Tag Archives: trust

WHO Knows WHAT and WHEN – A Key to Not Hurting Feelings

Mike Fassler
Mike Fassler

A common challenge for family members in business together is communication.  How well family members are communicating impacts the family’s ability to work together effectively, a capability that is foundational to healthy families and healthy businesses.

One key to effective communication by leaders is being thoughtful and deliberate about WHO Knows WHAT and WHEN (WKWW).  Information and its flow is a powerful influence within families and businesses, and WKWW sends signals as to one’s standing.

If family or business leadership conveys important information to one or more persons at the exclusion of others of supposed ‘equal standing’, this can signal that some have favored status.  This will likely lead to anger, hurt feelings and an erosion of trust among those who feel they were slighted by not receiving the information.  Further, those who received information may start to believe they are ‘special’ and entitled to different access – making it difficult to adjust to any requests to change the flow of information going forward without escalating resentments in the system.

A few thoughts on how to reduce the risk of these problems.  First consider whether the information to be communicated is primarily a family matter, a business matter, or an ownership matter.  Then communicate within the proper venue – family matters at family meetings, business matters at management meetings, and ownership matters at board or ownership council meetings.  That way the right people will more likely received the right information at the right time.

The second thought is role clarity.  For very good reasons some family members or management team members should know certain important information exclusively or before others in the family or on the management team.  Having clearly defined roles within family and business governance will help set appropriate expectations as to the flow of information.

Finally, for important information that needs to be communicated, think through and visualize: the appropriate venue, the best person to convey the information, the sequence and the timing.  Consider who will be most impacted by the information and the magnitude of any changes that will come along once the information is conveyed.  Taking the time to visualize the roll out of the information will increase the odds that you will get the roll out right.

WHO Knows WHAT and WHEN?  Getting this right will help your family and business go a long way to not hurting others feelings, an important part of working together effectively.

A Banker’s Dozen of Life Lessons Learned

Norbert Schwarz
Norbert Schwarz

In my 50 plus years in banking, business and consulting, I have been blessed to have had the opportunity to work with scores of families and mentors who have taught me a lot about getting along in the personal and business world. While I have not always practiced the sage advice given, it has served me well over the years. I would like to share some of those gems with you and ask that you share any that you have found particularly helpful in furthering your successes.

  1. Build your foundation on trust.
  2. Be able to shift gears.
  3. When considering the hold or fold strategy for your family business beware the FUDG Factor. (Fear, Uncertainty, Doubt and Greed)
  4. When you are up to your elbows in alligators, remember that your objective is to drain the swamp.
  5. Don’t try to push a string uphill.
  6. Don’t fight people who buy ink by the barrel.
  7. Fix the process and not the blame.
  8. How you say it often means more than what you say.
  9. Learn to love details. The devil will often appear in them.
  10. Know your bottom line before entering into a negotiation.
  11. Keep it simple.
  12. Never leave anything, always go to something better.

Thank you for indulging me in a bit of nostalgia. I look forward to hearing from you on your life’s lessons learned.

Accessing Next Generation Wisdom

Norbert Schwarz
Norbert Schwarz

The senior generation of a family business was in the process of developing an employment policy for family members wanting to apply for a position. They interviewed next generation family members for their input and found some very interesting suggestions. Many of the suggestions coming from the next generation were surprisingly similar to those suggested by the senior generation. There was one comment that was unique to the next generation. Many of them thought that any family member being considered for employment in the family business should have the trust of his/her cousins. This input led to some very interesting discussion among the generations. What constitutes trust? How do you know when it is there? If it is not present, how can it be gained? Some of the results of the subsequent conversation on this very important subject are worth sharing.

Trust is one of those fundamental notions that is claimed to be understood by everyone, yet it is hard to explain or precisely define.  Trust starts with the individual. Character captures a number of concepts inherent in the basic values of integrity, honesty, and credibility; being perceived as a “good” person. Trust is a level of comfort that someone is being genuine. It was also suggested that trust and vulnerability are partners; hence confidentiality might be an element of trust. Both generations agreed that it was of paramount importance that anyone employed in the business must have demonstrated the skills required for the position. Therefore competence is a critical element of trust. Competence includes skills, expertise, and performance as well as sound judgment and decision-making abilities. There was also agreement regarding the need for a family members’ commitment to the values, vision and mission of the family and the business in order to warrant trust. Such a commitment would also include a willingness to set individual wants aside for the benefit of the group. In a word, by caring for others. Trust is something you earn by giving.

This family is well on its way to understanding and practicing one of the very important foundations of any policy or relationship. Trust is the centerpiece of the family business system. Where it is present, the family and the business are well equipped to meet any challenge. Without it, conflict often overshadows opportunity.

Trust is a Two Way Street

Anne Hargrave
Anne Hargrave

“I’m not sure I can trust my brother to handle that; he just hasn’t proven that he has what it takes,” a client said.  Too often family members place responsibility for trust on the shoulders of the other person, instead of their own.  Trust has come to mean focusing on what we expect, need or want from another.  When we lose confidence in someone, don’t see eye to eye, or our expectations are not met, we tend to react.  We don’t feel that we can trust.

If you don’t feel that you can trust a family member, consider stepping back and asking yourself some questions:

  • To what extent might there be a disconnect between your perception of that person’s actions and their intentions?
  • Might there be another way to interpret past events?
  • How do you differ in the way you respond to conflict and stress or solve problems?
  • How might you adapt your style to motivate the family member to be their best self?

Trust is a two way street – we each play a part.  And we can only change ourselves.

