Am I my brother's keeper?
Maybe not. But like it or not, in a family business you may still find yourself making powerful decisions right next to your brother, sister, cousin or aunt-in-law twice removed. Family-owned enterprises are the backbone of the American economy, owning or controlling more than 90% of America's 15 million businesses. Whether it is a McDonalds franchise, a jewelry store started by an Eastern European immigrant grandfather, or a multi-million dollar investment banking firm, family businesses are held to the same management principles and competition as any business. But family enterprises are vulnerable to many more complex issues ‚ ownership and psychological baggage ‚ which can either add to the business and quality of family life or destroy it. Just as society does its best to plow down the nucleus of an ordinary family, family-owned businesses are even more subject. Internal psychologically complex mixtures of money, love, power and envy can spin a lethal web if uncontrolled. Siblings left to share an empire soon battle about more than toys, ponies or fast cars. This is one reason for the old maxim: the first generation makes a successful business, the second generation builds it, and the third generation blows it.
One valuable tool to maintain communication, foster vision, and plan strategically is the creation of a family council. Essentially a forum that allows all family members ‚ in-laws included ‚ a chance to express views and voice concerns. Family councils are an effective technique to give members a greater understanding of the owner's perspective and passion. It also helps teach that the business birthright is not merely an entitlement providing "silver spoon" rewards ‚ it demands responsibility. By allowing each family business member a voice in decision-making, communication is enhanced and, in many cases, improved as family members slice through years of ancient battles.
Sometimes business owners are hesitant to create a family council. They are concerned that their domain will shift from a dictatorship to a democracy overnight ‚ and with what consequence? Many entrepreneurs have ironclad control of their business. They tend to be compulsive personalities because it is, after all, their perseverance, sweat and risk that brought on the spoils. The Weyerhaeuser family, owners of the giant lumber company, endured losses for 40 years before the company showed profits ‚ this owner would not easily relinquish those reins of control.
Yet a family council does not mean a shift in power. Family councils open communication, encourage creative thinking, enhance the family's chances of preserving harmony and set the stage for a strategic family vision. Often the CEO attends, but as a participant, not a captain. Sometimes communication that yields first-hand information to all family members can put an end to future gossip and speculation that in the past may have been an ignition switch for trouble.
WHEN TO BEGIN
Family council meetings should begin as soon as the children (or other relations) are old enough to enter the family business with a real job. A family retreat away from home and workplace is the ideal way to inaugurate a council. An experienced family business consultant is an excellent "guest" facilitator to have on this retreat. He or she can lay out the guidelines and help establish the objectives. The goal of the family council meeting is not to resume a depressing family gripe session with echoes of past hurts but rather to open communication by asking questions and discussing ownership issues in a non-threatening and comfortable manner. This freedom of expression can and should lead to policy and decision making that will benefit both family and business.
WHO'S INVITED
In a first generation family business, the council is usually comprised of the founder, his or her spouse and the adult children. We suggest that the family council also include spouses of the children.
In a second generation business (sibling partnership), the council is usually composed of the sibling partners and their spouses. One business family recently planned their very first retreat for a choice spot in the Caribbean ‚ the Island of St. Johns. The consultant flew in and met the family for the very first time. He noted the room was filled with men. Either none of these men had ever married, or their wives had just not been invited.
"What do you mean?" the men responded when asked where the ladies were. The consultant made arrangements for the spouses in the family to fly to the Caribbean the next day for what proved to be a highly successful meeting. Later, some of the women in the family confessed to feeling "left-out" or "brainless" when they were left back home. The invitation to the meeting wiped away many days of resentment and helped the spouses understand the business in a different light.
A FACILITATOR TO LIMIT BAGGAGE
Though the family members make decisions, a facilitator is often the key to a successful family council meeting. The good facilitator is experienced in steering a discussion away from, for example, 20-year-old gripes and steer towards constructive solutions. He provides guidance and structure and ensures that future council meetings follow an organized format.
BRING LOTS OF TISSUES
The facilitator will make sure that the family CEO attends the meeting as a participant, not a boss. This frees family members to "put their cards on the table" and begin addressing underlying problems that have contributed to seething and pent-up resentments. In more complex, dysfunctional families this may not be possible to resolve in one retreat, but the family can at least identify the issues that affect the business.
