Families that work together successfully while maintaining positive family relationships have figured out how to have difficult conversations and reach agreement on challenging matters. Conciliatory gestures, doing something or saying something that expresses a concession or a willingness to make a concession, can play an important role in this success. Conciliatory gestures help create a safe environment for multiple parties to make concessions as they work toward agreement.
Examples of conciliatory gestures include apologizing for what was said or for how you behaved; acknowledging your contribution to the challenging situation which demonstrates a willingness to be accountable, and positive expressions about the other’s contribution. These gestures demonstrate vulnerability and a desire to find common ground. This in turn can elicit a conciliatory gesture on the part of others as the expressions send a message that fairness will be represented in the ultimate decision.
In order for this to be effective, all parties must share a fundamental belief that they all have the greater good of the family and the business in mind balanced with respect and consideration for individual interests. Absent this mindset, conciliatory gestures may be viewed as less than authentic and therefore manipulative.
Give it a try. The next time you are engaged in a discussion that is emotionally charged and where opinions vary, try out the use of a few conciliatory gestures. Set the example for the group engaged in the discussion as it may be contagious and could lead to a break through to agreement.
In a two-part blog post, Family Business Group consultant Stephen P. Miller highlights some key findings from his recently completed research on how next–generation family leaders develop leadership skills.
Engineering a successful generational transition is often the issue that most concerns family business entrepreneurs who hope the businesses they have created will thrive through multiple generations of family ownership. Family firms that develop effective next–generation leaders often employ the following leadership development strategies:
Ensure next-generation leaders have job assignments with real responsibility, accountability, and risk; inside or outside the family business. Next–generation leaders need opportunities to make complex decisions and experience the results of those decisions.
Provide accurate feedback on performance, often from trusted non-family leaders in the business. Next–generation leaders benefit from knowing how others perceive their leadership practices in order to learn the emotional and social intelligence competencies that account for over 85% of top leaders’ performance.
Create a positive and supportive family culture. Families that work hard to foster open communication, establish effective conflict resolution and governance processes, and create an overall positive family climate enhance the chances that next–generation family members will develop leadership skills.
Start early: Learning leadership skills takes decades, so wise family business owners encourage next–generation family members to gain leadership experience in activities in which they are personally interested in school and early in their careers.
The good news is that leadership skills can be learned. Forward–thinking family enterprise owners focus as much or more on the development of their human capital, including next–generation family leaders, as they do on their financial capital.
Fear, Uncertainty, Doubt and/or Greed (FUDG) often play a major role in a family’s decision to keep or sell the family business. Managing these emotions in the decision can have a powerful impact on the success of the process.
Several steps can be taken to manage the first three elements of the FUDG factor to the extent needed to make an informed hold or fold decision. Educating family shareholders on the products, the competitive environment, and the challenges and opportunities of the business is a good starting point. Encouraging family members to be informed on business issues in general can also help those not in the business better understand the current and future business environment in which the company operates. If the company has embraced a comprehensive strategic planning process, management should be well aware of these subjects. The planning process should also clarify the company’s vision for the future and outline its plans to achieve that vision over time.
An outside board I worked with recently had a policy of asking shareholders to discuss and communicate to them their long-term vision for their ownership annually. This was done before the board reviewed and approved the annual revisions to the company’s strategic plan. Building value and growing the company were the focus for many years until the shareholders responded unanimously that they wanted to prepare the company for sale within a three to five year timeline. A successful, fully priced sale was accomplished in less than three years.
The Greed factor is a bit more problematic. There is a difference between greed and rational self-interest. The need for individual financial security may become a key driver in the decision process. The question that arises is “what is enough?” When that question cannot be answered rationally, an element of greed becomes suspect and may lead to conflict before, during and after a hold or fold decision is made.
Fear, Uncertainty, Doubt, and to some extent, Greed may always be present in one form or another in every hold or fold decision. The key to success, whether the decision is to hold or to fold, is to manage these factors effectively.
You may not think of college basketball as a family business, but in a few rare cases it can be viewed through that lens. Take the McDermotts from Iowa. The father, Greg, is the head coach of the Creighton University men’s basketball team, and his son, Doug, is not only the team’s star player, but he is also considered to be one of the greatest college basketball players of all time. The Creighton team spent this entire season as one of the top ranked teams in the country, in large part because of Greg and Doug’s ability to work together effectively.
