The Key To Successful Family Business Communication

Over two thirds of the respondents in the MGI Australian Family & Private Business Survey 20101 (The MGI Survey) indicated that the most critical issues/challenges confronting Australian family businesses revolved around two main topics: communication between family members, and leadership and ownership succession, more particularly, letting go of control. (Refer to the table below)

Critical Family Business Issues and Challenges

In this article we explore the first of these topics: communication, and the related topic of conflict management. Subsequent articles will examine other topics, including leadership and ownership succession.

The MGI Survey also indicated that 41% of responding family business owner-managers believe that family-based issues are more critical than business-based issues, and 46% believe that when family-based issues are resolved, business issues can also be resolved. Interestingly, nearly two thirds agree that the ultimate challenge in family businesses is dealing with the addition of work/business-based relationships on top of pre-existing family-based relationships. Notwithstanding these views, few family businesses have implemented processes designed to anticipate, minimize, or avoid conflict or to manage it adequately when it arises. This is demonstrated by the Survey findings that 86% of family businesses have NOT set rules to strengthen interpersonal relationships and manage the expectations of family members; 82% have NOT established policies to deal with predictable family-in-business issues before the need arises; and 72% do NOT hold regular family meetings to share information, build trust, avoid politics, and achieve consensus.

Communication.

Communication is the perennial challenge in relationships. It manifests itself not only as lack of communication, but also as miscommunication, given that ultimately it is the message that is received rather than the one that is intended or delivered that constitutes the communication. Effective communication requires expressive skills, listening skills and the requisite process skills to manage an effective interaction; it is as much about what is done as what is said. There are many roadblocks to effective communication including judging, providing solutions or advice, and skirting or avoiding addressing the genuine concerns of others. All of these factors add to the difficulties that people generally experience in communicating effectively.

In the family business the issue of communication becomes an even greater challenge due to the different roles and relationships that family members have in the business including personal and family complementary/reciprocal roles, organisational roles, and equity or ownership roles, each of which influences the expectations of family members. As a result, when communicating, family members are potentially sending, receiving and interpreting messages from the various roles. As a result it has been suggested that the business-related communications of family members are “ongoing, oral, relatively unplanned, relationally important, emotionally loaded, and topically complex; in a phrase, rich and messy”2.

Conflict Management3.

Business is a purposive, task-oriented activity. Family relationships are based on powerful subconscious emotional forces that can often be aggressive and destructive. When these emotional forces find expression in the activities of families in business they can undermine both the business and the family. Frequent outbursts of suppressed emotions, constant bickering, repeated arguments over the same issues drain the business and the family of vital energy and drive. In family businesses conflicts come with the territory. They cannot be avoided or ignored. However, they need to be managed. Violation of one’s sense of fairness, feeling unacknowledged or powerless, lack of respect for one another, or of one another’s space and privacy, confusion over family and business roles and boundaries, are examples of factors that can create conflict in the family business. Addressing these potential tension-producing factors requires family members to work together as a family to become more aware of one another’s feelings, values and goals; to talk about differences; to face conflicts openly and constructively; and avoid procrastination by taking responsibility for making things better.

Combining love and work makes family business systems enormously complex. Families and businesses are vastly different systems with different, and even inconsistent, values and rules. In addition, family members, as family business stakeholders, have different roles, abilities, values, needs, and expectations. These differences are bound to create frictions that eventually lead to conflict; it simply comes with the territory and cannot be avoided. However, it can be, and it needs to be, managed; unresolved family conflict has the potential to undermine both the business and the family. The ultimate objective is for family members to be able to work effectively together as a team to produce a good living. To deal with the potential for conflict, family members need to build an ongoing dialogue by participating in constructive and well-managed meetings designed to clarify issues, reach workable consensus, and create plans to achieve desired family and business objectives.

Assisting Families In Business To Deal With Communication Challenges.

“The way that successful business-owning families address communication is but putting in place forums or systems or structures that promote, facilitate, and assure good, ongoing sharing of information, ideas, opinions, attitudes, and feelings.” 4

The MGI 2010 Survey identifies a number of proactive governance and management practices designed to assist families in business deal with communication and conflict management issues and challenges, including the following:

• Actively learning to deal with the challenges that result from combining family with business
• Establishing processes to govern the family-business interaction for continued family ownership/control
• Establishing policies to deal with predictable family-in-business issues before the need arises
• Actively learning communication skills for family members to operate as an effective team at work
• Defining a uniting sense of purpose and mission in relation to the business
• Identifying a clear set of values the family wishes to perpetuate (i.e., the human face of family business)
• Setting rules to strengthen interpersonal relationships and manage the expectations of family members
• Defining clear family member roles, responsibilities, accountabilities and interpersonal boundaries
• Gradually modifying parent-offspring relationships into ones of ‘peers” at work
• Holding regular family meetings to share information, build trust, avoid politics, and achieve consensus
• Accepting that family members will have different perspectives on family business issues
• Establishing conflict management processes
• Regularly getting together with other family members to have fun and pursue non-business activities
• Establishing a policy on how to handle/assist family members who have personal problems/special needs

Developing Family Business Protocols, Constitutions, And Succession Plans.

More specifically, to help and support families in business to anticipate and manage communication challenges and minimize the potential for conflict, MGI has focused on assisting family businesses prepare family business protocols or constitutions and succession plans. MGI Australia’s National Chairperson Sue Prestney, whose special focus is proactive family business advising, has developed her own specialist approach to these important processes which she has outlined in detail in her recently published book “Family Business Succession Guide”5. It facilitates the development of family business succession and estate plans within the broader context of a family business constitution so as to establish rules and principles to deal with family business issues both before and after succession, as well as the underlying interpersonal and emotional issues that invariably accompany the process. Of particular interest in this context are Appendices 8 in the book that deals with the ‘Family/Business Interaction’ and ways of ‘Preventing The Negatives’.

In one of the introductory chapters in her book, Sue comments that proactive advisors to family businesses with an understanding of why conflict and communication breakdown may occur can use their insights to assist and support family businesses “identify in advance where conflict is likely to occur and to put into place systems and procedures which will ensure that any conflict is handled in the most objective and expeditious way; in a way that protects both the family business and family harmony”.

1 For past surveys or further information about the results of the current survey visit www.mgiaust-survey.com

2 Lundberg, C. C. (1994) Unravelling communications among family members. FBR Vol. VII, no 1, 1994, pp 29-37, at p. 30.

3 Jaffe, D. (1991) Working with the ones you love. Conari Press. (Particular reference is made to chapter 3 that is entitled ‘Getting Things Straight: Clear Communication and Conflict Resolution.)

4 Ward, J.L. (2004) Perpetuating the Family Business. Palgrave McMillan, at p. 15.

5 Copies of Sue Prestney’s book can be obtained from the publishers Thomson Reuters by ringing 1300 304 195 or by visiting www.thompsonreuters.com.au , alternatively you can contact Sue Prestney at MGI.