Preserving a Family Business Can Happen With These Simple Tips

Follow these five tips to ensure your company will survive and thrive into the next generation

Preserving a Family Business Can Happen With These Simple Tips

Mitzi Perdue

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There’s no such thing as a family business without conflict. If you search “family business feud” on Google, in less than a second, you’ll get roughly 1.2 million hits. And that, of course, is the tiniest fraction of the number of family business disputes that show up in the Google search engines.

At their worst, a quarrel in the family business can become a threat to everything the family business holds dear, including relationships, wealth and position in the community. About 70% of family-owned businesses won’t make it to the next generation, and the biggest reason for this sad fact is family quarrels.

Since every family is going to have conflict, the fundamental question is how do you deal with these quarrels so they don’t cause lasting damage?

THE COVENANT CULTURE

An answer that has worked for many family businesses is to create a covenant culture. Do it long before it’s needed.

In a family business, this means family members agree that while they have a right to air their differences, when a decision is made, they come together. They agree to move on.

Part of a covenant culture is that everyone gets to be heard. Participants agree to listen to all sides and to value robust discussion.

Another essential element — possibly the most important — is a commitment that issues will be resolved within the group. The reason for this is that in cases where members of a family business go to the media or get into litigation to resolve a conflict, they are likely to unleash an uncontrollable chain of events that predictably will endanger the entire enterprise. By the time a family member exposes a conflict to the press or initiates litigation, there’s usually no turning back.

Since conflicts are inevitable, what can members of a family business do to commit to keeping quarrels within the family? The answer is that the business family needs to consciously work on developing a culture for resolving conflict. Culture is how we do things, and if the important work of developing a strong, supportive culture is left to chance, members of the family business may never learn key attitudes they’ll need to keep disputes from escalating.

Developing a positive family-business-friendly culture requires time together, discussions and, above all, role modeling. To prevent disputes from getting out of hand, practice these five techniques to tamp down trouble.

1. Take a moral stand that it’s wrong to move disagreements outside the family.

The experience of many thousands of family businesses shows that once a family starts down the road of a public dispute or litigation, the usual end result is the end of the family business. Positions harden, reason goes out the window, and it’s a rarity for any members of any family business to change course. The usual endpoint is either severe weakening of the business or its complete destruction. Members of business families need to know it is morally wrong to be the cause of this.

2. Let family members know this isn’t just about their wishes.

Because any public acrimony so often leads to the family company’s failing, it threatens the well-being of innocent bystanders including employees, financial partners, lenders and even the tax base of the community. Members of family businesses need to know they have a responsibility to large numbers of people beyond themselves.

3. Put relationships ahead of ego.

Members of family businesses need to know there are times when they have a choice between getting their way and having a relationship. Being a member of a family business at times means sacrifice, and for the business to continue, this can mean giving up the ego gratification of getting their way. However, in return they’ll get something of vastly greater importance — the chance for the family legacy to continue and thrive.

4. Compromise is key.

Members of a family business need to learn to listen to each other, and they need to avoid the temptation to “stand on principle.” In the context of a family business, “standing on principle” is a synonym for “being stubborn.” It means “I’m not going to listen to you.” It also tends to shut down discussion and the give-and-take that’s essential for compromise.

5. Be careful of what is said in anger. 

Angry words can be self-fulfilling, such as disparaging someone’s competence or expressing preference for one family member over another. A person may say something in momentary anger, but the person hearing what was said may remember those words for a lifetime. Garbage can come out of Pandora’s box that can’t be stuffed back in again.

THE NEXT GENERATION

Done right, the family and all its benefits will endure. Done wrong, the family business blows up. By considering and practicing these five attitudes and techniques, you can quell any family business dissent before it jeopardizes the health of the company as a whole. 



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