Are business owners doing it right? (Part 2)

If you answer “no” to just a handful of the questions below, sadly, your family and the business may be headed for a bruising conflict.

Do you think your children are dedicated in pursuing business continuity? Are your children qualified to assume leadership roles?

Do you have rules for in-law participation?

Have you already identified a successor? Do you have a succession plan in place?

Do you honestly believe your eldest child is the most qualified? Are your children entitled? Were there rules when they joined the business?

Did you require them to work outside the family business before joining?

Are you compensating your children commensurate to their skills and annual performance?

Does HR policies cover family members? Does your HR manager have the power to discipline family members? Have you stablished a criteria for family members owning shares? For selling shares? Assigning shares? Encumbering shares? Selling to siblings or other branches?

If you sense the undercurrents and tensions building among family members now, it is wise not to disregard them. As their leader, do your family a big favor, fix the problem. If you cannot fix it, find someone who has the competence, experience, and objectivity to help.

Let me take this opportunity to say that this extremely sensitive subject will be highlighted and discussed in my one-day workshop in Cebu on Saturday, May 20, in the City Sports Club.

Simmering tensions are telltale signs of a “baby elephant in the room.” Ignore these issues and the family and business will suffer. You might think that these issues will heal over time. It will not. As a matter of fact, the conflict will manifest in many forms and through time, implode as you start losing your grip of the business due to advancing age or when you are no longer around to make important decisions.

It is clear that these problems surfaced many years ago and you brushed them aside. These problems relate to entitlement, sibling rivalry, generational conflict, conflicting Interest, in-law and cousin participation.

When you procrastinate, the problems are magnified, emo- tions takes center stage, entropy pervades, and battle lines are drawn.

Emotion and entitlement

At this juncture, legal intervention assumes a more active role and my capacity and influence as a family business coach diminishes. As family business advisor, our governance intervention is more effective if lawyers are kept out of the conflict.

Right after helplessly watching his children bitterly fight for ownership and control of the business he started 50 years ago, a client confided to me: “Prof, I failed as a parent. How I wished I were poor again. I never expected that the wealth I created would cause so much pain and misery among my children… we used to live simple lives but things have changed, all because of greed and pride.”

If I may hasten to add, emotion and entitlement remain aggravating circumstances to any conflict.

With no policies in place, it will be overwhelmingly tough for the family to move forward in one direction.

I can go on and on with more nagging questions but inarguably, it will still reflect on the most fundamental question for family business owners:

“Are you doing it right? If you think you are not doing enough to ensure your legacy, do you plan to urgently do something to create harmony among family members?”

It is not too late, though. There is still time to do something right, but you must start the process now.