Questions Answered From Mastering Family Business Paradox Webinar

The following questions were asked during the recent Family Business Consulting Group webinar, Mastering Family Business Paradox.  Amy Schuman and John Ward were the presenters of this program.  CD’s and On-Demand Playback of this program are available at this link.  Mastering Family Business Paradox

 

Q. The polarity map is a nice academic model to frame the paradox. Are there practical tools that can allow family members to display the courage to be vulnerable about their fears and needs?

A. The Polarity Map™ (originated by Dr. Barry Johnson of Polarity Management Associates) is actually very simple, practical and safe – give it a try! In our book we give a step-by-step guide to completing the Polarity Map™ – hopefully, once you read it you’ll see it’s quite straightforward.

But you’re absolutely correct that, much of the time, the issues that need to be mapped can be quite emotional. It takes some courage to approach the ‘map making’. However – and I’ve been working with these maps for over a decade, so I am drawing on years of experience here – the maps provide a neutral and objective framework that maximize the success of the conversations. They really work!

One quick example – take the paradox of ‘harvest and invest’. Folks often have strong opinions here. Many times, those in the business want to preserve capital for the business, those out of the business are eager for a tangible, timely, return. How to talk about this calmly, and not open up a wide gap between the two groups?

Get the entire group in the room, and fill out the map together. Take the minority position first. Let them describe 4 upsides of their pole. Then, ask them to describe 4 downsides when their pole is ‘overemphasized to the exclusion of the other side.’ Then, switch, and let the majority group fill in upsides and downsides. This could be the very first time that each side has been fully heard by the other. That alone can be a major accomplishment.

Some keys to doing this successfully when emotions run high:

1. Let the minority group – the less powerful group – the group with fewer numbers and less opportunities to express themselves – be heard first. They often have years of being ignored or dismissed, and this will need to be overcome in order for both sides of the paradox to come to the fore.
2. Ensure that all views are fully heard, without interruption or judgment.
3. Start with the recognition that both poles are essential and both will be sought.
4. Recognize historical preferences for one pole – and be prepared to balance those out without over-correcting.

These are just first thoughts – more ideas can be found in our book or at Dr. Barry Johnson’s website, polaritymanagementassociates.com. Or, we can continue discussing the Polarity Map™, here, in this blog!

Q. What does the “agency problem” mean?

A. An agency problem exists when management and stockholders have conflicting ideas on how the company should be run.

Publicly owned companies can have an ‘agency problem’ because the shareholders and management are different parties.  Management is drawn to being an ‘agent’ for themselves – if a conflict arises between them and shareholders, management might be tempted to act on their own behalf rather than on behalf of shareholders.

In family enterprise, this problem disappears to a large extent, because management and shareholders are (largely) one and the same group. As the two groups draw apart, the agency problem can resurface.

Q. In my personal experience from family businesses (2nd and 3rd generation) there is a strong history of placing family first.  Currently some siblings work in the business and others not, so it seems it is now family first and family members working in the family business first and others second what is your experience?

A. Yes, in our book we hypothesize that a second generation will tend to place family first, so we understand!

It’s not uncommon that the world looks very different to family members working in the business, and those not working in the business.  In our book, we take a stab at listing the areas where these two groups will tend to see things differently. For example, in terms of the paradox of privacy/transparency, it is common that those working in the business tend to favor privacy  and those not working in the business seek more transparency.   Or, in the paradox of invest/harvest, we tend to see those working in the business favoring investing and those not working in the business favoring harvesting.

Introducing the concept of paradox could give you a great excuse to start an open conversation about what’s going on in your family. Start with the basic paradox of ‘family first/business first’. Take out a blank Polarity Map™ and fill it out together as a family.  The dialogue that you have will be a great first step towards building more mutual understanding – and possibly making some helpful changes in how you are approaching these issues right now.

Let us know if this is helpful!

Q. How do differences in personalities of the leadership affect the paradox dilemma? And of course do gender differences between family members have any impact on family paradox’s?

A. Interesting question. A leader’s personality can certainly lead him or her to overemphasize one half of a paradox. For example, a highly facilitative leader may be blind to the need for directive leadership. Or, a very transparent leader, who highly values open communication, may miss the necessity of privacy and discrete communication.

In our book, we do talk about cultures that are more conducive to paradox management. We believe that curious cultures are more conducive to managing paradox than are judgmental cultures. In the same way, we might say that leaders who are more curious – that is, open to new perspectives and eager to explore them – will be better at managing paradoxes than leaders who are more judgmental – that is, closed to new perspectives and more black and white in their thinking.

Finally, on the gender question, it is hard to make a blanket statement. A gross generalization might say that women tend to be more family first, and men more business first, in their approaches. You might think, based on research in different communication styles between men and women, that women would tend to prefer openness while men would prefer discretion,  or that women would tend to be more inclusive and men more exclusive. Although it is dangerous to make blanket statements in this regard, I do believe that within families, there can easily arise consistent gender differences generations that persist over time. Females and males can harden into ‘camps’ that ardently defend their position year after year, each representing one side of a paradox. In these cases, using the paradox framework (and the Polarity Map™) to surface and openly discuss these dynamics, would be a very powerful approach.

