Four ways to build resilience in your family business

By Doug Baumoel, Blair Trippe

During the 2009 recession, an article in the New York Times highlighted one of the great glories of the family business: its resilience. The author explored how family businesses may have unique potential to survive — even prosper — during hard times such as the recession thanks to several factors, including the fortifying power of shared history and accumulated knowledge. Of the reasons noted in the article, the most frequently mentioned was the strength of the family as a resource, their shared family ethic pulling together to carry the business forward.

Of course, powerful resilience based on a highly functioning family at its core reflects the potential in family business. Many of us know the reality is sometimes another matter. Family businesses also present a high probability of experiencing conflict, given the complex intersection of business, ownership and family systems. Roles and rules clash in the overlapping three spheres. This conflict cannot be controlled or wished away — it is inherent in the fusion of family and business. That’s the bad news about what you’ve gotten yourself into: There are landmines.

You know there are landmines — that’s part of the good news. When you understand why family business, or the interconnectedness of shared family wealth, is complicated, you are already one step ahead. Another part of the good news is that resilience in family and family business does not just come with luck. Resilience can be built, and building it is critical for success.

As Nelson Mandela said, “The greatest glory in living lies not in never falling, but in rising every time we fall.”
Here are four proven ways to nurture resilience in family business, so that when you stumble you’ll be able to rise up again.

1. Be deliberate in building strong family connection.
Conflict can be a serious disruptor of family business; resilience is what can help you work with the challenge and can bring you back to stability. Strengthening the family bond — what we call the “family factor” — has tremendous impact on a family’s ability to manage the level of conflict and have the resilience to make it through hard times. If families have a robust shared history — even if it is not all happy — they have something to lose by exploding in conflict. A strong family bond makes stakeholders better able to leverage compromise and more committed to change for the better. Building trust helps people consider making decisions outside of their own interests and in the interests of others. Making time for meaningful involvement in family events, upholding family traditions, and developing a shared vision for being family are all ways to build your family factor. Those strong connections will hold you together when the going gets tough and help you to grow from it.

2. Prepare for the journey: Invest in personal and family readiness.
Understanding how to navigate the complex, interconnected web of roles and relationships in family business is not second nature. Building skills in dispute resolution, having discussions to develop clarity on personal and shared family values, developing empathy and striving toward alignment are all involved in developing resilience in family business. Specialized conflict management trainings for family business can help family groups develop these skills, even in good times, preparing them to manage current and future challenges. As families improve their emotional intelligence, dispute resolution and communication skills, they are much more likely to become better partners in managing conflict and have a better outcome.

3. Define policy, process and organizational structures.
Developing structures that encourage objective decision making and discourage conflicts of interest can help family businesses develop resilience. Similarly, developing clear roles, responsibilities and accountability helps families respond productively during moments of transition or stress. Structural development is particularly useful in identifying where power is held and how power is used, typically the trigger of conflict. Power can also be represented by wealth, and where wealth is held in families that share assets without involvement in an operating company. When power is codified by agreed-upon policy and process — for example, establishing a family bank with clearly articulated purpose, such as paying for education —  conflict triggers might be avoided.
Developing structures such as a family council or an owners’ council also contributes to resilience by clarifying roles and offering an appropriate forum for discussions. These structures support appropriate learning and engagement, which strengthens the enterprise.

4. Look conflict in the eye — and maybe give it a wink.
Exploding in divisive conflict is a sure way to unravel resilience, which is why conflict management is such an important element in developing a resilient family business. Contrary to popular belief, conflict in family business is not a sign of failure — rather, it often indicates that something needs attention. Consider conflict in family business as playing a role similar to that of fever in the human body — it tells us when something is wrong and needs fixing.

Conflict is inevitable in enterprising families. It is important to overcome fear of conflict, and to approach it as a close but maybe challenging friend. Avoiding conflict often makes it worse. By learning more about conflict and addressing the weak points in your structures and systems, you will be creating pressure-release valves that will keep your family and business humming when things get hot. 

Doug Baumoel is the founding partner and Blair Trippe is the managing partner at Continuity Family Business Consulting (www.continuityfbc.com).

Copyright 2018 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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September/October 2018

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