For those who are interested in learning more about Doug’s phenomenal career, there is an enlightening article in a recent issue of Sports Illustrated magazine. One of the passages from this article that stood out to me was the sentence that identified the key to their success:
“[Greg] and Doug have determined that the father-coaching-son arrangement can work only if family time and basketball time are separate.”
As you might imagine, it can get confusing at times for Greg and Doug because they not only have a father-son relationship – they also have one that is coach-player. And just as the different roles each plays in relation to the other can lead to confusion about priorities, goals, and ultimately cause communication to be difficult, so, too, can the presence of multiple roles lead to confusion within family businesses. While you may naturally think of yourself first as “Dad” or “Mom,” you must remember that others may also see you as “Chairman,” “Boss,” and/or “Majority Shareholder.”
Like the McDermotts, members of family businesses would be wise to be explicitly clear about the multiple roles that are played, even if it means occasionally creating separate time for each. Maybe this college basketball tournament isn’t “Madness” after all.
What are your experiences with multiple roles in your family business? How have you managed to minimize the confusion that can often come with these multiple roles?
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.
Three siblings sat in a room discussing the details of a new shareholders agreement they wanted to create. Through a recent lawsuit with two other siblings, their current shareholder agreement, which had been put together by their father, had been helpful in defining settlement terms, but they knew it wasn’t comprehensive. The three siblings had gotten over the shock and hurt of the lawsuit, the dust had settled, and they were ready to proceed with a new shareholder agreement, but old habits had started to reemerge. They were stuck in a positional standoff. Eventually, after a year of building trust, they got to the point of having an honest and open discussion with each other regarding what they each wanted out of the shareholders agreement. They were (rightly) very proud of how far they had come.
They were also contemplating succession and their children were now employed in the business. One of the senior generation siblings suggested that since the three of them had come so far, it might be important for the next generation to sit in on the facilitated discussions regarding the shareholders agreement. They wanted the children to see that they could have tough discussions without being positional, judgmental, and/or defensive.
The meeting didn’t get very far through the parts of the agreement. There were a lot of side questions, a lot of meandering, but always came back on topic. Eventually, the three siblings went off on their own to discuss a few of the points on the shareholder’s agreement. After the siblings left, the next gen were asked what they thought of the meeting. A couple of them were confused about the lack of progress on the different points. Why was there so much discussion and meandering? Another was grateful to start hearing some of the terms that were used. He didn’t understand all of the different aspects of the agreement, so he was intrigued. And finally, the last one said he was happy to understand why they were making decisions about certain things instead of being handed a document and told “that’s how it is.”
The three siblings came back in the room and one of the next gen asked if they got anything done. One sibling answered that they got a lot done – they uncovered more questions. Two of the next gen were confused. They again said it seemed like the older generation siblings weren’t accomplishing anything. But the eldest sibling was excited. He told the next gen they accomplished so much more than just the points of the agreement. They gained trust and understanding and were enjoying the new found teamwork around the important document. They had come so far in their communication and were now enjoying solving tough problems together.
It was such an important illustration of how much the process matters when making decisions among family members. The next generation began to understand how to work together as future shareholders. It is incredibly important to teach the next generation many things, but most importantly, how to be a good partner. Next time you’re having an important discussion among the shareholders, keep these following points in mind:
Understand the process of making decisions is as important, and sometimes more, than the end product.
Exemplify what good communication and decision making can be for the next generation – they’re watching you.
Don’t hide difficult situations and conversations from the next generation.
Understand that the next generation wants to know WHY you made the decision you did.
Introduce terms that may be foreign, confusing, or misunderstood.
Don’t be afraid to veer off-topic for the sake of understanding. Just remember to come back to topic again.
Good decision making is so much more than good decisions.
A couple were driving home and the wife mentioned that she talked to her brother that day. She said she was sad because her brother had confided that he was having a tough time at work and home. She was worried about him. The husband quickly started to solve the problem by suggesting how her brother should change and take charge of his life. After a while (with no response from the wife) he stopped talking. The husband knew the wife was now upset with him so he sheepishly asked what was wrong.
The same man was also unsure why he was having difficulty with his relationship with his son at work. His son was bright and the father was proud to have him consider taking a leadership position one day. But the son could be cranky and shut down around the father. The father knew the son needed more training and experience. When he first started working there, he would ask his father questions but now rarely talked with him unless the father requested a meeting. In those meetings the discussions always seemed to be tense and one-sided.