“Trust Me”

JoAnne Norton
JoAnne Norton

These are two of the most compelling words in the English language. As human beings we have an innate urge to trust one another because we know instinctively we need each other for survival. Establishing and maintaining trust is the basis for all relationships in the family and in the business, and what takes a life time to build can be destroyed in the blink of an eye. It is critical to trust and to be trustworthy in your family’s business.

A betrayal of trust can do as much damage to a business as a bad economy, and it can be even more catastrophic to a family. But beware: mistrust can be caused by miscommunication. For example, a CEO we’ll call John might tell his sister Jane one thing and then turn around and tell his sister Jennifer something totally different. If Jane and Jennifer get together and discover that John has told each of them differing stories, then they might find themselves wondering if they can really trust John any more.

Fortunately, if this family has regular meetings, the sisters in our story would be able to ask John face-to face why he had given them different answers. John could then show them that between the time he talked to Jane and when he talked to Jennifer a couple of days later the facts themselves had actually changed. John could explain he had been completely truthful to both of them.

Family meetings provide the opportunity for communication. Good communication requires the courage to ask questions—tough questions that can clarify situations and manage misunderstandings. Owners have the right to know what is going on in their company, and it is up to family members to build an enduring trust based on transparency and a history of fair dealing. So the next time someone says, “Trust me,” answer them with, “Talk to me.”

SHOULD YOU HAVE A SHAREHOLDER (BUY-SELL) AGREEMENT ?

Bernie Kliska

Going into business with a parent, child, sibling, in-law, or cousin both demands and assumes a certain level of trust. But, you need more than good faith and a firm handshake. Future disagreements and unexpected events can occur and tear apart businesses, and relationships as well.  A shareholder’s agreement is almost a must in any business when more than one person is an owner.  Just because your fellow shareholders are family is not a reason to assume this ‘good practice’ does not apply to you.

How do you avoid splitting up a company and deciding who gets what in the heat of battle?  You may not be able to think in a level-headed manner when screaming is at the highest decibel and doors are being slammed. What is better is to plan for the worst cases, hoping they never happen.  The wording and terms of shareholder agreements can vary greatly, but they most commonly address the following issues:

1) Who may or may not own shares and what happens if shares intentionally or unintentionally fall into the “wrong” hands due to divorce, death, credit problems, lifetime transfer or otherwise.

2) Events permitting or requiring a sale, such as leaving the company to pursue another profession, retiring, being disabled, funding estate taxes or getting divorced from a family member.

3) The price for which shares can be bought or sold and how that price is determined (fair market value given minority shareholder discounts, etc.) and how that price could be modified over time.

4) The payment terms, including down payment, length of note and interest rate.

Many shareholder agreements give the company or existing shareholders the right of first refusal to purchase the shares. A shareholder agreement legally determines how to handle a host of what-ifs.

While it may be uncomfortable to go through drafting legal documents between family members – remember the adage, better safe than sorry!

Some Thoughts About Trust

David Lansky
David Lansky

Many people have written about trust in human relationships. I have collected some quotes on the topic and list some of my favorites below:

Our distrust is very expensive. –Ralph Waldo Emerson

The only way to make a man trustworthy is to trust him. –Henry L. Stimson

He who mistrusts most should be trusted least. –Theognis

Whenever the people are well–informed, they can be trusted with their own government. – Thomas Jefferson

Trust men and they will be true to you; treat them greatly and they will show themselves great. – Ralph Waldo Emerson

Those who trust us, educate us. — George Eliot

Mistrust begets mistrust. Trust begets accomplishment. –-Tao Te Ching

For it is mutual trust, even more than mutual interest that holds human associations together. –H. L. Mencken

Relationships of trust depend on our willingness to look not only to our own interests, but also the interests of others. –Peter Farquharson

When Trust Has Been Broken

David Lansky
David Lansky

No matter how well intentioned, family relationships can sometimes go awry and trust can be broken. There is no simple solution to rebuilding trust, but here are some guidelines:

  1. If you have violated another party’s trust, you must admit that a violation has occurred and ask for forgiveness.
  2. Understand that questions about trustworthiness will continue for quite some time. You will therefore need to be tolerant and patient.
  3. Dedicate yourself to the attributes of reliability, intimacy and honesty.
  4. Seek to understand and resolve the reason for the violation, because if that is not managed, trust may well be broken again.

Sometimes there is a lack of trust that stems from historical dynamics, hurts or injustices. If that’s the case, then people in the present may be unable to change the situation no matter how hard they try. In these types of situations, the person or persons who feel they have been victimized will PRESUME that certain others cannot be trusted – even if those individuals have not themselves done anything objectively ‘wrong’. Those who see themselves as victims of a historical injustice will have to work hard on themselves.

  1. If you experience a lack of trust that is rooted in the past, admit to yourself that your lack of trust may not derive from wrongs that have been committed in the present.
  2. Be clear that you WANT to trust again.
  3. Be willing to forgive.
  4. Seek and affirm instances that CONTRADICT your presumption of distrust.

Three Attributes of Trust

David Lansky
David Lansky

Working well together, sharing assets fairly, planning collaboratively for the future – these are among the most critical tasks of an enterprising family. They all have in common a fundamental basis in trust.

In my experience, families who are able to sustain a culture of mutual trust, seem to adhere to three basic elements, whether intentionally or not:

  1. Family members are reliable. They do what they say they will do.
  2. They demonstrate feelings of intimacy. They care about each other and they like being together. 
  3. They are honest with each other. They have open, direct communication — they are willing to speak and to listen when difficult things need to be said.

These elements might come naturally to some, and might need to be learned by others. Either way, trust is something that is built over time.