The Family Business Consulting Group welcomes Justin Craig, Ph.D. as a consultant to our team. His areas of advisory expertise include issue-selling by next-generation family members, business and family governance, and the use of strategy measurement and management tools, such as the Balanced Scorecard, in family firms.
He is also a Clinical Professor of Family Enterprises and Co-Director of the Center for Family Enterprises at Northwestern University’s Kellogg School of Management.
Justin’s research focuses on the strategy, function, management and performance of multi-generational family enterprises and those who lead and steward them. He is especially interested in the behavioral aspects of the family and, increasingly, the business family-influenced drivers of socio-economic impact. Before Kellogg, he held faculty positions at Northeastern University in Boston, Bond University in Australia (where he co-directed the globally renowned Australian Centre for Family Business) and Oregon State University.
Today he works closely with family business leaders and advisors, and has trained and presented to members of family firms from most business sectors (technology, consumer goods, manufacturing, retail and many others) and countries worldwide, including the United States, Columbia, Mexico, England, Ireland, Finland, South Africa, China, South Korea, Pakistan, India, Dubai, New Zealand and his home country Australia.
Justin completed undergraduate degrees in Business and Psychology (with Honors) at Griffith University, a Master’s degree in Counseling and a Ph.D. in Behavioral Science at Bond University.
In my last post, I shared the parallels I found between the marriage research of John Gottman, Ph.D. and how it applies to any familial relationship especially those who own/work together. Gottman dubbed the four most detrimental behaviors for a marital relationship as The Four Horsemen: criticism, defensiveness, stonewalling and contempt. (Criticism is discussed here.)
Defensiveness , says Gottman, is a way of blaming the other for the issue and blame has never solved any dispute. By accepting responsibility for at least your own part of the problem goes a long way in having a constructive discussion. Being defensive is like having a rubber wall around a person, never letting in any type of constructive feedback. The defensive person takes feedback and twists it to fling back at the person in order to protect themselves. Communication and problem solving get increasingly difficult with this person because attempts to better a situation are stalled from the beginning and the conflict escalates. Teenagers and young adults need to learn to graciously accept feedback and hone their own ability to change and grow. Defensiveness is an inherited trait.
The third part of The Four Horsemen is stonewalling: when one of the participants of a relationship withdraws from interaction. How many times do we see people go quiet and withdraw when things get difficult? How many times do people get flooded and not know how to manage the situation so they shut down? It happens a lot. People falsely believe that by not interacting in a time on conflict that there will be a better outcome than by confronting the negative, but the research shows that is not the case. It’s a death knell for a relationship.
Being able to talk with someone (or even argue in a constructive way) is better than shutting down. I have worked with more than a few families who have the culture of not “fighting.” The problem is that no one learns to manage conflict effectively. Stonewalling is a fierce form of control over the other person. There is no emotional connectedness with the person who is stonewalling because they have emotionally built an impenetrable wall around their psyche.
Finally, Gottman argues that the greatest predictor of divorce is contempt, and I argue it is the greatest issue of destructive family dynamics. Contempt displays include sarcasm, cynicism, eye-rolling, name-calling, tsk-ing, sneering and hostile humor. (There are more, and you know them when you see them). Parents don’t understand how their children can act that way towards their siblings yet they demonstrate those same behaviors to their own relatives in the firm.
Contemptible actions are made to discount the thoughts, feelings, and actions of the other in such a way as to inflict incredible damage. To ignore someone who is doing that takes Herculean strength! I have been the recipient of contempt and it is probably, to me, the absolute worst treatment anyone can do. I feel silly, angry, not valued, and completely turned off.
Imagine if that happens every day when you work someone who is related to you? I have been in situations where parents do this to children. What does that teach? The parent is keeping the child one step below, always on the lower rung. How can we prepare a child to have good relationships, have confidence to take on challenges when they are made to feel inferior? To me, contempt is akin to hatred. Who needs enemies when family members display contempt? There is NO PLACE for displays of contempt.
I am not naïve to expect that none of the above will happen in even the most loving, respectful and constructive of relationships. Sometimes emotions take over and we become our worst self – especially with those whom we trust will forgive us. But the preparation of our children is such an important task that we really need to teach them emotional skills that help with relationships. When you find yourself behaving a little subpar (and that might take some reflecting time to let the anger subside), acknowledge your actions and admit that you are not your best self sometimes.
Gottman’s final word of advice to couples is to try to have a ratio of 5:1 in positive to negative interactions (over a long span). By conceding less than stellar behavior and combating it with some positive interaction, you will mitigate the damage from the Four Horseman. We can do that with our next gen, too. Try to remember the golden ratio to keep the Four Horseman of the Relational Death at bay. Then you will have prepared your next gen well.
