Empathy building comes up a lot in our work with families. Whether family relations are primarily characterized by care and understanding or frustration and conflict – seeking to better understand the point of view of others is always a good idea.
When you find yourself at odds with someone (whether family or otherwise) – make a conscious effort to put yourself in their shoes while thinking about the issue. When facilitating discussions with family where there is disagreement, I often open the discussion by saying: “as you seek to listen and understand one another – listen with the assumption that each speaker is a rational person of ‘good intentions’ and try to consider then, why a such a ‘good person’ would see the issue in this way…” Explicitly assuming ‘good intentions’ on the part of others goes a long way to building empathy and understanding.
Humans are a communal species. Our biology is such that it takes many years for our young to mature and become capable of true independence from their family (though our teenagers may debate the length of this time!). We typically depend on one another, even as adults, for essential goods and services. In addition, the intensity of mutual dependence was even stronger in earlier human history – when individuals were entirely dependent on their social group for food, basic shelter and safety. At that time, if a person was banned from the group for some reason, they were unlikely to survive. Given that survival was dependent on good social relationships, our brains evolved with a developed sensitivity to interpersonal relationships.
It is not surprising then to learn that research has found ‘mirror neurons’ that light up in our brains when we observe someone feeling anger, sadness, etc. – just the same way they light up if we are having this feeling directly. Jeremy Rifkin makes a very compelling argument (see http://www.youtube.com/watch?v=l7AWnfFRc7g) that this is further evidence that humans evolved to be caring, social beings. He says: “we are soft wired to experience another’s plight as if we were experiencing it ourselves.” In fact, he and many others have argued that humans are not wired for aggression and self-interest, but rather for sociability, attachment, affection, companionship the first human need is the need for ‘belonging.’
While lack of harmony with your group is no longer as dangerous – the wiring in our brains have not changed much. People have a deep need to feel ‘accepted’ and like ‘they belong’ as this probably brings reassurance to that part of the brain that is wired to be worried about risks in becoming an outcast. When you feel those around you truly understand you –you feel much more reassured that you ‘belong.’ In the reverse situation, if you feel others don’t really ‘get you’ – this can lead to anxiety about not really belonging – or not being accepted – a stress that is more intense if the group whom you feel does not understand you is your family!
Empathy and genuine understanding of one another is critical to a well-functioning society and certainly essential in a family. In the context of a family owning a business together, if an individual does not feel true acceptance from the others it can make collaboration and cooperation almost impossible.
I recently read a short interview of Stuart Diamond, a professor of Negotiations at the Wharton School at the University of Pennsylvania who has also authored “Getting More: How to Negotiate to Achieve your Goals in the Real World” (Crown Business).
While he spoke about seeking solutions that responded to both parties’ needs, avoiding aggressive tactics, and making sure you truly understand the needs of the other party in the negotiation – I was most enthused to hear him dive a little deeper on what kind of understanding he felt was most important. In fact, he suggested that the best way to start a negotiation is to ‘address emotions first.’ That is particularly good advice in the context of negotiations in a family business, where emotions are often raw and intense. Diamond underscores something behavioral psychologists have studied for years, that is – the more important a given negotiation is to a person, the more irrational that person may act around the process of making this decision.
In our work with family businesses, we often find ourselves in situations where the most intelligent and rational business people suddenly appear to be irrational, petulant children when trying to negotiate an emotionally loaded issue. While a high emotional load on a negotiation can always be difficult, when the response of one of the key players feels very ‘out of character,’ this tends to add a level of confusion and fear in the room, that can often make the negotiation process even less effective.
Families are complicated, business is complicated and clearly the overlap of these two entities is VERY complex. In order to simply illustrate some of this complexity, those of us who work with families in business often talk about the ‘Three Circle Model’ which aims to illustrate the overlapping dimensions of ‘OWNERSHIP,’ ‘FAMILY,’ and ‘BUSINESS,’ which can help clarify how different stakeholders may perceive issues differently by virtue of where they are in the overall system.
