Conflicts are part of human nature and are inevitable. In a family business context, they should not be suppressed, but every effort should be made to resolve them with understanding and judicious wisdom. This is the true test of leadership in this scenario. One needs to try and prevent, if not preempt, conflicts, and manage them adequately when they occur.
It is true that the term “family business” comprises two words: family and business.
However, family + business do not necessarily = family business.
While we place family at the center of any business succession exercise, we also address each of the other two elements that make up the family business equation: the family business and the family finances.
This being said, we do put more emphasis on the family and on family matters, knowing very well that, if we miss a step, all the work we do on the “business” and the “finances” sides will fall apart, at the first opportunity a crisis hits the family or the business.
Three factors underpin this philosophy:
• Human nature
• Money and the effect it has on people
• The ever-evolving values system
Despite what you hear, or believe in, human beings are not born equal.
Some are born with a silver spoon in their mouth, others not. Some are healthier than others. Some are smarter. Some are prettier. Some are wittier, and so on.
Jealousy, envy, hatred, and rivalry cohabitate with love, affection, and camaraderie.
Psychology and psychiatry teach us that these are traits that exist in every single one of us, and even between parents and children, among siblings, and among cousins.
The manner in which people behave with one another is not the subject of this book.
We only need to highlight that these traits exist and that they affect people’s behavior and relationships with one another, and they cannot be ignored.
In a family business, the family needs to identify these traits and take note of them. If left unattended, they have a tendency to fester and poison the relationships among its members. Sooner or later, they will surface and cause irreparable damage. There is no sense in hiding behind one’s finger, and pretending that they do not exist.
Conflict erodes trust.
Many of the families in business I have worked with are families with financial wealth.
I have observed that the relationship people have with money is very personal. Certain relationships are healthier than others.
In many cases, money is a corrupting factor. For some people, money is an end, but for others, it is a means to an end.
Many among our NextGen family members had difficulty dealing with money and many among the seniors had difficulty teaching their children the value of money and the way it should be managed.
For some, money seemingly grows on trees; for others, it takes sweat and blood to generate, and is dear to them.
This disconnect between generations often cohabitating under the same roof has, in many cases, caused dramas within families.
For many who feel entitled, “the bottom line is the dollar sign.” Nothing else counts.
The money factor alone, if not addressed properly in a family business succession planning context, will distort the outcome of any exercise.
Discussing money in public is deemed to be, in certain circles, taboo and depends very much on the cultural context.
People may be happy bringing up the subject in private, but not in public.
Unfortunately, “money makes the world go around,” as the song goes, and in 9 out of 10 of the mandates we have worked on, money has been the main underlying subject that no one is willing to bring to the table. It is like the elephant in the room that no one dares address directly.
“Father does not give me enough.”
“I am taken for granted. I am not paid a fair wage.”
“I need so much to make ends meet.”
“Why is my sister-in-law better off than me?”
“Why is the non-family CEO earning more than me?”
“Look at my brother’s house, and how he is living. Why not me?”
“Father loves my sister more than me. He keeps on buying her stuff.”
“My husband always brings a gift for his mother when he comes back from a trip, not me.”
“Our inheritance is blocked because my brother is selfish. He has money, I don’t.”
“My elder brother always lectures me about my spending habits. Who does he think he is?”
“My father died, and my uncles no longer give us the same income he used to bring home.”
These are but a few of the examples we hear as we gather data.
(c) Values Systems
The world in 2020 has nothing to do with the world in 1920, or 1820.
Globalization and artificial intelligence have disrupted societies to their core.
A new generation of highly educated boys and girls are hitting the market. “GenZees” (Generation Z, those born after 1996) and the Millennials before them, are challenging the status quo and are demanding to sit at the table with the big boys—and to be heard.
This has resulted in a shake-up in the value system governing the relationship among people for centuries.
At the family level: the pater familias, as it was known for generations, has disappeared. Parents (can) no longer “whip” their children into shape, and primogeniture, as has been practiced for centuries is being
challenged, as more educated women enter the workforce.
The concept of parenthood is changing, and the role of parents is evolving.
The spotlight is now on the role of “education” (at school) + “upbringing” (at home) + “general knowledge” (personal development), and the manner in which they shape people’s behavior and attitude.
At the business level: Slavery has disappeared and the master–servant relationship has evolved and is gradually being replaced with a more collaborative employer–employee relationship based on trust and mutual respect.
NextGen employed in the family business are no longer taken for granted and are now competing alongside non-family member employees and executives for positions and promotions.
Nepotism is fading away and is being replaced by meritocracy at all levels. Siblings and cousins (current or future shareholders) are watching, and they now have a voice.
In today’s world, privacy is compromised. Transparency has become the norm.
Excerpts from Dynastic Planning - A 7-Step Approach to Family Business Succession Planning and Related Conflict Management
By: Walid S. Chiniara