Resolving Family Business Problems—Part 2

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This topic is so vast that I split it into two blogs—this one focuses on solutions to the challenges faced by family businesses, while the first one pointed out those issues.

All families have their own ways to communicate with each other (or not), but the behaviors that might work around the dinner table don’t necessarily translate into the workplace. As a matter of fact, without some form of behavior modification, family businesses can quickly find themselves in peril.

At the root of the solution to overcoming the issues I pointed out in the previous blog is communication. Yes, it’s not rocket science; you may be amazed at what happens when open and honest dialogue takes place and everyone knows “the score.”

Every family business should incorporate the following two practices into its operating procedures:

  • Regular communication. This sounds like a no-brainer, but it’s surprising how many times family members feel out of the loop with respect to what’s going on in the business. Communication can occur through formal family councils and meetings, where the agenda is business-focused, as well as through informal channels like family retreats, dinners and vacations, where business and non-business topics are discussed.
  • Regular education. Never assume that family members have the requisite skills in effective communication, conflict resolution, listening, negotiation, assertiveness and other areas that are crucial to business success. Provide ongoing training to ensure that all family members have the knowledge they need to add value to the business and do their jobs well.

When conflict does occur—as it invariably will—it’s important to separate the person from the problem. This is true when resolving a conflict with anyone, but it’s especially critical when dealing with a family member. Attack the problem rather than the individual and focus on your interests rather than your position; make your interests known, but also understand those of the other person…and make it your goal to create a win-win situation based on mutual gain.

When you’re faced with simple conflicts, those occurring in the “here and now,” you can often resolve them quickly and move on. More complicated conflicts—those that have a lot of history behind them and are more likely to revolve around family issues—need to be approached in a more structured manner, and this is where rules of governance can come into play.

You’ll find there will be fewer opportunities for conflict if you’ve clearly spelled out business “rules” such as:

  • Entrance requirements
  • Paths to promotion
  • Salary schedules

These rules of governance provide you with documentation to back up your positions and they also promote a sense of fairness, something that’s especially important to the non-family members of the business. Above all, you must treat family members like any other employee, with one major exception: it might be to your benefit to find another way to compensate—such as leaving an inheritance—family members who need to stay home because they’re non-functional at the business.

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