While this simple model is very helpful for starting conversations and understanding, it is – as all models are – a simplification of reality. For instance, one dimension that is not captured in this model is the dimension of TIME and how each circle tends to grow and shift over time. A family of 5, with only two generations present is very different from a family at a third generation, that has grown to involve 18 adults. Similarly, when the business has sales of $10 million and 30 employees it is run differently and affects the family and ownership circles differently than when it has grown to $70 million in revenues and a workforce of over 100 people.
Another element that is not well captured in this standard model is the multi-directional influence that is present within circles and across circles. For example, while employee development is clearly a responsibility that is in the domain of the BUSINESS circle, when it comes to developing employees who may also be prospective owners – there may need to be some communication between all three of the circles to get that done in a way that works for all stakeholders (reflects values of family, needs of business and goals of sustained ownership). Similarly, while the owners are the ones who have to determine what their tolerance is for risk and their targets and goals for economic returns on their investment in the business – those who run the business day to day are the ones who need to provide information and feedback about what is feasible in that regard.
Clearly there is a lot of flow and movement between the circles, to say nothing of the variety of inputs and opinions that exist within any one circle. The challenge is that if you tried to capture all the complexity and moving parts in a model – the model would become so busy that it would be impossible to read or follow. My point is not to question the usefulness of these tools – but merely to remind us all that they are just that, TOOLS – a conversation starter, a simple model that is a framework by which we can start to talk about more complex issues and think through how to handle the fun and idiosyncratic ways in which this complexity gets expressed for real in any business.
The ‘personal finance’ columnist at US News & World Report, Kimberly Palmer recently wrote a book titled: “Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back” (Ten Speed Press). In this book she cites an impressive statistic from the Center for Philanthropy at Indiana University that on average, people under 40 donate about $1,200 a year. While that is a healthy amount for the average person, ms. Palmer indicates that young adults are giving back differently. In particular, she point out that a lot of young people today like to start their own charities. This is in keeping with my recent post, that there is a trend towards wanting to be more hands-on and contribute time as well as money. Families with strong entrepreneurial genes may enjoy the challenge that comes with setting up a charity for a cause in which a number of them share a passion.
If you are looking for something a little less labor-intensive, ms. Palmer also speaks about ‘Giving Circles’ that pool the funds of a group of friends who want to take the time to research charities and ensure their donations are being well used. These are not too dissimilar to the investing clubs that were popular in the 1980s and 1990s (where people got together to research companies in which they wanted to invest in to make a profit). This strikes me as a great model that families could emulate for next generation groups who are eager to give back in their communities, and also want to practice decision-making skills and learn how to differentiate between different uses of money (relevant when evaluating the merits of a for-profit or non-profit investment choice). If your family is not ready to start their own circle, interested family members can find a giving circle (givingcircles.org is the website where these can be found) that already exists in their area, and join themselves to learn and hopefully bring the model back to the family for consideration.
There has been a lot of buzz in the press of late around the ‘Giving Pledge’ launched by Warren Buffett and Bill and Melinda Gates, as an effort to encourage billionaires around the world to donate the majority of their wealth to charity. According to a recent article in Daily Finance (See full article at:http://www.dailyfinance.com/story/forty-billionaires-pledge-wealth-charity/19581080/?sms_ss=email&icid=sphere_copyright) over 40 well-known figures have signed up for this pledge, such as CNN founder Ted Turner, Ronald Perlman, designer Diane von Furstenberg, to name but a few. Members are expected to make a public statement about their gift, explaining their decision. Buffett describes the effort as follows:
“At its core, the Giving Pledge is about asking wealthy families to have important conversations about their wealth and how it will be used. We’re delighted that so many people are doing just that — and that so many have decided to not only take this pledge but also to commit to sums far greater than the 50% minimum level.”
While obviously the huge philanthropic commitment being pursued through this Giving Pledge is to be lauded, we know families that own businesses might not have the ability to make the commitment that is being encouraged on this platform, but remain among the most philanthropic and high-contributing members of society nonetheless. The reality for a family that aspires to see its business vision carried into the next generation is that transitioning a capital-intensive business to the next generation while funding ‘Uncle Sam’s’ cut will tie up the resources of even the most generously-minded soul!