Both of those situations could be helped by one thing: the ability to listen better. Listening is such an important skill to hone, but too few actually actively practice. It seems unnatural in this day and age of emails, texts, and quick phone calls. Our minds are busy solving problems, thinking about the demands that life puts on us, and especially in a family business, receiving information from others through the lens that we have built up over the years. We get stuck in positions of defending, explaining, knowing what they’re going to say (but do we?), and solving their problems that we forget to listen.
Listening with patience and an open mind can create the type of thinking that is enormously creative, build trust among those who do not have it and enhance that of those who do, build self-confidence among those with none, and instill wonderment for those who do it. It is so hard to actively listen with patience and an open mind. There are so many demands on time that we get in the habit of responding quickly. If we take too much time to think we believe people will get impatient. We jump in and finish thoughts and take the conversation the way we view it. We solve their problems. After all, isn’t that what we’re supposed to do for the people we love?
For just today, try this:
Pick one person and give yourself time to listen them.
Actively try to hear every word that person says to you.
Do not interrupt or answer until they are finished.
Look at them during the entire time they are talking.
Force your mind to not jump to what you think they’re going to say.
Do not begin to formulate your response until they have stopped talking.
Do not fix their problem, but ask a question instead.
The steps are basic, but hard to do with every conversation. Just for one day, with one person, practice the most crucial component to communication. We have two ears and one mouth for a reason.
Almost everyone remembers a time in childhood when they felt left out—the party they weren’t invited to, the snub by someone who was supposed to be a friend, the time they weren’t rewarded for a job well done, especially when others were being recognized. Even as you read these words you might still feel the sting of something that made you feel shunned or ostracized a long time ago. Now, thanks to neuroscience, we know why this pain was so severe and why you still remember.
Social neuroscientists at the University of California, Los Angeles are studying what goes on in the brain to help leaders understand how their actions affect their followers. These researchers use functional magnetic resonance imaging (fMRI) along with other sophisticated equipment, and the results have important implications for leaders of family businesses. One of the most pertinent studies for family business owners was conducted by Dr. Naomi Eisenberger, a social neuroscience researcher at UCLA, who studied what happens in the brain when people feel rejected. Her research indicates that when we feel excluded our brains have the same reaction they would to physical pain.
Dr. David Rock, the president of the Neuro Leadership Institute, writes Eisenbergers’ research illustrates “people who feel betrayed or unrecognized at work . . . experience it as a neural impulse as powerful and painful as a blow to the head.” Rock claims many studies show the brain responds to social needs the same way as it does for survival.
Family leaders must be aware of the unintended consequences of accidentally excluding a family member. Perhaps you thought Aunt Alice was drastically overreacting because she didn’t receive the information she thought she should have been given. When her face turned beet red and she began screaming at you just before she angrily stormed out of the room, she wasn’t being overly sensitive. Her brain was telling her you had just hit her over the head with a baseball bat, and she was responding accordingly!
Family leaders who understand how strong the brain’s reaction is to being excluded, betrayed, or unrecognized can be more sensitive. There are steps they can take such as:
Making certain all family members are invited to family meetings and gatherings;
Seeing that pertinent financial information is accessible to everyone;
Establishing family policies so all family owners are given the same opportunities in the business;
Creating a Code of Conduct giving all family owners the chance to talk about how they expect to be treated and what is important to them;
Recognizing the hard work of family leaders as well as business leaders; and
Showing appreciation to family members and employees.
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.
Our highly wired culture encourages us to constantly be ‘in touch’ and communicating through texts, Twitter, phone calls, emails, Facebook, Linked In, you name it… It seems we are forever posting or checking updates, sending or responding to texts or emails, essentially constantly in the act of communicating – at least electronically.
But sometimes all this electronic communication crowds out in-person communication. I have seen countless face-to-face meetings interrupted by a phone call or a text; it is increasingly difficult to enforce the ‘no electronics’ rule at meetings; and I have even witnessed family meals with clients where family members are texting each other at the table (rather than speaking)! I sometimes wonder if we raising a generation of people who will be increasingly uncomfortable with direct human interaction.
In addition, the constant interruption of electronics also challenges people’s ability to focus and work on projects in an uninterrupted manner. As the norm in many business (and social) settings is that folks will respond to a received communication almost instantly, there is pressure to always check and respond to email, texts, etc. This effectively prevents individuals from having uninterrupted time for complex discussions or quiet work.
While I would never advocate eliminating electronic modes of communication (I am email-dependent), I do think families need to insist on some ‘electronics off’ time – both in the business and in the family. At your next family meeting you might put electronic communication on the agenda and have a frank discussion about how it is helping and harming the family and the business, and consider some policies to manage it intentionally.