Little Scars, Lotta Good
Cardiac ablation is a marvel of modern medical science. It is a treatment for irregular heartbeats, called arrhythmias. It uses heat or cold energy to create tiny scars in the heart. The scars block faulty heart signals and restore a healthy heartbeat. It works! We know from experience, seven years ago.
“Tiny scars” doesn’t sound very appealing. But when arrhythmias are left untreated, they can create serious problems like shortness of breath, dizziness, and even stroke. So, when medication fails to prevent arrhythmias, ablation is often recommended. How do the tiny (smaller than a pin prick) scars help? The errant signals that were telling the heart to beat too often and/or irregularly cannot pass through scar tissue. Thus, ablation blocks faulty signals that cause arrhythmias, restoring healthy heart function.
Application to Family Business
I spoke recently with my friend and mentor Jonathan Magidovitch, an experienced family business consultant. We discussed ways to help several family businesses who were dealing with challenging situations. In the conversation, I happened to mention my personal history of arrhythmia and successful ablation. Jonathan said something that struck me profoundly. “How interesting,” he mused. “An ablation deals constructively with a troubled portion of the heart so that healthy heart function can be restored.”
Now what if we applied that concept to some common relationship challenges with proven power to disrupt family business operations?
People Issues: ‘Swamp’ or Opportunity?
What do matters of the heart have to do with business? Quite a lot, actually. Manfred de Vries has worked on human resource development with family businesses in 40 countries for over 50 years. In his book Family Business on the Couch: A Psychological Perspective (Wiley, 2007) he and his co-authors challenge the assertion that the human side of family business is “a swamp that will drag the family down and prevent them from addressing the ‘real,’ hard business issues.” To the contrary, “the soft issues are the hardest issues.” (p. 279) Sarah Hamilton put it more directly in the May 2023 issue of The Journal of Wealth Management: “Preserving the family in the midst of wealth is far more difficult than preserving the wealth.”
Four Common Challenges and How to Address Them
Josh Baron and Rob Lachenaur warn of four challenges that often disrupt family business operations: death in the family, new entrants into the business family, inequality, and behavioral health issues. (See Chapter 8 of Harvard Business Review Family Business Handbook: How to Build and Sustain a Successful, Enduring Enterprise, pp. 145-163.) Each of these has upset the beating heart of many a family business, with crippling – sometimes fatal – consequences. Here’s a high-level overview of each ‘arrhythmic’ challenge and related treatment plans to maintain or restore healthy family business function.
1. Death In the Family
Death, whether sudden or anticipated, is difficult for any family to deal with, of course. But in business-owning families, the consequences of the death of a family member ripple through business operations and the broader community in addition to the kinship network. Survivors must process their grief with the added challenges of managing business, estate, and financial affairs that can be quite complex.
Treatment: Up-to-date wills, estate plans, and thoughtful ownership agreements are essential. Make sure everyone understands the documents and what they put in motion when there is a death in the family. The tendency to avoid or postpone this work is a serious risk-management failure. “It’s tempting to avoid planning for your own (or your family patriarch’s or matriarch’s) death, but if you forgo this planning, you are quite likely dooming the business to failure in the long run.” – Baron & Lachenaur, p. 148. Our friend Sarah Kendrick offers practical assistance to those preparing for or involved with estate closure; see Rhea Services.
2. New Entrants Into the Business Family
Many family businesses start out quite small, with just a founder, a spouse, and young children. But over time, as the business grows the family does too. Children grow up, marry, become parents, and eventually grandparents! Soon there are distinct branches of family members living in different places around the country or around the world. How are children – beneficiaries and perhaps future owners – prepared for their roles? How does the family treat those who marry in? Are they welcomed and valued as peers and contributors, or marginalized and viewed as threats?
Treatment: First, prepare your heirs. In their book Own It! How to Develop a Family Enterprise Owner’s Mindset at Every Age, Wendy Sage-Hayward and co-authors focus on the critical role and function of family business ownership and suggest ways to intentionally develop owners from childhood through adulthood. Second, be thoughtful in your treatment of new spouses. “How a spouse enters the family makes a huge difference.” – Baron & Lachenaur (p. 150). They recommend you determine how a new family member will be legally and emotionally incorporated into the business family before anybody gets engaged.
