In my experience, the majority of family business conflicts have their origins somewhere outside the issue that people think they’re arguing about. Old unresolved disputes or unforgiven affronts can simmer under the surface for years and then erupt into open warfare when some unrelated event in the family or the business pulls the trigger. Or a family member’s frustration and hurt when his or her place in the business suddenly changes can boil up as external hostility that reflects, but doesn’t resemble, the inner turmoil that’s causing it.
The death of a senior family business owner and active company executive invariably affects both the family, with a sense of loss and grief, and the business, with a sense that an era has ended. Even with the best of contingency planning, things are no longer as they were, and people may react in unexpected ways.
Your brother may feel his position in the company has been either elevated or downgraded by your father’s death. Or perhaps he believes that your position has been either elevated or downgraded and is reacting to that. Maybe your own behavior has changed, and what you’re seeing is your brother’s reaction to that change. Or your brother could be having a crisis of confidence in you as president of the company without your father’s hand on your shoulder.
You didn’t mention if your sister and her son also find your brother’s behavior unsettling. But in any case, it’s important for all of you to distinguish behavior that’s simply annoying from behavior that’s interfering with sound management decision making and threatening employee productivity in the short term and the continuity of family ownership in the longer term. If it’s the latter, you should move deliberately to analyze the problem, identify who “owns” it and its root cause, and take corrective action. Your business was built up over three generations, but it can be brought down in one.
Remember that this is a time of profound change for all of you, and taking charge of change is the best way to ensure that it produces improvement in your business and doesn’t undermine its stability and purpose. Consider organizing a series of retreats during which the four of you can sort through all the effects of your father’s death on family and business dynamics; you could be surprised by what you discover. You might even work together to modify the executive structure to more effectively manage the business in his absence.
Because there’s already evidence of family tension, bring in a facilitator experienced with family business issues to help guide the process of resolving concerns and clarifying roles. Commit yourselves to drawing up a new strategic framework that will restore your common focus and preserve both the business’s integrity and the family’s legacy and financial security.
— James W. Lea, Ph.D.
Lea, a professor at the University of North Carolina at Chapel Hill,
is a family business speaker and adviser (email@example.com).
The writer is experiencing the ripple effects of change. Dad’s passing changed the family dynamic; he may have been the buffer or mediator between the older brother and the younger. His passing also changed the business ownership dynamic; now, perhaps for the first time, the younger brother is taking an active, interested role in the operations of the family enterprise. An overall unease about coping with the changes in the family, ownership, work and wealth dynamics triggered the request for advice.
Note that the stated problem is only from one sibling’s perspective. To paraphrase: “My brother is out of control, he is managing poorly and he is not observing the chain of command.” If another sibling wrote the letter, the comments likely would have been different.
Entrepreneurial family business owners are fast-paced people, and they want speedy solutions to their problems. In this case, it looks as if the writer would like someone to “fix” his brother. The reality is that these problems took a long time—perhaps decades—to manifest themselves, and solutions to the problems will require a process of gradual change (evolution, not revolution).
What this family and business need is strategy and structure. The first step is to understand the system better by interviewing every stakeholder and soliciting each person’s view of the situation. The family may need outside help; if their communication is reasonably safe and sound, it’s OK for them to meet together to attempt to brainstorm potential solutions. The family should undertake an objective view of the family enterprise. Which businesses are vital and viable going forward, and which should be closed or sold?
In terms of strategy, the family needs a common vision for where the business is headed. In multi-generation family businesses, it is rare that individuals share a common philosophy on business strategy. Finding alignment there would offer a tremendous boost.
As for structure, most family businesses have underdeveloped systems of accountability. The writer’s lament that his brother “demands an explanation from me” may say that either he’s never been held accountable before or he doesn’t want to be held accountable. The management team should determine what business decisions can be made unilaterally, what decisions should be made by consensus, what decisions must be made by vote and what decisions must be made unanimously. In addition, job descriptions and accountability metrics would help keep everyone honest with respect to day-to-day job performance.
While the writer might be sorely vexed by the changes in the family business system, he should know that the passing of his father creates an opportunity for review and revitalization that could help this enterprise surge from the fourth generation into the fifth.
— Wayne Rivers
Rivers is co-founder and president of the Family Business Institute Inc.
in Raleigh, N.C. (firstname.lastname@example.org).
