Family Business: Managing tough conversations in business families

This article first appeared in Wealth, The Edge Malaysia Weekly, on November 29, 2021 - December 05, 2021.
Family Business: Managing tough conversations in business families
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Many people shy away from conflict. The same goes for families. But when a family works or owns a business together, issues that are not resolved can threaten the integrity of the family as well as the business. Here are two scenarios of tough conversations that need to be managed.

Scenario 1

Growing up, Philip and Peggy had always spent their school holidays and weekends helping their father build and grow their family business. Philip officially joined the family business upon finishing high school as he preferred to be actively doing business rather than studying. Peggy on the other hand obtained a degree, worked her way up to a senior role in a prestigious consulting firm but gave it up to join the family business when her father insisted that she come back “to help me and your brother”.

While Philip is not a natural leader, he enjoys the work and is very hands-on with operations; Peggy contributes her expertise in finance and strategy. The siblings feel that they have devoted many years to the family business, and with their own children growing up, the time has come to discuss the issue of succession and share distribution. However, their father has consistently avoided the topic whenever they have brought it up. Moreover, Peggy is resentful of the fact that she earns less than her brother despite her corporate background and more strategic role in the family business.

Scenario 2

The Carlos family has been in the manufacturing business for more than four decades now. Everything has been going well, the family members work well together and the business has been profitable. However, Cory believes it needs to invest in new machines that will make their business environmentally friendly. 

Cory has been trying hard to persuade his father, Jose, founder CEO of the family business, to do so, but the conversation has gone nowhere. Cory explained that the new machines would be more energy-efficient and produce less waste. Although the rate of return will only be seen after five years, this investment will be good for the environment. However, Jose has stood firm: “Don’t fix it if it ain’t broken. Besides, there are no immediate returns.” As a result of several heated arguments, Cory has begun to send out his CV for positions in eco-friendly manufacturing companies.

Why do conversations between family members in business families break down?

Often, conversations break down in business families because of unresolved issues, differing expectations or a lack of knowledge and experience on how to hold respectful adult-level conversations between parents and children as well as between siblings. Family members are used to the roles they play. Transitioning from role-based interactions (that is, parent-child) to professional conversations between family members may feel “unnatural”, so families continue with the familiar patterns of communicating that no longer work.

Unresolved issues may stem from childhood. One sibling may feel that another sibling is favoured, and harbours resentment over the unfairness despite remaining loyal to the family. This may result in a sense of negativity both at home and at work, and trust is eroded. 

Another unresolved childhood issue may be the inability to go against parental expectations owing to fear or the need of approval. The child may feel caught between being chained to “golden handcuffs” such as family wealth, and not being allowed to fulfil their dreams because their parents insist on their involvement. Therefore, the child acquiesces in front of the family but refuses to put effort into the business, creating frustration for the parents.

For families who live together or near each other, the line between work and family becomes blurred, with conversations about work being carried over to the dinner table or even family bonding occasions such as holidays. Having in-laws living together in the family can sometimes pose a challenge, especially when it comes to differences in expectations concerning parenting the third-generation grandchildren. A child-in-law comes from another family and may have a different parenting style than the founder-owner grandparents, and that difference may result in tension and conflict, especially if the child-in-law feels like he or she has little say.

Types of conversations in business families

Depending on the issue, business-owning families can choose the type of conversation to have. The first and most obvious is the one-on-one conversation, most productive when both members are able to hold back negative reactions and listen to each other openly and respectfully. Issues are resolved without involving or affecting the rest of the family.

When a one-on-one conversation is difficult, members can choose to have mediated conversations. The mediator can be a family member, a trusted friend or even a professional consultant or coach. The mediator should not take sides, but help the two members to stay engaged in the conversation without it breaking down. The purpose of the mediator is to provide a stable, unbiased presence so the members can communicate safely and with respect, to reach a productive resolution. Often, after one or two successful mediated conversations, members will be able to talk without the help of a third party.

When it comes to an issue involving multiple family members, group conversations may be required. To have a productive group conversation, all members must understand the ground rules. Some helpful rules for difficult group conversations are: (1) Set a time and place, with a clear ending time regardless of the outcome; (2) Be clear about the issue and the objective of the group conversation; (3) Express facts and feelings without labels or blame; (4) Take turns to speak and listen — only one person can speak at a time. 

If necessary, members can write down what is being said. Again, it may feel “unnatural” in a family setting to take notes, but it can help to slow down the emotional reaction, increase the accuracy of listening and help to stay on point in lengthy conversations.

How to use professional mediation and avoid getting into a legal battle

Feuds and legal battles among family members are not uncommon. Such fights can be detrimental to the family and business. The Yeo family, who owned Yeo Hiap Seng since 1901, endured legal battles among family members that led to them stepping down from various roles, and a majority stake was sold to Far East Organization in the 1990s. When conflicts become so entrenched that members no longer trust each other, a legal battle is an unwanted outcome. In most families, harmony is the objective, so professional mediation is the much better and cheaper option. The best thing to do is to engage professional mediation proactively and early on, before conflicts become unmanageable.

There are different kinds of professionals who can help families to mediate conflict. Consultants trained in finance and law will tend to use structured means to mediate — for example, setting up legally binding family constitutions or clarifying ownership. This is the “hardware” approach to helping families when productive, open conversations feel difficult. 

There are also family coaches or therapists who specialise in helping families manage emotions and have productive conversations — the equally important “software” side. Family coaches or therapists help members to delve deeper into the issues that are troubling them, and to resolve the issues through dialogue and relationship repair. 

Family relationship consultants can also be engaged to increase trust between family members through mediated family conversations, and even deepen the bond of multi-generational extended families through curated family gatherings or holidays. In cases of clinical issues troubling the family (for example, substance abuse, gambling, infidelity, mental illness), a clinically-trained family therapist may be needed before productive conversations can be held.

Towards having productive conversations within business families

The two scenarios mentioned before have one thing in common, the breakdown of conversations between generations. In Scenario 1, the siblings are not able to even start the conversation with their father. In Scenario 2, the heated argument has left the relationship between father and son strained. Both scenarios would benefit from mediated conversations, either with a trusted individual or a professional. In addition, for Scenario 1, consultants would be able to advise on the importance of family estate planning, and for Scenario 2, family coaches or therapists would be able to help fix the relationship before they move on to having a productive conversation to take the family business forward.

Dr Johnben Loy is the founder and clinical director of Rekindle Centre for Systemic Therapy and also a certified forum facilitator for the Young Presidents’ Organization, providing personal/relationship coaching for business leaders, specialising in family business. Dr Feranita is a lecturer at Taylor’s Business School’s Faculty of Business and Law.

This article is a collaboration between Family Business Network (FBN) Asia and Taylor’s University. FBN Asia, a regional chapter of FBN International, which represents family businesses in 65 countries across five continents, offers opportunities for stakeholders of the family business to learn, thrive and transform across generations to build a sustainable future.