THE FAMILY'S MISSION
The family helps define and decide what they want to do with the family business. Keep it in the family? Sell it outright? Be acquired? Go public in how many years? What would happen if the CEO and majority owner died tomorrow? This is where long discussions can decide such issues as should children not involved in the business still have a say in operations? What are the management standards for the business? How involved shall family members and particularly in-laws be in the business? How compensated? What about ownership of company stock? Management succession? Relationships with each other and how can the family agree about resolving family difference? All responses and thoughts to these questions should be articulated in the family creed.
THE FAMILY CREED
This is a document that should be written (or initiated) at the family council meeting. It is designed to spell out the family's basic values and policies in relation to the business. In effect, it becomes the family's strategic plan. A family creed should be reviewed annually and revised as needed. Some family creeds begin with a mission statement or preamble; a statement on management philosophies and objectives; rules on company positions for family members including in-laws; leadership criteria; compensation of family members; voting control and stock ownership; creation of a Board of Directors; present and future communication; a statement on how to treat employees and an agreement to review and amend the creed after a set period of time.
FAMILY FEUDS
There are many who believe that family feuds are inevitable. For example, whenever you get the same blood relatives in one room together at the same time, at least one member will emerge with bruises. (And mother will always get her headache. And father will have a scotch.) Barring severe dysfunction ‚ all families experience some dysfunctional behavior ‚ these family members may never change. Susan may still insist her sister Sharon got the better husband because she was more loved by daddy; that's why Sharon now has a bigger office on the brighter side of the building than Susan. While people may rarely change, behavior patterns can and do. Sometimes they must for the health of both the family and business.
The Koch family of Kansas is one of America's wealthiest families. Yet the sons (sibling partnership) could not get along together in their business. The oldest son, Fred, went off to New York as a patron of the arts, which may have been difficult to do later when his father disinherited him. Son Charles entered the family business, as did twin brothers David and Bill. Bill was terribly envious of Charles, who possessed excellent athletic ability. It got so bad the mother sent Charles away to boarding school at age 11 because of the "terrible jealousy" that was consuming young Billy. Later that jealousy would consume him as he tried to take control of the company from Charles and failed. Charles fired Billy in 1980. Billy sued Charles. And the saga, sounding like several years of the old "Dallas" TV series, went to trial last month in Topeka, Kansas.
Siblings can prevent rivalry and jealousies from becoming a destructive force by recognizing its destructive capacities and agreeing on a behavior code with help from an independent board of directors or a facilitator. Conflict is inherent in family business. The question is, will the family choose to manage the conflict or will they by not addressing the hard issues allow the conflict to tear the family apart ?
The owner of one family business put it to his heirs this way: "We have a fine family business that your mother and I have spent years creating. If you take care of it, it will provide you, your children and grandchildren with many of the good things in life. If you spend your time watching and bickering with each other instead of tending to business, you'll destroy the company and in the process, you'll destroy yourselves."
The family council can help establish a spirit of openness, respect and cooperation that can minimize conflict or, if differences are truly major, provide adjudication to help control the conflict. Fairness is in the eye of the beholder ‚ Texas columnist Liz Carpenter says she has never seen a nickel distributed between siblings without a harsh word shed. But with planning, preparation and counsel, siblings can develop a regenerating system to cover the inevitable bumps and provide for a lifetime of healthy and productive communication.
Like two brothers from Jerusalem who shared a family grain business: To ensure fairness, the harvest was divided equally into two bins, one belonging to each brother. Each evening after the grain bins had been filled and locked, each brother ‚ unknown to the other ‚ dumped a bit of their grain allotment into the other brother's bin. It was each brother's plan that he wanted his sibling to have more than enough food for family and profit. And so at night, when no one was looking, each would secretly replenish his brother's bin. Late one dark night they discovered their secrets as they collided with each other on their way to commit this secret but kind-hearted deed. Why did they continue the secret replenishing? Because, said one brother, I am happy to be my brother's keeper.