Clarity, clarity, clarity within a family business matters almost as much as “location, location, location” matters in real estate. Sometimes it’s useful for everyone in the family to draw an organization chart. I wouldn’t be surprised if no two are alike.
In your position as president of the holding company, who ordinarily reports to you? Does your younger brother have clear authority over one division? How do your sister and her son fit into the chart? To whom do which non-family employees report?
Your father’s management style may have something to do with the current confusion. Some successful entrepreneurs see themselves as the hub of a wheel, relating to everyone in the circle that surrounds them. As long as they are competent this can work well, depending on the size and breadth of the company, but an unplanned departure will create significant problems.
In my years of study and work with many families I have learned one thing: What people do always makes sense, unless they are on drugs or have major brain damage. We just have to work long and hard enough to try to understand what is behind behavior that seems puzzling. Would your father have promised your brother something without telling you? Is there unresolved sibling stuff left over from childhood? Were you always in charge at home? Did your brother get a better bicycle? Maybe he doesn’t believe in monarchy anymore, and no longer believes that the eldest son should inherit the kingdom.
How has ownership been transmitted? Who controls the voting stock? If you are equals in ownership, the control of the company may be ambiguous. Do you have an active, professional board that has endorsed your leadership? Who chairs that board, which is the ultimate authority for any company?
The first step is communication, communication, communication. I suggest you meet privately with your brother, away from the office, so you can describe the feedback you have been getting and your personal concerns. Sharing observable facts plus your feelings (without labeling his “ego” as the problem) is the best formula for a clean confrontation. He may have some explanation that will surprise you. If his performance with employees continues to be a problem, you might become his advocate by encouraging him to get more training in supervision or management skills. If he doesn’t respond, and you have a controlling interest, you will have to take a tougher approach, perhaps including a 360 review of his performance (and other managers’, too), so you have data to back up your decisions.
Since you are a fourth-generation company (congratulations!), you must have a track record of resolving problems in the past. The question now is whether you, your sister and your brother can build a viable sibling partnership without your dad in the center. Confronting the problem sooner rather than later is in everyone’s best interest.
— Ellen Frankenberg, Ph.D.
Frankenberg is a Cincinnati-based family business consultant who facilitates family meetings
and coaches executives and successors (email@example.com).
From your question, it appears that your brother was responsible for day-to-day operations while your father served as chairman of the board. His death may have triggered some unresolved tensions and lack of clarity about leadership and responsibilities. For example, when your father was alive, was your brother’s problem with employee retention apparent? If so, was it addressed? Has your brother’s role changed since your father’s death? As president of the holding company, are you clear what your role is within the operating business?
While this transition has created tension within the family, it provides an opportunity for the ownership group to get together and discuss how the fourth generation plans to own and manage this business. In a time of change, it is always good to refresh your vision and update your plan for the future—for the business as well as for the owners. Hiring a family business specialist trained in family dynamics as well as planning and problem solving can be crucial for success. Family members often have difficulty discussing sensitive issues because they are worried about causing irresolvable rifts. A trained expert will create an atmosphere where people can envision the future and solve problems.
Your board of directors can be beneficial in this time of leadership and ownership transition, particularly if it is an active board with trusted outside directors. If it is not, developing this governance structure can be very helpful. This is an action item that probably would come from your planning process.
As owners review their plans for the business, it is crucial that they develop trust in the one with responsibility for day-to-day operations. Leadership should be held accountable for running the business efficiently and maintaining profitability. Strategic planning that includes top managers can create a road map for maximizing the business’s strengths and addressing its weaknesses. As part of this process, the problem of employee retention may be addressed and a strategy developed.
If the leadership your brother is providing creates significant issues, the family business adviser can coach him to improve his management style. Some leaders can learn to be more effective; other times, hiring people who relate better to the leader’s style may be more appropriate. Ultimately, however, it is the role of the board of directors to hire the best leader possible for the business. As businesses go into the fourth and fifth generations, they frequently employ a professional or non-family manager.
Joining together as a family to address these business issues and to develop solutions that are beneficial to all is a challenge, but the results can be very satisfying. Most businesses were created and grown through hard work and struggle. This is just one more chapter.
— Margery Engel Loeb
Loeb, president of Loeb & Associates LLC, consults nationally to families in business
on transition, change, communication and planning (firstname.lastname@example.org).