In an informal poll among our family business advisors I heard a number of comments around trends and approach to giving among our family business clients. Chris Eckrich offered the following series of examples:
“The biggest trend I see with clients is getting actively involved in their giving. Visiting Africa’s micro businesses, walking in fundraising walks to which they contribute, touring hospital wings that have been donated by the family, serving on boards for causes they feel strongly about, helping build buildings, and many site visits to recipients of grants are examples.
Those who seem to enjoy active involvement with today’s dollars…as opposed to future dollars at death, show great vibrancy in their foundations.”
Others mention the frequent family time devoted to service projects such as a building a ‘habitat for humanity’ home as a project undertaken by the ownership group. These efforts of going beyond writing a check, and getting involved in person demonstrates a genuine connectedness that provides a strong example to the broad community, employees as well as to future generations of owners.
John Ward also underscores the importance of choosing to keep a family business private (rather than selling and creating cash that can then be given away). Many closely-held businesses are run very ethically and provide value to their customers, and an excellent work opportunity for hundreds or even thousands of employees – staying the course in this case represents another important way of contributing to society. These business-owning families are often deeply connected to their communities and also contribute tirelessly to local charities and community development (which is always enhanced by the presence of stable, well-paying jobs).
Finally, Jennifer Pendergast underscores the importance of a family having an intentional conversation about the purpose of their wealth. Most families with whom we work have philanthropy and giving of funds as one of their shared purposes as a family – but many also choose to reinvest funds into new ventures, contributing to society through business innovations and employment.
It would be great to share how different families have found meaningful ways to contribute – as community-minded families are eager to hear of new approaches to stimulate their own family’s thinking. To quote John Ward: “different approaches for different people is the American way.” Feel free to share your ideas or comments as we are always eager to learn about the many ways that families fulfill their ‘obligation’ to be generous and engaged members of the community.
A recent piece by Dave Logan in “Tribal Leadership” made a compelling argument about why most business books are ‘bad for you’ – and while I am not sure that many are actually dangerous, I do agree with his premise that most offer painfully simple advice OR read like stories about ‘hero-figures’ that can mislead the reader into thinking that an individual’s personality is what leads to business success. To quote Logan:
“Most business books use stories to cover over their complete lack of insight. This week, I read a galley of a book that I hope will never come out. After some catchy anecdotes about hero CEOs, it advised, among other things, that leaders figure out what’s really important, then do those things. It went way out on a limb by saying that great leaders are remarkable at forming relationships. And (are you sitting down?) the best leaders are honest when a strategy isn’t working.
Are you kidding me? How about we add that true leaders can dress themselves, use full sentences, and bathe before work.
Business success isn’t a checklist, and that’s the implied message from many business books: do these things and you’ll be the hero. Business success is a dance: with the market, employees, investors, customers, landlords, and creditors — not to mention spouses and kids.
Business leaders need a reboot on the ideas that make organizations run. Is your time best spent reading business books, or talking with people with radically different ideas? Put down the business book and go interact with ideas that challenge you, frighten you, or piss you off.”
He then went on to suggest some useful non-business books that aspiring leaders should actually invest time in reading, such as the Odyssey and Atlas Shrugged. While these are certainly classics that are thought-provoking, I would add Stewardship by Peter Block, Flowby Csikszentmihalyi, and Predictably Irrationalby Dan Ariely to a recommended reading list for thoughtful business leaders. Would love to hear about other books that have pushed your thinking and excited your imagination.
While there are many things that I appreciate about working with families that own businesses together, one aspect that always takes my breath away is the depth of generosity that so many of these families demonstrate. While recently looking for examples of statements or philosophies around giving for a family that wanted to have a discussion of how they could make a powerful contribution, I came across a few good quotes that I share just for interest…
From Andrew Carnegie: “I resolved to stop accumulating and begin the infinitely more serious and difficult task of wise distribution.”
