Conflict Resolution - Enhancing the IQ for Breaking Deadlocks - Family Business

Author: Barbara Specter (USA) / Country: Mainland China
Publisher:
Publish Date: 2006-05-01
Features: Communication is the key to successfully operating a family business. Unfortunately, even families that have recognized the importance of communication often hesitate and never truly step over the threshold of dialogue. I once worked with a family that owned a manufacturing company. At a dinner party, we discussed the future of their family business. "Everything is fine," the father said, "The only thing that bothers me is those damn property taxes." However, none of the family businesses I consult for today come solely for tax issues. Taxes may be one topic, but they are rarely the main issue. This manufacturing company has achieved tremendous growth over the past 10 years, and the entrepreneur's tax payments have been steadily rising. But unlike many business owners, this father is not averse to tax avoidance strategies: he has consulted some savvy tax experts and is considering implementing an employee stock ownership plan. So, I waited to see what he was really thinking. The next morning, during a private conversation, he finally dropped a bombshell: he believed his eldest son, who is also the only heir, was not capable of taking over his company. The son had been working in the business for 18 years. He was eagerly looking forward to taking over the company in the near future, but he had no idea his father thought he wasn’t capable. Of course, the father didn’t want to tell him. Why don’t families communicate internally? Each person harboring their own secrets is the main obstacle to internal communication in families. In this case, the father’s true intentions might have been to have no intention of retiring at all. And the son’s reluctance to confront the father and bring up the matter of inheriting the business might also have other reasons. Perhaps the son doesn’t really want to take on the leadership responsibility of the business, but he lacks the courage to voice this thought. This matter has been delayed too long, which is the second obstacle to communication. Over time, small silences can grow into mountains of guilt that people avoid at all costs, leading them to continue their silence by default. On one hand, the father might be thinking, "Years ago, I should have arranged this, but it’s been too long. It’s really embarrassing to bring this up now." On the other hand, the son might be thinking, since the father never mentions it, his eligibility to take over the company will naturally increase day by day. The third and particularly critical obstacle is that such issues are heavily emotional and almost impossible to discuss rationally. When the son has already invested 18 years of effort in the business and is counting on inheriting it, the topic of inheritance is bound to be filled with too much emotional turmoil for both father and son. The topic has become too fragile to be truly explored. If the son were to tell his father about his concerns for the future, he might hear things he doesn’t want to hear. Moreover, doing so would be too risky for the father-son relationship and the son’s future. Questions about children’s capabilities are often the most challenging tests of family communication. For a while, parents can comfortably believe that children’s capability issues are just a "maturity problem," an "attitude problem," or "influences from their friends." But by the time children reach 30, parents should know whether their descendants are capable of taking over the business. If parents are still unsure at this point, they must test their children: they should give them more responsibility and opportunities to be screened by reality. At this stage, parents must stop treating their children as their own. Children must undergo evaluations from outsiders, receiving honest and objective feedback from managers and human resources experts. The next 10 years are particularly crucial for the lives of grown children. Without good internal family communication, children may become lost in their family business, living in a fantasy of the future. When a crisis is about to arrive, as in my case, the father and son have a lot of work to do. Ten years ago, the father could have easily arranged for the son to leave the family business without causing any internal turmoil or conflict. In that case, when the father was ready to retire, he could have calmly selected a professional manager to take over the business. But it’s too late now. The son has almost no other career options. The father, due to his prolonged indecision on this matter, has delayed the son’s prospects and gradually lost his moral authority. The father understands this but feels powerless. This father must separate the issue of power within the company from the issue of preserving his son’s dignity. He must find a way to transfer the company’s power to those with leadership potential while allowing his son to maintain a sense of appropriate self-esteem. Perhaps the son could be put in charge of a smaller entity, such as a factory. Or he could be appointed as a company director, receiving a generous salary, while the company is managed by non-family professional executives. The father and son must seek a win-win solution to free themselves from this dilemma. This situation requires a great deal of communication, problem-solving patience, and mutual understanding. Tragically, such high-quality communication is often a scarce emotional resource in families, to the point where entrepreneurs fail to