One of the many challenges in family business succession involve the creation of what I call “unnatural business partners.” Just because you and your family members are related by blood doesn’t mean you will be successful business partners, co-fiduciaries, shareholders or coworkers. Yet many ill-conceived estate plans force close relatives into business relationships that they never would enter into by choice. Stranding relatives in these unnatural business relationships is often destructive for both the business and the family.
When family members complicate their blood relationship by taking on an additional business role, they may need time and training to help them grow into that new relationship and to define boundaries and roles.
Here are a few scenarios you may have seen.
1. The successor-leader as lightning rod. If you have inherited authority greater than that of your sibling partners, be advised that when your parent passes on there may be trouble. If you become a business authority figure, any unfinished emotional business that your siblings had with your parents may come down on you. Your parent may have been viewed as an authority in the business, but your family partners may not acknowledge you as the new leader.
2. They never got along anyway. Many siblings compare themselves with each other and harbor feelings of unfairness or injustice. Being thrust into shared ownership and fiduciary responsibilities creates a higher level of involvement with each other than they really want. Thus shareholders’ or directors’ meetings are derailed, encumbered or postponed by family dynamics.
3. No one ever thought to train them. Being a skillful team of business partners or directors on your company’s board doesn’t come easily. It requires trust, respect, clear thinking, relevant knowledge and a highly developed set of listening and speaking skills. All of these are teachable, but too many business families neglect the training of the successor generation as owners. Ownership successors often don’t get a chance to develop themselves as a functioning team until the responsibilities are already on their shoulders.
The next generation of owners is set up to fail in all three of these scenarios. But when they have developmental resources the group can:
• Think more clearly together. Sometimes collectively they can even come up with better ideas than any one of them could alone.
• Eliminate, or at least manage, disruptive emotional issues.
• Develop a strong sense of loyalty for, and stewardship of, the family’s collective interests.
Developing a partnership
Good partner relationships are hard enough to develop and sustain when you have actually chosen one another as partners. However, there are things that multigenerational business families have done to develop otherwise unnatural business partners into a functional team. Creating a successful partnership involves both the development of individual leadership skills and team building.
• Create shared leadership and team development training sessions for shareholders.
• Offer individual professional assessment or executive coaching resources when called for.
• Give the shareholder group meaningful projects to complete. One family-owned construction equipment company, for example, is funding a hands-on project for the third generation. The young family members, in their late teens to mid-20s, are building a playground in a small, economically challenged Missouri town.
• Help define boundaries among different subgroups of the family and business (e.g., shareholder group, board of directors, management team, family council) with delineated norms, responsibilities, meeting times, etc.
• Develop group-vetted documents, such as a shareholder agreement, by-laws and a mission statement.
Overcoming ‘stuck’ relationships
But what can be done if a relationship is so toxic and emotionally reactive that such interventions can’t get off the ground? Sometimes two or three relatives are locked in such destructive patterns of behavior that they can barely have a civil conversation. Often these “stuck” relationships are the biggest liability facing a family and its business.
Of course, conflict is not inherently a bad thing. Conflict is inevitable when people are engaged in challenging activities like running a business. But when the conflict is continuous, hurtful, condescending and intended to “get back” at others, something must change. These chronic conflicts take on a life of their own, and they sometimes injure families and family assets.
Imagine that you are sitting comfortably in a chair. That physical posture is well suited for a number of activities—reading, conversing, taking a nap or watching TV. Now imagine that you are still in the chair, but you can move only your wrists and ankles. Suddenly, when you can’t move out of a perfectly normal posture, it becomes a profound disability. If you become stuck in any physical posture, it automatically limits what is possible for you.
The same is true with emotional states. Getting stuck in an emotional state with someone limits what is possible for the two of you. We are all most healthy when we are able to change emotional states as the situation requires.
I have searched for resources that can reduce the emotional reactivity between family members and thereby open up new possibilities for the family and the business. Two resources have been very helpful. They are the Hoffman Institute and EMDR (Eye Movement Desensitization and Reprocessing).
The Hoffman Institute, a private, non-profit organization with 13 centers around the world, offers an eight-day residential personal development program known as the Hoffman Quadrinity Process. I have referred more than 50 people to the Hoffman Institute (www.hoffmaninstitute.org); only one client felt it wasn’t right for her.
In one case, five siblings engaged me to help them address ownership issues. They shared so much negative family history they had trouble sitting at the table in our monthly meetings. Their mistrust of one another was making an intrafamily lawsuit more likely. As a last-ditch intervention I advised the family that the only way to continue our work together was for them to each attend the Hoffman Institute. Over the next nine months they all attended (in separate sessions). During family meetings in the ensuing months, the tension in the room would palpably drop after another sibling returned from the institute. The siblings were so impressed with what they accomplished at the Hoffman Institute that they sent their spouses. They also decided that their successor generation would be required to attend the institute before they could join the family board.
The other resource I am using is EMDR (www.emdr.com). It is a brief form of treatment, usually involving lateral eye movements, that was designed to reduce or eliminate the symptoms of Post Traumatic Stress Disorder (PTSD). I suspected that this process could be used to calm chronically conflicted relationships, so I approached a certified practitioner and he confirmed that indeed it can be used in this way. Chronic conflict, mistrust and anger in a close relationship can create some of the emotional and behavioral symptoms of PTSD. The process usually produces a very significant reduction in symptoms in the first session.
In one client family, two brothers owned a commercial real estate development company and had been partners for 20 years. They really cared about each other, but it was hard to tell that because of the way they yelled at each other. The professional and administrative staff had become swept into their drama.
I referred both men to an EMDR specialist. Only one went, but that was enough to reduce the emotional reactivity and bring civility to their discussions. Even the brother who declined to do EMDR was calmer.
Being a partner with someone you would not have chosen for yourself is a risk. If you are already in such a relationship—or if you anticipate that your parents’ estate plan will someday place you in one—don’t despair. There are resources available that may help make the situation better.
Joe Paul is a family business consultant at MCS Financial Advisors (www.mcsfa.com) and a member of the Aspen Family Business Group.