ILLUSTRATION BY RUTH MACAPAGAL
Family businesses are a unique breed. They encapsulate the essence of both worlds – family and business, blending emotions and profit, love and logic. These bring forth unique challenges in personal relationships, sibling rivalries and many other dynamics that could severely affect the business performance and the family’s harmony.
How do I know? I have worked closely with some of the wealthiest families in the world. Most of the clients of my global strategy and management consulting firm, the Tom Oliver Group, are family business conglomerates. As the Al Roya Newspaper in Oman said, “For over 20 years, the Tom Oliver Group has advised family business owners and the best global brands as one of the world’s most famous management consulting companies.”
Of course, our clients ask us for support in the usual areas, ranging from innovation to profit optimization, from growth and expansion to diversification and strategic planning. But some of the requests are unique to family businesses. One of them is the resolution of family conflicts and how to achieve optimum levels of collaboration between family members. These issues usually revolve around managing family conflicts, which, if not addressed effectively, can drive a wedge between the business operations and the family members themselves.
The yin and yang of family businesses
Family businesses aren’t all doom and gloom. Indeed, many stand as a testament to positive synergies that can be harnessed when family ties are well-managed. Take, for example, the well-renowned Walton family of Walmart. The Waltons have been able to navigate the rocky road of family dynamics while maintaining the exponential growth of their business, now one of the world’s largest retail corporations. They established a clear governance structure and separated family and business roles, ensuring that the decision-making process was insulated from personal disagreements or rivalries.
The patriarch’s final wish
The 80-year-old patriarch of a third-generation, highly successful family business conglomerate in Switzerland approached us to help them professionalize and pivot, with the goal to use the many unique opportunities and remain market leader. But he came to us with yet another request: to make sure the sons would work closely and peacefully together so that he can be assured the future of the business is safe when he dies.
In this case, the family had many children, but only one was chosen to lead, as is usually the case. This created sibling rivalry and tensions. In order to solve this, we used a combination of personality assessments and personal coaching to ensure the sons understood each other’s strengths and weaknesses. We helped them realize they complemented each other well in their different roles and they were placed exactly where they could make their best contribution.
As a result, they understood that this was not about competing against each other, but rather, about future-proofing the business. And here, their combined strengths were the business’ greatest asset.
It’s lonely at the top
Many leaders at the helm of family business conglomerates need advice on how to walk the dual path between sibling and business leader because they often feel isolated within the family. The CEO of a family business conglomerate in the United States suffered because he felt he had lost personal touch with his four siblings, being the chosen one to lead. His siblings only saw him as the ruthless CEO who would decide everything by himself and not let them into his world.
To avoid conflict with his siblings, we recommended that he organize regular informal family get-togethers. Here he could show his warmth and emotional side while making sure they understood the heavy burden he was carrying. We encouraged him to use these occasions to explain that as the CEO, he had to make many uncomfortable decisions to ensure a prosperous future of the business. This enabled them to understand that he had to be the ruthless CEO who did what had to be done, but that he was also their caring brother.
Conflict is inevitable; destruction is not
The matriarch of a family business conglomerate in Singapore approached us with the request to future-proof their business, boost profits and also make sure the two children she chose to head their group of companies would collaborate well.
When we accepted, we quickly saw that the conflict between the two children at the top could not have been darker. They were about to bring the whole business down. They would usually refrain from talking to each other, let alone solve conflicts and not address the conglomerate’s challenges.
We took a multi-faceted approach to solve this situation. First, personal coaching of the two siblings was needed to ensure they understood how vital their collaboration was for business survival. When talking to the top executives, we discovered that most of them wasted half their time and energy worrying about sibling rivalry and its negative impact on operations. It was vital that we could free up all this headspace so the top management could go back to focusing on what mattered most: growing the business.
Apart from personal coaching, we set up legal and operational structures that would allow the siblings to have clear swim lanes of responsibility, both now and after the matriarch’s death. This included provisions that made it impossible for them to tear the business apart after her death.
Lastly, we established a clear communication schedule so they would have a weekly huddle to openly address any challenge or matter needing urgent attention. The results? The business thrived and now they are on their way to having their best year.
Practical steps on how to turn conflict into collaboration
1. Separate business from family: Like the Walton family, strive to separate family from business matters. Establish rules and guidelines to prevent personal grievances from spilling over into business discussions. For instance, business meetings should be strictly professional, focusing on business strategies, operational issues or financial performance.
2. Set clear roles and responsibilities: Defining roles, responsibilities and decision-making processes can help minimize conflict. Family members should clearly understand their role in the business, what is expected of them and the decisions they are responsible for.
3. Establish a conflict resolution process: Conflicts are bound to occur and when they do, it is crucial to have an established process for resolving them—whether it’s a family council, mediation or professional arbitration.
4. Succession planning: Doing this early on and involving the entire family in the discussion can help avoid future disputes.
5. Open communication: Encourage open and honest communication among family members. This will help to prevent misunderstandings and facilitate resolution when conflicts arise. INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email Tom.Oliver@inquirer.com.ph.