Issue link: https://read.dmtmag.com/i/279349
I DA U N I V E R S A L M a rc h -A p r i l 2 0 1 4 33 he manages. e decision was made without input or consultation from his sibling partners and without having previously developed a process for next generation family members to enter the business. e sister and other brother's feelings are hurt because: "We thought we were partners, and he didn't even ask us for our opinion ..." We can see how easily people fall into these sorts of problems. Dan is trying to be a good father, and he may not see that his action has led to a signifi cant decision and precedent in the family. In his mind, he is just fi xing a short- term problem. Dan is confused by the intensity of his siblings' reaction. Yet, it is not surpris- ing that emotions escalate over the issue, because clarity on decision-making rights is particularly tricky in a family business where there are over- lapping roles. What you want as a father versus what makes sense for the business may frequently come into confl ict, and for these confl icts to be addressed fairly, it is important that decision-makers resolve them consistently. In this case, it may be important that the siblings have a discussion (maybe even including their kids) to determine a policy around how next generation family members can enter the business. Clarifying who has the authority to make what deci- sions and ensuring that all family members understand and abide by these rules is an investment in good feelings and a well-functioning family team. Concepts in Action: Communication and Information Flow (CIF) Scenario: A group of fi ve cousins own and operate a multiple enterprise family business with seven fourth- generation family members working in the business from entry level to middle manage- ment. One of the cousins, Bruce, is the CEO and chair- man of the board. He has two children working in the business: one at an entry-level position and one in a middle management position. Both have aspirations to move up the ladder, as do other fourth- generation family members. Recently, the family has undertaken major growth initiatives, and Bruce is lead- ing this eff ort. When Bruce becomes aware of an acquisi- tion candidate that he believes fi ts with the growth initiative, he begins sharing information with his sons about the acqui- sition opportunity. However, Bruce shares the information with his sons before he shares it with other members of the board and management team. rough casual discussions and informal interactions, the other members of the board and management team get the sense that Bruce's chil- dren know more about what is going on than they do. e members of the board and the management team's feelings are hurt because important information has been con- veyed to them out of sequence. Given their positions in the business and their higher standing, they believe they should have known fi rst. How information fl ows is a powerful signal around stand- ing within families and busi- nesses. If family or business leadership conveys important information to one or more persons of (supposed) diff er- ent standing out of sequence, this can signal that some have favored status. is likely will lead to anger, hurt feelings and an erosion of trust among those who believe they were slighted by not receiving the information. Further, those who received information, or received the information fi rst, may start to believe they are special and entitled to diff er- ent access, making it diffi cult to adjust to any requests to change the fl ow of information going forward without escalat- ing resentments in the system. Getting communication right requires real eff ort. In general, it is important to be as transparent as possible to build trust, yet some information cannot be widely shared. Some- times the members of the board need to get information before others in the business or family. Again, this dynamic can be particularly intense in a fam- ily business where one family member is in a leadership role in the business, which can o en lead to the perception that their kids are better informed or connected than their cousins. Whether the problem is real or not, this perception will lead to a sense of inequity of opportu- nities that will erode trust and create bad feelings. Families need to clarify a system for actual information fl ow and work hard to combat appear- ances of unequal access as well. Concepts in Action: Accountability and Reward System (ARS) Scenario: A 50/50 sibling partnership in which two brothers own and are working together to lead the business they inherited from their father. ough their respon- sibilities diff er, ever since they started working at the business, their compensation has been equal. Over the past seven years, the business has achieved signifi cant and profi t- able growth, with one brother, Richard, being the "driver" behind the growth. Rich- ard's brother, Jacob, has been content to go along with the growth plans and doesn't hold the business back. He has not contributed nearly as much eff ort as Richard has to achieve the successful fi nancial results, yet he has been equally shar- ing in the fi nancial rewards of the success. As the months go by, Richard is starting to experience some feelings of animosity toward Jacob. ese feelings are a result of what he perceives as inequities in what he is receiving in return for his contribution relative to his brother, and his brother never acknowledging it. When a situation like this is le unattended, Rich- ard's negative feelings will grow deeper and deeper and eventually lead to further resentment for his brother, Jacob. e negative emotions stem from a real or perceived lack of fairness on Richard's part regarding equal pay for disproportionate generation of results. Of course, fi nding Continued on page 35