The owners do not need to sell all of their shares and can continue to hold their position as directors of the business. There is no IHT payable on the transfer to the trust, or on an ongoing basis within the trust. If a business is currently operated in partnership, this can be incorporated in order prior to sale to meet the necessary criteria. What Are The Benefits For The Company And Its Employees? The goals of the business are aligned with the employees and the model has been shown to increase employee retention and drive business growth. The company can still issue share awards under existing or new plans. The EOT can pay employees bonuses of up to £3,600 per year, free of income tax (these remain subject to national insurance). The company can take a corporation tax deduction for these bonuses. What Are The Drawbacks And Restrictions Associated With EOTs? As the sale price of the business is more commonly paid out of future profits, owners will receive their payment over a longer period than is usual with a third-party sale. As a result, there is a risk that if the business does not continue to perform the full sale price may not be received. If any of the qualifying conditions cease to be met in the tax year of disposal or the following tax year, the capital gains tax advantage will be removed. How Might The Rules Change In The Future? Given their increasing popularity, it is unlikely that we will see any meaningful change in the legislation surrounding EOTs, particularly with the Labour Party vocally in favour of employee ownership as a concept. However, there are some proposals that the government could enact following a period of consultation that ended some time ago. These are intended to prevent what HMRC sees as potential abuses of the current rules. The main points of interest are as follows: Former owners or connected persons would be prohibited from taking control of the company by controlling the EOT board. To require that the trustees must be UK residents. To require increased employee representation on the board of trustees. To allow for tax free bonuses to be awarded to employees without including directors. It is the UK residency that may have the most widespread impact, particularly given that having offshore trustees can be commonplace, in the hope of ensuring that in the event that the company is sold by the trustees in the future, such a sale would not give rise to a UK capital gains tax charge for the trustees. About the Author - Robert Davies is a Managing Associate at Foot Anstey LLP. If you would like to discuss your own situation or that of a client, and   the suitability of an EOT as compared to other options , please get in touch with Robert  to discuss further.

For family businesses, passing wealth and control to the next generation can be both a strategic and an emotional journey. However, evolving tax legislation is putting increasing pressure on these transitions especially in light of upcoming changes to Business Property Relief (BPR) and rising tax burdens such as National Insurance increases. These developments are prompting many families to reassess their business structures and succession planning. In this article, we will explore the key tax and non-tax considerations, outline practical steps to take now, and offer guidance on how to future-proof your family business before it is too late. Understanding the changes to BPR BPR currently provides up to 100% IHT relief on the value of qualifying business assets passed on during lifetime or upon death. However, with effect from 6 April 2026, a £1million cap will apply to the 100% relief marking a significant departure from the current rules. It is important, now more than ever, to review the availability of BPR if you have a trading business. Key considerations include looking at whether the business: Holds significant non-trading assets, such as investment properties or excess cash not actively used in the business. Has mixed trading and investment activities, such as a property development company that also holds a portfolio of rental properties within the same business or company group. Along with the existing criteria for BPR and the new £1million limit, individuals with family business interests will now be more exposed to an IHT tax charge on death where previously this was fully covered by the BPR relief. Non-tax considerations in succession planning A business structure which is tax efficient can still fail if attention is not given to involving the right people, and without appropriate governance. For succession planning to be a success, it must also address: Family governance structures - Set up formal governance structures such as a family board, shareholders agreement to define roles, responsibilities, voting rights, and participation rules. Communication and transparenc y - Regular family meetings can help share business intentions and explain the rationale behind decisions which can include things like equity, roles, and compensation structures. Through having open lines of communication and maintaining transparency, the potential for resentment or misunderstandings in the future can be reduced. Involving an independent trusted adviser can also help with internal dispute resolution and can prevent disagreements or be the ‘voice of reason’ providing unbiased contributions. Leadership development - Identify and mentor the next generation of leaders early. Develop succession plans, encourage internal and external work experience to support training on understanding and running the business. Practical steps family businesses should be taking 1. Review eligibility for BPR under the new rules Conduct a full review of business operations, asset holdings, and ownership structures to determine if the business meets the “wholly or mainly trading” (i.e., at least 50% trading activity). Assess non-trading elements such as: Excess cash not used for working capital or not earmarked for specific business purposes. Investment properties or securities. Loans made to and from the business. Obtaining a valuation of the business and your shareholding will also be helpful in determining the potential IHT exposure. 2. Consider restructuring the business Use group structures (e.g. holding company and subsidiary) to ringfence trading and non-trading activities. Transfer investment assets to a separate holding company to avoid tainting the trading business and losing BPR altogether. This may be suitable in circumstances where the ‘50% wholly or mainly test’ is not met. Ensure the business operates as an active trade and avoid passive income investments that may disqualify the business from BPR. 3. Review and update your will and LPA Review your will to ensure it reflects the current business structure and ownership as well as being tax efficient. Include provisions for business continuity, such as cross-option agreements and trustee appointments. Changes in legislation can sometimes lead to unintended consequences which could mean your will no longer aligns with your wishes. Consider putting an LPA in place to ensure your business affairs can continue to be managed in the event you lose capacity. If you decide to implement an LPA, ensure that your partnership/shareholder agreements, and articles of association allow actions to be carried out under an LPA. 4. Create a succession roadmap Define a clear timeline for transferring leadership and ownership, ideally over several years. Define ownership versus management roles. These do not have to be the same people. For example, younger family members may inherit shares without immediately stepping into management roles. Consider appointing external advisors or non-executive directors to support the next generation with independent guidance. 5. Make use of lifetime gifting strategies Transfer of shares or business interests to individuals would be potentially exempt transfers for IHT which means no IHT is payable if the donor survives seven years. Use the capital annual exempt allowance (£3,000 per donor per year) and regular gifts from surplus income rules to pass on value tax-efficiently to the gift recipient. Structure gifts with growth shares or freezer shares to cap current values and pass future growth to the next generation. Consider the use of trusts and family companies to keep control and asset protection within the family and protection from IHT. 6. Involve and educate the next generation Provide financial literacy education and business mentoring to younger family members. Let them take part in board meetings, strategic planning, or lead small projects to build capability and experience. Consider shadow boards for the next generation to provide a platform for their voice and ideas without immediately handing over control. What family businesses need to do now With HMRC’s strict review on the application of BPR and an ever-changing tax landscape, family businesses must: Act sooner rather than later : Waiting until a triggering event (death, illness, or dispute) often leads to rushed and costly decisions. Engage with professional advisors : Tax advisers, solicitors, accountants, and family business consultants should all work together to create a well-balanced and tax efficient plan. Address both tax and family dynamics : A tax efficient structure that creates resentment or legal challenges within the family will ultimately fail. Treat succession as a journey : This journey should ideally begin before any transfer of control or ownership and requires commitment, patience and planning. Family businesses are viewed as legacies. Without careful planning, both tax liabilities and family tensions can unravel decades and generations of hard work. With new limitations on BPR, it has never been more important to reassess your structure, engage the next generation, and implement a succession plan that balances tax efficiency with family harmony. A key part of this process is starting conversations with younger family members as early as possible and continuing them regularly to understand when and how they wish to be involved. Equally important is recognising how their individual talents and aspirations may shape their contribution (or lack thereof) to the business in a way that respects both their goals and the legacy of the business.