From Eli Broad: “To me, money is a means to do good. I reached a point in my life where I had enjoyed tremendous business success that afforded my family everything we could possibly want. My wife and I then decided that we could use our wealth to make a difference. So we created the Broad Foundations to do four things: to improve urban public education, to support innovative scientific and medical research, to foster art appreciation for audiences worldwide and to support civic initiatives in Los Angeles.”
From Carlos Slim Helu: “I’ve always said that the better off you are, the more responsibility you have for helping others. Just as I think it’s important to run companies well, with a close eye to the bottom line, I think you have to use your entrepreneurial experience to make corporate philanthropy effective.”
As always, we are eager to hear about how your family addresses its responsibilities around philanthropy and community service.
The Emotional Benefits of a Board: By Stephanie Brun de Pontet, PhD
While many articles have been written on the importance of a well-functioning board of directors to the sustainability of a family business over generations, it is not unreasonable to also pose the more immediate and selfish question: why would I want a board? What is in it for me today? How can a board help me tackle the ‘hard stuff’ that I sometimes would rather not have to address? There are plenty of good ‘business’ reasons for having a board – but the truism that ‘it is lonely at the top’ generates a series of emotional benefits that can also be derived from having a board.
Just to name three:
Experience, Expertise and Empathy. A board of risk-taking peers can ease the fear of the unknown and help anticipate new challenges. Individuals who have the experience of having been in the CEO chair in a down cycle, with limited access to credit, will not only have practical advice and possible solutions, they will also have true understanding of the pressures a business leader faces every day.
A Sounding Board. Like most anyone else, family business owners are full of ideas that range from great to mediocre. What many of them lack is a sounding board to help evaluate those ideas—a panel that is knowledgeable and objective and will listen and react honestly, appropriately and without unintended consequences.
Confidential and Empathic Counsel. The empathy independent directors have for the leader and owners of a family business confronting an intense dilemma will enable them to lighten the mood, and think through rational options in a way no others could. For example, how can we decide if we should pay more dividends to appease frustrated shareholders, or hold more cash in reserve to put the company in the strongest possible position coming out of this recession? Making the decision to put together a board of directors with independent outsiders who can really push you to address the hard questions can feel like a frightening leap to many business leaders. However, in our experience those who take the plunge find far more emotional support and encouragement from this group of individuals than they ever expected.
We would love to hear about your experience with your own board, or in sitting on someone else’s board and the opportunities you saw for this kind of emotional support (and sometimes push) for the CEO.
I would also like to invite you to consider our upcoming webinar on Family Business Boards. We will be addressing many of the issues that face family businesses when trying to get the most out of their boards.
Our September 29th webinar, Building your Board for Maximum Impact will answer many of the questions around developing your board, give you practical ideas and best practices and allow you to ask questions that are pertinent to your family’s board.
To register or learn more about our webinar just go to www.efamilybusiness.com Hope you can make it!
Welcome to FBCG’s new more active (and hopefully interactive) Blog. As we transition from our monthly newsletter, to a mix of new media: sending articles to all our contacts by email, developing comprehensive webinars to dive deep on a topic, and reaching out to a broader public via this blog space – we hope to touch a wider audience, and engage folks in conversation about all things family business. In fact, in our experience a lot of issues in family business are more threatening to the business or the family when ‘things are left unsaid’ than when we grab the bull by the horns and broach the topic as adults. We hope these short communications may serve as a vehicle to facilitate ‘starting an important conversation’ for a number of our readers. In addition, we hope to provide you with fun facts, tips, or advice that can help you navigate the complex world that is the family-business overlap. As with our earlier blog, we will certainly address topics relating to education, but we will also speak to issues on governance, family meetings, family relationships, best business practices, and many others. In fact, we would welcome your input on topics you’d like to see covered here. Also, if you have a general question on which you’d like our thoughts – please feel free to post this and we will share our thoughts and offer some advice as appropriate. We genuinely hope you’ll join the conversation and help us make this a great resource for all folks involved in family enterprises.