I was reading On Wisconsin, the alumni magazine for the University of Wisconsin, when I came across an article highlighting John Gottman, Ph.D., who graduated from Wisconsin in 1972. I knew of Gottman’s research because I used it often when teaching an undergraduate course at Wisconsin on Interpersonal Communication.
Gottman has devoted his life study to the indicators of what makes a successful marriage. I was in the process of writing an article on preparing teens and young adults for the family enterprise and I thought this is the most important aspect of preparing anyone in a familial relationship, especially those who own/work together. A constructive family relationship is key to continuance of the family firm.
While Gottman is a noted researcher on marriages, I believe his research applies to any familial relationship, especially when preparing the next generation. Parents can teach teens and college kids how to have a constructive, open relationship with family members by treating their own relatives in the business in a healthy manner. Gottman suggests that the four most detrimental behaviors for a marital relationship are criticism, defensiveness, stonewalling and contempt. In fact, his accuracy in predicting divorce (when he sees these behaviors) is at 94%!
Gottman defines criticism differently than a complaint. A complaint focuses on the specific behavior, whereas criticism focuses on the character of a person. When I teach negotiations, I tell the students to separate people from the problem; focus on what the problem is at that time. Don’t get caught up in the behaviors of the other person because that causes one to lose their most critical leverage piece: their ability to think clearly.
The same is true of familial relationships. Don’t slay the character of the other family member. Examples such as “He always needs to be in control” or “She is lazy” is a direct slam at their character. It solves no problems but instead exacerbates the downfall of the relationship. In some of my most conflicted family enterprise work, I see character slams repeatedly happen. The manner of character slamming becomes a habit and is passed down to the next generation. Children mirror these types of habits and begin to believe that this is how we treat relatives.
It never ceases to amaze me how family members in some family enterprises are able to function with relative ease while communicating and making decisions. Their ability to function this way results in uplifting family relationships along with enterprise growth and continuity. An observation about families with this level of functioning is that they have a high degree of affinity for one another – a natural liking for one another.
A high degree of affinity among family members is often not the case. This may cause family members to function with relative difficulty as they govern their family enterprise. However with deliberate effort the opportunity remains to overcome these difficulties. By family members rallying around some common purpose, they are often able to engage in rewarding family relationships along with growing and continuing their enterprise.
To begin, accept the reality that just because family members share the same genetics and grew up in the same environment, that does not necessarily result in a high degree of affinity. There is going to be diversity in beliefs, behavior, talent and interest among family members. Affinity is a natural occurrence, you cannot mandate or will it into existence. However, the following actions can help what affinity exists to express itself:
Maintain an ongoing dialogue to uncover (or discover) some level of shared purpose for working together.
Acknowledge one another’s contributions within the family and the enterprise as they are made and express gratitude for the impact they are having.
Through assessment and study, develop a basic understanding of your own and other family members’ behavioral tendencies. This understanding can lead to increased acceptance of other family members and can help you manage your own behavior as well.
Remind yourself that your family enterprise is a group of people working together. To be effective as a group there are times when self-interest must be secondary to the group’s interest.
Add structure to conversations and decision making whether they are in the realm of family, management or ownership. Both informal and ad hoc communication and decision processes can get in the way of productive interactions.
As your family and your enterprise evolve, know that evolving your governance process will contribute to rewarding relationships, growth and continuity.
And one final thought: Yes, when there is a low level of affinity productive interactions can be really difficult work. The pay-off is protection of relationships with family members you love.
Aristotle said: “The whole is greater than the sum of its parts,” a quote often used to describe families who own businesses.
Recently, a member of an extremely successful family business was thinking about the different inequalities in her family, now in its 4th generation of leadership. She explained that some family members had more money, others more education, and still others more creativity. I asked if I could share her eloquent and poetic description of her family’s circumstances if I respected her privacy by not revealing her name. She agreed that I could quote the following:
“For various reasons I’ve been contemplating the center of rose windows (stained glass works of art). The center is the still-point, the point of reference from which new ideas develop and their stories are told. If our family is a kind of rose window, our still-point would be shared values, and our unique voice. While our individual stories come with their own sizes, shapes and colors, all come with the potential to reflect beauty. And the rose window’s exquisite and ultimate grandeur may only be glimpsed when viewed as a whole, every part adding it’s particular glow/value to the still-point in the center. Even so, our values as a whole allow us to flourish, our shared values flow out from their center and we forget which pieces, by virtue of their size or shape, were ever considered ‘unequal.’ It is this we need to learn, or to remember.”
Like the famous rose window at the Cathedral in Chartres, France, this family is more than the sum of its parts. Over the last decade, her family has carefully preserved their stories by writing their history, saving precious photos, making educational videos and listening to members of the third generation tell exciting tales at their reunions. They share great pride in their family’s many achievements and much laughter at some of the things that didn’t pan out so well. Family values and often-told stories give them a collective voice, and even more importantly, their shared values make the inequalities insignificant.
