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Team Building in the Family Firm

A family business has all the right ingredients to make up a winning team: a defined leader; a sense of commitment to a goal; a small, tightly knit group; some measure of creativity; a sense of spirit and an awareness that cooperation is necessary in order to produce a "whole that is greater than the sum of its parts".

Family is one thing, business another. The family enterprise is neither – it can be the best of all possible worlds or a nightmare. The choice is strictly personal.

But often family members in business together aren't able to become a fully functioning team simply because they are a family! When family values come into opposition with business priorities it often creates cracks in the foundation of team development. Building an effective team within a family firm requires attention to both family and business matters in the context of what factors contribute to an active and competent team.

Shared Goals and Objectives

The founder of an enterprise likely has as an overarching goal that the business will be continued by the next generation. While the vision of a multigenerational enterprise may exist, all too often the founder articulates it only in general terms. The specifics of how the family as a team will reach that goal is often not stated or shared with successors –'father' or 'mother' may not be used to sharing 'adult' concerns with children.

Complications can also arise when successors have their own vision of what the business could be – and what role, if any, they will play in the business. Their vision may well be in opposition to the founder's, but usually remains unstated for a variety of reasons including fear of the founder's reaction to any opposing view, a lack of self-confidence or a desire to preserve family harmony.

Like any other team, the family must examine its values to ensure that values, goals and objectives are clearly understood and mutually agreeable. In effect, the family in business together needs a 'family creed' – a mission statement that successfully balances personal, family and business needs.

Building a family team requires time to share and compare visions and time to plan – a family plan and a business plan. Commitment to the plan and a sense of team membership comes from involving all family members in the sharing of ideas and in being able to discuss problems which they see as relevant to reaching or not reaching certain goals.

This building process works best when the family works with an agenda and a facilitator in a retreat-style setting. The retreat provides a break from everyday family and business settings. An agenda helps keep discussions focused while the facilitator can encourage communication and understanding – and channel any negative emotions that may arise.

Conflicts are inevitable the real question is always Will you manage the conflict or will the conflict manage you?

What should an agenda for family team building cover once the values, goals and objectives are clarified and agreed upon?

Some items will be specific to the family and its business, but there are some topics, which we believe every family must examine.

In our experience these common elements include: using resources effectively; trust and conflict resolution; sharing leadership; control and procedures; building effective interpersonal communications; and developing an approach to problem-solving and decision-making.

Using Resources Effectively

Most advisors say that parents should objectively assess their children's skills and then match skills to jobs. It may be good advice, but it's next to impossible in real life.

Parents should be asking children what their skills are and how the child sees them contributing to the business, but all too often children 'grow up' in the business doing whatever tasks are required without any assessment of their skills.

From the outside, it's clear that parents can accurately assess when their child is ready for the snow shoveling/kitchen clean-up/waste management (garbage night) assignment and justify their decision on the grounds that the child is a member of the family – s/he is a team member.

Business is different. In our experience, parents don't objectively ask the right questions or assess their children's skills with cool rationality. It isn't that they don't want to, it's just the natural difficulty of being objective about your own children.

Family enterprises can make objective decisions about children's contributions to the business and accurately assess and match skills with jobs, we've found, when the family has learned to work as a business team.

We've seen that the family's effectiveness as a team in business is further enhanced when the children feel that their opinions are heard and considered, and when the founder, in particular, has created an atmosphere where successors can voice their opinions without fear of negative family or business consequences.

Trust and Conflict Resolution

Conflicts are inevitable in any team situation. In fact, the real question is always: Will the team manage the conflict or will the conflict manage the family?

Families in business together will often avoid openly discussing conflicts for fear that there might be a split in the family. This all too natural fear of family discord is where family and business issues get particularly entangled - since attempts to evade business conflicts usually produce the very discord and hard feelings they sought to avoid.

When the founder says the children aren't ready to take over the business, it usually means that the founder isn't ready to give up control.

In a family business, conflict can be intensified by intergenerational disagreements and sibling rivalry. In many cases emotional, interpersonal family issues are much more difficult to resolve than issues which arise in the strictly business context since all too often family members tend to focus on personality and emotion rather than on the business issue.

To work as an effective team, individual feelings and difficulties that come up between family members and non-family employees must be dealt with.