3. Inequality
Resilient family businesses have learned to carefully parse the distinction between fair and equal. “Are fair and equal the same thing? No, they are not, or at least not necessarily.” – John Broons, Creating a Thriving Family Business: Progress Not Perfection, p. 17. “Often, fair is not equal. And eventually, equal is no longer fair.” – Baron & Lachenaur, p. 155. One family expects its members who work in the business to accept significantly lower pay than they could earn elsewhere in similar corporate roles, while another lavishes salary and benefits on family members far in excess of what they’d earn elsewhere. Siblings often end up in quite different roles. They share the same parents and are usually offered similar levels of opportunity. Yet they have different interests and abilities, and inevitably over time they make different choices that result in different outcomes. Some may wind up working in the family business while others don’t. Some may become owners, others not. Similarly, family branches can diverge. They develop different values and lifestyles, make different choices, and experience different outcomes. None of this means necessarily that dealings have been unfair.
Treatment: A clearly defined family culture, purpose, and governance structure go a long way toward preventing inequality from becoming a disruptive threat. These things are developed over time by means of good communication and trusting relationships. Doing this work is its own reward; families often report that the process of developing statements of family values, purpose, and culture is as important as the outcomes, because it builds their collective human capital. Conversely, when family culture is ill-defined, resentments and perceptions of unfair inequality may grow. It’s helpful to have governance policies in place before conflicts arise. Such policies make clear how disputes will be handled, and by whom. Finally, family gatherings should not be prohibitively expensive. Plan them in ways that allow everyone a chance to participate. “Make sure your family culture prizes the family – and not just the finances.” – Baron & Lachenaur, p. 156.
4. Addiction and Behavioral Health
Addiction, mental health, and other behavioral challenges can disrupt family business operations. No family is immune. A recent example involves John R. Tyson, grandson of the founder of Tyson Foods and son of the current chairman, John H. Tyson. John R., in his early 30s, had been promoted to an important and demanding corporate role when he was arrested for a series of alcohol-related incidents over several months. As a result, he had to forfeit his new role, and the family business endured a season of negative publicity.
Treatment: Recognition is an essential first step. “Families are very good at ignoring or minimizing what might to an outsider seem to be obvious signs of trouble.” – Baron & Lachenaur, p. 157. Caring for a family member with an addiction, mental health, or behavioral issue is sensitive and demanding work that resists quick fixes and easy answers. Become an advocate for your loved one and seek out professional help when warranted. Explore whether there might be a repeating multigenerational family pattern of similar behavior. Become comfortable speaking openly and honestly about the struggles, progress, and setbacks – at least with a few trustworthy confidants. Consider using family philanthropy to support community services that help other families cope with and overcome similar challenges.
This Is Normal. You’ll Emerge Stronger
No family is perfect. When your family business is faced with one of these challenges, embrace it as an opportunity to grow together by improving communication and building relationships. Baron & Lachenaur again: “There’s nothing wrong with your family if you are struggling with any of these challenges. Sometimes, working together as a family can be the best remedy. In other situations, you will need to look for outside expertise to help you get through it.” (p. 163)
If you’d like to explore the benefits of outside expertise for your situation, Family Business Facilitators brings years of training and experience in helping individuals and families in each of these four areas of challenge: grieving the loss of a loved one, finding a new equilibrium after a family addition by birth or marriage, addressing conflicts over inequality, and dealing with addiction, mental health, and compulsive behavior issues. For a confidential, risk-free 50-minute Zoom meeting, contact us today. It’s the healthy families who get the help.
Challenges can knock the beating heart of your family business out of rhythm for a season. But like an ablation, addressing them effectively restores healthy function and strengths your collective capacity for resilience and long-term health. A healthy heart is worth the work! “Above all else, guard your heart, for everything you do flows from it.” – Proverbs 4:23
