Taming the emotions that upset business

The way to avoid destructive arguments: Lay down rules and learn to accept what can't be changed.

By Peter Davis

Social psychologists like to make a point about human behavior by describing an experiment with a frog. If the frog is dropped into a bucket of hot water, they note, it will jump out immediately and instinctively. If it is put into a container of cold water that is slowly heated, however, it will sit there getting hotter and hotter-until it cooks. In much the same way, we human beings seem to have an infinite capacity to rationalize our own discomfort-even at our peril,

Many people in family businesses continue to endure boiling emotions; they hope that things will eventually get better but they are unwilling to take a leap that will lead to relief.

I have seen fathers hold onto a conviction for 20 years that their sons are not good enough to take over the business, without telling them so. I have seen brothers act out the struggle to be King of the Mountain for a lifetime. In day-to-day decisions, I've seen some family members trying repeatedly to make a point ("You can't control me") or clinging compulsively to old beliefs ("My daddy put me in charge, and if I don't look after things we face disaster").

People in such situations need therapy perhaps. But I am a great believer that they can frequently dig out from under these messy emotional issues by learning some management techniques or problem-solving skills.

Emotions are like a huge tumbling wave with many powerful cross-currents and eddies. The good surfer learns to maneuver amid conflicting forces, avoiding some and riding the crest of others, going with the flow. He survives by mastering skills.

The first skill to master is knowing how to separate family issues from business issues. Some people are good at planning to deal with business problems, but make no effort to anticipate family upsets. For example, any switchover to modern computerized techniques in manufacturing is bound to cause upheavals in any company. In one family owned concern, a son with a newly minted MBA came into the business founded by his father and launched a large-scale project to transform it into a state-of-the-art, just-intime operation. The concept was fine, but the execution was chaotic. Orders were lost.

The sales group became angry at manufacturing. Everyone was angry at the son, who had replaced an experienced nonfamily manager and was viewed as "that young smart-ass from MIT." And the son resented the father, who, he felt, was not supporting him.

The father had driven an older son out of the business, and the brother who was now in charge felt the same might happen to him. He became increasingly discouraged and uncommunicative. A wise family could have anticipated the trouble. The father and son had little to do with each other outside of the business. There was no trust, no warmth between the two. But to carry out a project causing widespread disruption in the company, they had to pull together, to share confidences, to have complete trust in each other.

There are many emotions in older family businesses which, if you don't realize are there, can do a lot of damage. I know one family that is still reacting to an incident that occurred back in 1904: A great-grandfather connived to get his sister to sell part of her stock, which put him in control of the business. That episode has shaped how people in different branches of the family behave toward one another to this day.

Families have to accept that some things, like an iceberg that has been there for centuries, cannot be changed. I sat through a board meeting in one company recently at which the members spent an hour trying to force the founder to professionalize his business before passing it on to his son. But it isn't going to happen. This man is not a natural manager, he's an artist who loves his freedom and spontaneity. He is going to take his son under his wing and train him until he becomes a carbon copy of himself.

The old man isn't going to hire any intermediaries, no new business school graduates, to help in the transition. The board members have no choice but to go with the flow, which is dictated by the father's style and passion. Certainly this is risky in any succession process; the trick is to help the old man make it work and not waste energy trying to change his ways.

Another thing that we can't easily change are the standards of fairness that have evolved historically in the family. The standard may be based on equality-all siblings share equally in the fruits of the business-or on equity-each gets back according to what each contributes.

Let's say that in the second generation, the standard of fairness that's been established is equality. In future generadons this may be translated as meaning that all branches of the family will be represented on the board. Then along comes the fourth or fifth generation, and they want to change the standard to equity. When one or more of the matriarchs discovers that this new principle will exclude them from the board, all hell may break loose.

The principle of fairness changes only slowly, or under exceptional circumstances, if at all. So in the example described, if we want to accomplish something in the company, we should keep the matriarchs on the board and build around them.

We also can't do much to change the basic ways in which siblings relate to one another. Two common patterns are "fight to kill" and "fight to relate."

If siblings are out to destroy each other, nothing much can be done; going with the flow in such circumstances would mean dissolving or splitting the business. I asked one brother what his goals were in the business. He answered simply, "Revenge." A buyout soon followed.

But, curiously, some brothers and sisters seem to define themselves in battles with their siblings; the only way they know how to relate is by fighting each other. The message here is: "If I don't fight with you, I won't know who I am. I hate you, but I need you. So please don't go away or talk about selling the business."

I was called in to make peace between two brothers who were constantly fighting. One day when I was present they were arguing in front of a cousin. She looked at them and admonished (partly for my benefit): "You are always fighting with each other. It's a mess. You should sell the business." At that point, both brothers turned on her angrily and told her to stay out of it.

We can conclude with some confidence that these brothers are always going to fight and are not going to sell the business. Pressuring them to sell simply won't work-and it may disrupt. Instead, we should keep them apart as much as possible, give each his space, so they don't bump up against each other constantly.

Managing the emotions also calls for making critical distinctions and laying down some ground rules in the business. The importance of an explicit set of rules, a family constitution if you will, is illustrated by the case of two sisters who own a business. One works in the business; the other's husband works in the business while she does volunteer work. The question comes up: What happens if the brother-in-law dies? The second sister, his spouse, will need help in maintaining her standard of living.

The family asks her to propose a solution. She responds, "Under those circumstances I would want to take a parttime job in the business, and I certainly would want to make at least as much money as my sister."

This woman is obviously missing some important distinctions here. If the family had established the principle of equity beforehand, her proposal would have been clearly out of line-so out of line, in fact, that it would suggest another interpretation: She was making an unreasonable demand because of competitive feelings toward her sister. This is therefore a family issue not a business issue. The right way to resolve it is sister-to-sister, not attorney-to-attorney. The family is, in fact, trying to get the lawyers out of the dispute and settle it themselves.

Lastly, family members have to recognize-and avoid-issues and circumstances that they know from long experience are explosive and best avoided. Tom Watson Jr. of IBM, for example, learned that some issues in his relationship with his father were too difficult to handle face to face. So he learned to write to the old man about them (see "How father-son battles helped shape today's IBM," FB, September 1990, page 14).

Managing emotions in the family business is an art that requires considerable training. Not everyone is up to it; many need outside support. In the great majority of businesses, the problems can be managed through anticipation, commitment, some skill, and a good sense of humor.


Peter Davis is chairman of Family Business's advisory Board, and the director of the Division of Family Business Studies at the Wharton School.