An outsider who has skills in family firm management or family therapy can be helpful in resolving the more contentious issues, but to be useful, the outsider must be seen to be neutral and unprejudiced.

Shared Leadership

Development and cohesion of a family business team occurs only when there is a feeling of shared leadership – just as participatory leadership creates successful non-family companies. Participatory leadership, however, is a totally foreign concept in the family where parents, not children, are considered the only 'leaders' in a family.

To understand why this is probably one of the most difficult issues in family business just consider the changing leadership dynamics –and stresses – of parents, adult children, teenage and pre-teenage grandchildren sharing a cottage.

Our experience shows that the founder or controlling generation must be prepared to transfer authority as well as responsibility for different aspects of the business to the successors. This transfer of authority and responsibility has to include both operational and interpersonal functions to be successful.

It also has to be accomplished gracefully –and without 'second guessing' once done. It is a difficult task, particularly for founders, but in reality probably no more difficult than other parenting tasks.

If the children are to carry on the business it is crucial that the founder involve them in managing the business. But when the founder thinks that the children aren't 'ready', it's often because s/he is not ready to give up control.

The founder must also be prepared to train the children in the operational aspects of the business as well as the financial and legal aspects. One way we have found is to draw up a contract between the founder and the successors for X numbers of hours of training over a period of time with a detailed plan as to which areas need attention, when and how.

Control and Procedures

More and more activities are added as a family business grows, but little thought is given to regulating these activities. Founders, in particular, seldom stop long enough to recognize that s/he is running the company from scraps of paper in their pocket or purse.

Founders with the entrepreneurial spirit also tend to resist formalizing the way things are done – day-to-day management becomes a matter of "we've always done it this way" or "you should have known how I wanted it done."

While it is possible to successfully learn through osmosis, we believe that unless the founder and the family have established their values and goals the business will likely lack the clear organization and structure needed for the smooth transfer of the business.

Both founders and successors we've worked with have found that an organizational structure with clearly stated goals and procedures isn't as restrictive or bureaucratic as they first feared.

In our experience, what they have discovered is that there is a liberating value beyond the documentation since a formal structure can provide mechanisms for conflict resolution, shared leadership and transition from one generation to the next.

Establishing management and operational procedures doesn't happen overnight, but without some guidelines chaos becomes the norm, the frustration level rises, morale drops and business difficulties turn into family discord.

Effective Communications

Successful team development also depends on the ability of team members to communicate in an open and honest manner. Sometimes, however, openness and honesty between family members is less important than maintaining harmony – "If you can't say anything nice…"

It is possible to maintain family harmony while being open and honest, but if this type of communication has not been developed in the family it will become a critical issue in the family business. However, if parents have been in the habit of listening to their children with courtesy and talking things through with them in a way that separates person and issue, then the transition to business matters will be much easier.

Siblings are probably not used to listening to each other, but have long memories for each other's follies and misdemeanors. It needs some awareness on their part to regulate themselves, ensuring that all team members, including the sibling with the family reputation for not being able to walk and chew gum at the same time, have an equal opportunity to participate in discussions. The real need is for siblings to realize that their lack of effective communication has an impact on the business.

Problems and Decisions

Solving problems and making decisions are two critical team functions. The standard family approach to problem-solving and decision-making is totally at odds with the business approach. In the family, problems are usually solved and decisions made by parents – made in isolation without consulting children.

Most successful businesses, however, are based on participatory management with a group/task force/consensus approach to problem-solving and decision-making.

Families in business need to agree on an approach to solving problems and making decisions that leaves the traditional 'parent/child' relationship at home.

Our experience indicates that families in business need to learn and follow the generally accepted, step-by-step procedures for problem-solving and decision-making in business. Because in the long term, we believe, taking the 'parent at home' approach will only frustrate and obstruct successful transfer of the business to the next generation.

In Conclusion

A team's development can be measured by assessing its ability to get things done – its effectiveness and the degree to which it is cohesive. A cohesive team gives individuals a strong sense of belonging, a commitment to common goals and each other.

It takes time, effort and patience to develop a family business team with its higher level of commitment to the enterprise; ability to respond more quickly to changing market conditions; wider range of committed resources for managing difficult and complex situations; and irreplaceable support system.

Acting as a team, the family in business together benefits as a business, benefits as a family and benefits as individual family members.

ALL ARTICLES PERVIN FAMILY BUSINESS ADVISORS INC.

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