Q. I wonder if the inclusive/selective would also apply to spouses vs. blood lineal descendants?

A. Thanks for this good question, – which we did discuss on the webinar. The issue of spouse inclusion is a big one for families in business together. People tend to have very strong opinions on this matter — expressed in the extreme:

“It’s unthinkable for us to allow in-laws to work and/or to become owners in the business”
…or…
“How could we even imagine excluding in-laws from employment or ownership in our business?”  

Like so many things, neither of these approaches is the one ‘right’ answer – families can make either approach work well – and unfortunately, either approach has the potential for disaster.

Interestingly, there are several specific decisions here that are NOT paradoxes, they are problems to be solved. Two simple examples: – will our policies include in-laws as shareholders? Yes or no? Will our policies include in-laws as employees? Yes or no? These are problems to be solved – not paradoxes to manage.

However – along with the need to make clear decisions come some important paradoxes to manage. No matter what policy is selected, the paradox of inclusive/selective needs to be managed.

So – if the decision is made to exclude spouses from employment in the business, extra efforts and opportunities should be sought to include them in other meaningful ways, for example in the family’s philanthropy or in the preparation of the next generation.

If the decision is made to include spouses in employment, extra emphasis upon exclusivity might be necessary. For example, if this policy results in quite a few family members working in the business, extra attention to family performance appraisals and clear processes for promotion will be especially important.

This dynamic provides a great opportunity to explore the difference between a ‘problem’ and a ‘paradox’, and how they both need attention and care! Thank you.

Q. Do you find that individual families who have recognized and worked through these polarities end up somewhere in the middle or continuously cycling through the infinity path?

A. Thanks  – it’s a great question about how paradoxes and polarities work. It may be logical to conclude that the ‘best’ place to be on a Polarity Map™ is smack dab in the middle, between the two poles. However, this notion of staying put in one place on the Map is much too static for the lively dynamic of a polarity. Families that are highly experienced in managing paradox find themselves comfortably and continuously cycling through the infinity path, moving steadily and deliberately from one side of the paradox to the other. By tapping the power of both poles, over and over again, and giving full respect and honor to both sides, these families keep themselves well positioned in the upsides of both poles, spending minimum time in the downsides.

Trying to pick a middle ground and stick there is actually impossible, as the movement through a polarity is organic and unstoppable. Trying to stop this natural movement will tend to find you over-emphasizing one pole to the detriment of its complementary opposite.

This is not to say that ‘synthesis’ is impossible. There are actions – experiences – where you are experiencing the full power of both poles of a paradox. For example, in family education, when you honor the need for education of both the individual and the group, it can be impossible to separate them. Skill building for the entire group, by definition, will strengthen the skills and knowledge of the individuals in the group. Conversely, it’s impossible to separate an individual’s skill building from the skill level of the whole family. This is a great example of synthesis – emphasizing both group and individual at once.

Q. How have you seen families effectively debate the common family business paradoxes?

A. Actually, one of the appealing things about working with a paradox is that it tends to move a family away from ‘debate’, and towards more open sharing with the goal of mutual understanding.

For example, let’s say that a lively ‘debate’ in your family commonly has to do with the strategic direction of your business. One group tends to focus on the historical strengths of the enterprise. This group is firmly rooted in preserving the successes of the past, appreciating the family’s proven strengths, and staying true to the way things have always been done – their motto might be, ‘If it ain’t broken, why fix it?’

The other group tends to be centered in the need for change and innovation. This group speaks of the untapped opportunities for success in new ventures and the exciting potential for invention and experimentation into areas not yet imagined – their motto might be, ‘Change or die.’

Many families will engage in a debate between these two camps. Each camp flings their well-reasoned arguments against the other. Who wins? The wisest position, or the one with the loudest, most persistent and stubborn adherents? Whoever ‘wins’ the current debate, these arguments tend to be a losing approach over time.

If you shifted your perspective, and viewed this dynamic as a paradox – with two desirable poles that appear to be in conflict with each other, but are in fact, complementary – you would accept both the need for Tradition and  the need for Change. Instead of trying to choose one over the other, picking one instead of the other, the family would seek ways to pursue both. The debate would shift to a dialogue, where the upsides of each pole were fully explored. The group might analyze how well they are doing at valuing and pursuing both. Instead of trying to convince each other of the wisdom of each separate position, the two groups would work together to ensure that both tradition and change were being respected and pursued throughout the organization, and that both were being executed with skill.

Q. Your thoughts to us advisors in dealing with our own dilemmas?

A. Yes, we had a bit of time to talk about this on the webinar. There are plenty of paradoxes in our work as advisors to family enterprises. To what extent do advisors challenge as vs. support  their clients?  How much do we, as advisors, facilitate our clients’ decision-making, and how much do we direct them? And how much do we focus on process as vs. outcomes, or people as vs. tasks? All of these dilemmas are paradoxes – in each case we may have a strong preference for one side of the pair, and miss the need for both.

Pushing ourselves, as advisors, to recognize paradoxes when they are present, and to appreciate and value both options, will be crucial. This is where working as part of an advisor team is advantageous. Not only do we have the advantage of multiple perspectives and areas of expertise, in a team we can make sure that all sides of an issue are being recognized and respected. The best cross-functional teams see paradoxes as a source of energy for excellence, rather than a frustrating source of complexity and challenge.

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