It was unusual for my old friend Walter Waitingame to phone at 8:30 on a Sunday night unusual and inconvenient, just when the kids are getting their second wind and it's my night to give them their baths. But he sounded upset.
"How about if I call you in the morning?" I suggested.
"No, no, don't do that," Walter said. "I can't talk freely about this at the office."
Enough said. Things hadn't been going smoothly for Walter at Onceler Enterprises. He's been with his father-in-law's company about ten years, rising from assistant executive to executive assistant.
"I've got an appointment in your neighborhood Tuesday morning," I offered. "Shall we meet at your office and go to lunch from there?"
"No offense, Ken, but I'd rather my brothers- and father-in-law not see me getting together with you."
So it was at a dark, secluded taco place on the other side of town where Walter confided his secret fears.
"Marcie thinks her brothers are colluding against me," he said. "One of her sisters-in-law let something slip that could possibly indicate they've convinced the old man to bring in an outsider as president of my division."
"Maybe he's got bigger plans for you," I suggested.
"Maybe. Maybe not."
"Maybe they feel someone with valuable experience elsewhere could serve as your mentor for a few years, until you're ready."
"I thought I was ready. That's why we bought the house in Lake Forest. The one with the balloon mortgage."
Walter and Marcie were in a poker game with old man Onceler, who was playing his cards close to his chest. An owner's unwillingness to share information is a common source of frustration in a family business. Owners who are accountable to no one but themselves generally don't teach anyone their seat-of-the-pants flying techniques, don't reveal their succession plan (usually they don't have one), and rarely face the necessity of a rational compensation and benefits scheme. If an owner suffers a heart attack, the person who suddenly has to pick up the reins is unprepared. The company lacks a contingency plan to compensate for possible market changes, or to counter competitors who might force them to streamline or die. And, as in this case, the seeds of suspicion and mistrust among family members are sown.
But there is another side. The ability to operate in secrecy is a well-known prerogative of privately held businesses. Public companies must report to shareholders. They have to file with the S.E.C. and must continually fine-tune their image with the press in order to maintain their stock's attractiveness while at the same time avoiding the wrong kind of investor interest. "Closely held" and "keeping it in the family" are phrases that apply to information as well as to profit in a family business.
Privacy is an advantage of the family business. Yet privacy is incompatible with teamwork. The solution is clearly to seek a middle road between openness and secrecy. How do you decide how open to be, what to be open about, and which secrets to guard rigorously?
Successful families use what the military calls a "Need to Know" rule (which they apply implicitly, if not as a matter of explicit policy). If a decision effectively has been made, Onceler ought to announce it to all who will be affected and who need to plan accordingly. Keeping it secret for weeks, months, or years, besides being unfair, is sure to inspire resentment after the decision comes to light, and family members or other employees who make plans and financial commitments based upon misassumptions or false hopes will feel betrayed.
The issue of "who needs to know what" also arises in the area of assessments. If the Oncelers are concerned about Walter's performance, perhaps looking for improvements, they had best be sure he knows the criteria on which he's being evaluated. As with many decisions, others don't need to know about it, but Walter himself certainly does.
A third important area has to do with secrets that are kept from you, by family members, employees, and even customers. As a top manager, you cannot respond to family tensions, employee gripes, or customer complaints you are unaware of. Openness is a two-way street. Thus if you remain open, share appropriate information, and invite comment, those around you will keep you posted and be less inclined to be secretive.
That still leaves many people who are best kept in the dark. Old man Onceler may have good reasons for keeping Walter uninformed. But I doubt it; it seems unlikely that it has anything to do with maintaining a competitive edge as a privately-held firm. It probably has more to do with Onceler's personality. It is not a case of "what you don't know won't hurt you" because it can, but rather, "what you don't know, you won't question me about and I'll remain in control." Right up to the moment it hits the fan.
Of course, like Walter and Marcie, I'm only guessing.
Kenneth Kaye is a Chicago-based psychologist who runs workshops for families who are in business together.