Don’t Let Your Worlds Collide
On the TV show Seinfeld, George Costanza once learned that “worlds colliding” can kill a relationship. Separately, he could handle his obligations to both his friends and his girlfriend. But when he had to deal with both his friends and his girlfriend at once, things “blew up.”
The same phenomenon occurs when the head of a family business lets family issues clash with business objectives.
To reduce the risk of collisions, try to keep your family system of problem-solving separate from your system for solving business problems.
While internal family conflicts can spillover into the workplace at any time, conflicts are most likely to occur when businesses are preparing to be sold. For example, the entire family might not be on board with the decision to sell. Or, they could disagree about how to proceed.
For example, every member of the family may have a different perception of the business.
- The owner: The dad, mom, or both worked hard to build the business. After pouring so much money and time into creating a successful company, they believe it’s time to retire. Getting rid of the business will lead to sorely needed relaxation.
- The kids: Meanwhile, the kids fight over the company. Two children both want to run the business, but have different visions to do so. The third child wants to sell the business out of the family, adopting a “take the money and run” strategy. Some kids who have a stake in the business may expect to be paid handsomely, regardless of their productivity or contributions to the success of the company.
- The spouse: In the middle of it all, the spouse just wants everyone to get along. While she supports the owner’s quest for retirement, she doesn’t want the business transition to create chaos within the family.
How can one decision cause so much dissension? It’s because the family hasn’t separated its family issues from the company’s business needs. This is a necessary step for any family thinking of turning over the business to new ownership.
Understanding the Two Systems
The term family business implies two distinct interests that are often at odds with each other.
The Family System is emotion-based, tied together by emotional family connections. It is oriented inward, focusing on the security of its members. This system greatly values loyalty and protects its own. The family system resists change, and is designed to stick to the status quo.
The Business System is task-based, composed of people with common interest in the work product. The business system is oriented outward, focusing on the production of goods and services. This system greatly values competency and productivity of employees. The business system exploits change in the interest of growth. It adapts to ever-present and unavoidable change to survive.
How to Settle Differences and Think Rationally
If the family resists change and attempts to stick to the status quo, keep in mind that nothing threatens to change the status quo like the owner stepping down.
Your business may have all the foundations in place – good infrastructure, sound financials, a solid valuation – but family issues can threaten all of that. If family dynamics threaten the future of your business, your family needs a plan.
That plan begins with separating family issues from business issues. Certainly, most families do want what’s best for the family and the company. However, due to personal biases, long-held grudges, and family conflicts, it’s not always the rational decision that comes out on top.
If internal family conflicts are preventing family members from thinking rationally about the business, it can be difficult to change their perspective. My advice is not to try to do it alone. You need an objective, experienced expert to help your family determine the best steps for the specific dynamics of your family.
Not all disputes between business partners involve family businesses. But family businesses often face challenges when older generations give unequal shares to younger generations, or when four siblings with equal shares don’t make equal contributions to the business.
There are resources available that can help your family in the face of conflict. Katy Mitchell of KSM Leadership Consulting is one such resource. She is an expert in the interpersonal dynamics of family business transitions. She facilitates meaningful yet often challenging family conversations, and supports the senior generation as their role shifts. Another resource is strategic business attorney Terri Krishova who has also helped family businesses mediate disputes.
You can prevent a business/family world collision by keeping your business system separate from your family system. It’s the key to a successful business and a happy family. Family/business separation is just one of the topics I cover in Succession Planning Simplified. Download this FREE guide for helpful tips.
Recommended Resources
Saving the “Baby” in a Business Divorce: Terri Krishova, Maslon