The Family Business – No More Advice, Please
Family businesses have become the talk of the decade. Over 90% of businesses worldwide are family businesses we are told. Only 30% of family businesses make it through the second generation. Less than 10% make it through the third. Who hasn’t heard this overused and often misquoted statistic or some other variation of it?
Family businesses underpin the economy of most nations. Some of our the largest businesses are family businesses. I struggle to think of a client in my practice that is not a family business in one way or another.
Yet family businesses are in trouble, statistics keep reminding us. Most of them are doomed to fail. They cannot handle the unique challenges that they face. They need help. And in business ‘need’ means ‘market’. And this market has been tapped with a vengeance. A simple search for ‘family business’ on Amazon reveals hundreds of books on the subject packed with well-meaning advice, ‘how to’ guides and ‘dos and don’ts’. We have MBA programmes on family businesses, family business networks, centres and institutes, family business magazines, family business seminars, family business websites and family business consultants. Accountants, lawyers, management consultants, financial advisors, academics and researchers have discovered The Family Business and are rushing to the rescue.
The problems plageuing family businesses have been conveniently sorted and categorised under different headings and a multitude of ‘products’ have been developed to treat every conceivable situation. These have been neatly packaged in various forms and include succession planning, organisational design, operational effectiveness, strategic planning, leadership and management, remuneration and conflict resolution, amongst a host of others.
So why do so many family businesses keep failing? Why don’t they take all this professional advice and just grow and prosper? Why do they wither when they should be blooming? To start with very few family businesses are prepared to accept that they have a problem. Everyone wants to be the perfect family, or at least be seen as one. A family that lives in perfect harmony, where there is little discord, where mum and dad always have time for the family, where everyone meets at the dinner table, where children are brought up to be responsible adults, where all members enjoys open and intimate communication with each other, where spouses are accepted with open arms. We all want the world to know that we are “one big, happy family”.
So how do you suddenly own up to the fact that your family business is in difficulty? Saying that your family business is in trouble is like admitting that you have problems in your family, God forbid. Not a very easy thing to do, particularly for the parents. So what usually happens is that the root of the problem is ignored and instead the focus is conveniently shifted onto the ‘business’ symptoms, the areas where the problems are commonly manifested -cash flow, financial structure, profitability, and employee motivation to name a few. Poor performance in any of the these areas is then blamed on other ‘business’ causes – lack of financing, increasing competition, inadequate accounting systems, inefficient procurement, the state of the economy. The consultants are called in, reports are drawn up, business plans are prepared, employees are replaced, and IT systems are changed.
The result? Many changes but very little change. The son is still frustrated and angry at his dad’s reluctance to let go and let him manage the business. His constant criticism and disapproval is driving him crazy. The daughter resents her brother’s attitude, hates having her ideas ignored, and cannot understand why her husband won’t be given a job in the business. The consultant said it is better not to have spouses in the business. But its not fair, after all, her sister in law was not asked to leave the business was she? Her brother cannot understand what she’s complaining about. After all she gets paid almost as much as him and she hardly does any real work in the business. Dad is sick and tired of all this bickering. Why can’t Junior appreciate that his sister has kids to take care of? Doesn’t he have any family values? How can they both be so selfish and ungrateful when dad has worked so hard and made so many sacrifices to leave them this business? Mum despises the business. Her husband is rarely ever home. Whenever she invites all the family home for lunch hardly five minutes elapse before the conversation turns to the business and an argument erupts. So they rarely ever get together outside the business these days and she really misses her grandchildren. She wishes he would just sell the damn thing.
The more I work with families in business the more I realise that family business consulting is more about ‘families’ than it is about ‘business’ and that issues are always much more complex than they seem. Problems in the business are often deeply rooted in relationship problems between family members, which are rarely apparent at the outset. There are no quick-fix solutions here. is the people relationship issues that present the toughest challenge and which need to be given the greatest attention. The management aspects – organisational design, systems policies and procedures, business planning, financing, cost reduction etc., are in my view, the ‘easy bit’. This is not to say that these areas are not important or that they do not present any difficulties. But providing advice solely on the business aspects is superficial if the relationship and emotional issues remain unaddressed.
I recently read a book entitled Keep the Family Baggage out of the Family Business, by Quentin J. Fleming, which is one of the best sellers on the subject. ‘Baggage’ is a term used by psychologists to describe ‘issues’ that people carry with them. But how in all fairness can the family baggage be kept out of the business? The family baggage is there whether you like it or not and you cannot just force it out. A business is nothing more than a group of people trying to work together toward a common goal. Forget about ‘human resources’. People are people, and people carry with them a complex cocktail of genes, experiences, values, beliefs, strengths, talents, fears, insecurities, likes and dislikes. You cannot ask people to leave their baggage outside when they enter the workplace. The baggage is part and parcel of their being, no less than their finger or toe. Good leadership means being able to bring out the best in people, helping them discover their strengths, helping them direct their passions and motivations toward the good of the business. To do this you need to get to know the people concerned. What are they really good at? What do they really want? What they may need is someone to help them sift through their baggage and sort it out, rather than make them throw it out of the window.
In a non-family business one can afford to do without all this ‘hassle’ and just opt to replace a ‘high-maintenance’ employee by another who demonstrates a more positive mental attitude and who can just get on with it. Even if this detached approach worked, and I don’t believe that it does, in a family business it is a totally different story. The employee in question may well be your father, mother, son, daughter, brother, sister, spouse or in-law, and you can’t just sack these people, can you?
So where does all this lead to? Is it all hopeless then? Certainly not, but the solution as I see it is not simply a question of advice. I have learnt to be wary of giving advice when working with family businesses. Advice is very tempting of course – the family members in the business are yearning for it, they need a solution and they need it yesterday. Advice does wonders for one’s ego too. It makes the consultant feel like the expert, the family business guru. You just want to jump in there to the rescue, dispense advice, solve everybody’s problems and exit heroically.
Unfortunately advice rarely produces the intended results. Sooner or later the advice is forgotten, the business plan is shelved, the relationship issues re-surface and the old habits kick in. The family members need to uncover the real issues and see the solutions for themselves. This is not something that can be achieved in a week. It is a process, a journey during which the door to communication is opened, fears and expectations are exposed, beliefs and assumptions are challenged, and existing mindsets are changed.