We often hear from management that board meetings are “a waste of time” where directors “don’t really understand our business” and “don’t contribute much to enhancing our strategy.”
That is unfortunate.
Yet in many cases, the primary source of the problem is not poor director choices, as much as poor management preparation for board meetings.
Directors generally are sincere in their wishes to add value and make a difference for management and for the business. They also typically bring deep experience across multiple businesses and industries. So how is it that they attend board meetings without bringing significant value? There are a number of things that directors expect (or at least hope for) from management in order to help ensure that they can contribute real value.
Below is a list of considerations for management as it prepares for board meetings:
Is enough time allotted for the board meeting? (Most effective board meetings are at least a full day in length.)
Does the agenda indicate enough specificity in terms of what directors should give thought to before the meeting?
Do you allot sufficient time for strategic discussions (versus financial review, operational problems, or regulatory issues)?
Have the directors received the completed board packet information at least one full week (and preferably 10 days) in advance of the board meeting?
Is there a cover page to each section of the board packet which summarizes the key issue(s) and the key questions that management would like directors to be prepared to discuss?
Is management prepared to discuss the issues without running through slides that the directors have already read in the packet?
Directors aren’t perfect and sometimes, poor director choices are made. On the other hand, it is probable that management can step up its game in terms of equipping directors to contribute more meaningfully in board meetings!
In a family business, it is not unusual for a junior generation family employee to become stuck in a job where he is under-performing. When this happens, it can be difficult for family management leaders to talk openly with the younger family employee about the situation. Although folks working with the family employee are well aware of the situation, no corrective feedback is given.
This can be even more difficult if it is a sibling or cousin that is observed to be in a rut. Commonly, the junior generation family employee feels strongly that there are artificial limits placed on what he or she is allowed to do in the organization, perhaps because of age, experience, or unhealthy family dynamics that are playing against them. Often, nothing is said as speaking up may create tension and nobody wants to hurt loved ones.
This is not a healthy situation. For the company, the business is robbed of a family employee who could either excel and add much more value to the company, or exit and make room for a nonfamily employee who would be more successful in the position. For the junior generation family employee, being in a stuck position creates frustration as valuable life time is being spent doing something that is perceived as either not meaningful or lacking direction.
When this happens, the status quo can continue for months or even years if neither side speaks up. Once the pattern is entrenched, senior generation leaders may form judgments about the junior generation employee’s motivations and assume that they are lacking. The junior generation may form judgments about the senior generation’s typecasting and form judgments as well. Both sides begin to see each other as the problem and a decline in mutual respect sets in. A better model is needed.
If you see yourself in this situation, don’t settle for the status quo. You and your organization are much too valuable to settle for this no-win scenario.
Here are some actions you might consider:
What the “stuck” family employee can do:
What the senior leader can do:
Quit complaining about things not being the way you want them to be. It does nothing to help you.
Quit labeling the junior employee as ineffective and commit yourself to helping him or her develop into a better person and employee.
Identify a resource that can coach you to clarify and state your desired goals and roles.
Work with ownership to develop a comprehensive family employment policy that addresses an expected family work ethic and identifies career resources available.
Communicate your hopes to your supervisor or HR Director, asking what specific training or behavior changes you could make that would increase your chances of reaching your desired goals or roles.
Speak with the younger generation employee about his or her desired goals and roles, listen to what is shared and write it down. (If he or she has no future goals, request HR assistance or outside coaching as a way to help the person gain clarity.)
Create an action plan to develop the specific skills or experiences needed to reach your goals, even if it will take time (like furthering your education).
Once goals are clearly stated, work with HR or appropriate supervisors to identify behavioral, educational and experiential requirements that will be needed for the person to advance. (Request coaching for this person through HR or outside resources, if it is needed.)
Talk to senior family leaders about your hopes and what you intend to do to reach your goals, asking them for further input on what you can be doing to become more valuable to the organization.
Determine what corporate resources are available to help the junior generation employee achieve his or her stated goals, and what strings are attached (e.g. the company will pay for courses in which a B or better is earned).
Use your coach or another person to serve as a support resource to help you stay on track.
Clarify what role senior family leaders and immediate supervisors will have in providing guidance and feedback to the junior generation employee.
If you realize that your needs cannot be met inside the company, don’t be afraid to pursue your career outside of the family business. You may end up developing a stronger skill set that will allow you to reach your goals in the family business at a later time.
Affirm progress towards goals and expect setbacks, but don’t fall into the trap of labeling. Be honest in providing feedback that will help the junior generation family employee get back on track.
Senior FBCG consultant Stephanie Brun de Pontet was a recent podcast guest on Business Confidential Now with host Hanna Hasl-Kelchner.
The show explored how a family business can grow and prosper and successfully transfer from one generation to the next while at the same time avoiding blow-ups and other situations that make for really awkward family get togethers.
Interview highlights include:
The most common first generation family business challenges.
Which should come first, business or family?
Why it’s important to manage a family member’s sense of entitlement.
Distinguishing the rights and duties of family business owners who don’t work in the business from those that do.
Why pay objectivity is more important than pay parity among family working in the family business.
The quintessential family business succession challenge.
Why next generation leaders must be empowered to adjust leadership styles.
The word profit invokes thoughts of selfishness amongst some, benefit amongst others, and a necessity in family business. While the love of money may be the root of all evil, the pursuit of profit is necessary in order to sustain any ownership group’s goals. But what role should profit play in driving behaviors of business owners?
Recently, I was confronted with a discussion in which a person shared that the only goal of business should be the pursuit of profit. When this view is taken to its extreme, employees in a company end up being viewed as replaceable automatons and leadership drives towards ever increasing levels of accountability to the point that a business starts to represent a slave enterprise.
One of the most rewarding experiences of my consulting career has been to experience the many ways that families approach earning business profit as an essential goal, but not to the exclusion of other goals they may have as an ownership group. One family ownership group may choose to organize their enterprise in a way where work life balance is of primary importance, believing that the essence of humanity is not either work or play, but a balance between work and the enjoyment of life in its many forms.
Another family may view their enterprise as an entity whose financial performance is critical to achieve their philanthropic goals outside of the business. A return therefore becomes imperative not just to provide a comfortable living for owners, but to further support their efforts to impact the world in positive ways – sometimes to the benefit of the business, but often times without any spotlight to gain publicity or benefit.
One other reason many owners are concerned about profit is to sustain their ability to keep their workers employed. One of our clients shared with great pride about a long-term employee who has sent two children through medical school while working for her family business.
In all of the situations above, the owning families could choose to focus on profit to the exclusion of all other ownership goals. Instead they see profit merely as a tool to achieving something greater than themselves.
When it comes to leaving a legacy, if the legacy consists of dollars alone it is likely to be an empty legacy void of any real purpose. The lasting legacy runs far deeper than money. In fact, the families who pass on the strongest legacies rarely focus on wealth as their primary purpose, even though they may possess great wealth. Instead, they seek to create an impact on the world through their core beliefs, business practices and philanthropic efforts.
Profit is just a tool to help them complete their noble journeys.
My father, Harry Louis Schuman, passed away earlier this month. He was over 90 years old and in decent but declining health. Even at the end of his life as his circumstances became quite limited – no more driving, diminished mobility, many medical challenges – whenever asked how he was doing, his answer was always an enthusiastic: “Fantastic!”
All 10 grandchildren and step-grandchildren came to Chicago for the funeral, at very short notice, from near and far (including Berlin, Ann Arbor, Los Angeles, Massachusetts, Normal and Chicago, IL). Family, friends, colleagues and neighbors gathered for hours (actually, we gathered for seven days, the traditional shiva period of Jewish mourning), sharing stories and remembrances.
Many useful lessons were embedded in the memories that people shared. Humbly, I offer just three that stand out from this sad but grateful time. What did people most remember about their time with my father?
His discipline and commitment: One example: my dad attended 6:30 AM religious services every Thursday morning, often waking us kids in the dark to take us along and treating us to a chocolate donut afterwards before dropping us off at school. It was tough to get going so early in the morning, but provided a direct experience of what commitment to a community really means. True commitment means stretching outside what’s cozy and comfortable, and discipline requires it be done on a regular basis.
His non-judgmental presence: Many folks revealed that they had confided their troubles and challenges to my dad, privately, and he never violated their confidence. They described how he listened without judging, often without giving advice, just offering his presence and support. I have vivid memories of my dad pulling me aside as a child, sensing when something important was bothering me and offering me a chance to talk it through with him without him flooding me with instructions and advice. He trusted my ability to work out my own answer.
His goofy fun lovingplayfulness: My dad loved to leave extemporaneous, singing, voicemail messages that most of the grandkids still have saved on their phones. He gathered all the grandkids for an annual pilgrimage to Popeye’s chicken, in honor of the fried chicken from his Memphis hometown. No Parents Allowed. (See picture below, circa 2009 or so. Unfortunately my dad is not in this picture, but my stepmom can be seen at the end of the table.) My dad personally decorated the envelopes of birthday checks with multicolored exclamation marks and hearts — making the envelope as much a treasure as the birthday check inside.
This is just a bit of what we all heard, and learned about Harry Louis Schuman. Nothing brand new, or flashy, or even surprising. However, all of the modest, daily, steady, dependable and generous actions taken by my father throughout his lifetime added up to a mighty and far reaching inspiration, one that is alive and well in all of us who now aspire to make his example our own.