The elephant in the room
One of the most common and pervasive causes of family tension that I have learned over my years as a family business consultant is that every family business has what are commonly referred to “elephants in the room.”
According to Wikipedia, an elephant in the room is an “English-language metaphorical idiom that means that there is an obvious problem or risk that no one wants to discuss, or a condition that people do not want to talk about.”
This has been a challenge for me in coaching family businesses. They find merit in pursuing governance but when it’s time to talk about forbidden issues and I press them to let these “elephants” out of the room, they become uncomfortable and prefer to share the issues individually and in complete confidence.
For the sake of discussion, the word “elephant” suggests that the problem is so big and so heavy that no one wants to confront it or try to move it.
By virtue of its size, it takes up so much energy, time and productivity. The phrase “in the room” implies that the issue is large that no one can help but notice it. And since it is in the middle of the room, it means that family members have deliberately avoided and walked around it and worse, pretended it is not there rather than deal with it.
For family enterprises, the term refers to a question, problem or controversial issue that is obvious, but which is ignored by family members, especially the business leader, generally because it causes embarrassment and may “rock the boat.”
Rocking the boat means stirring up trouble where none is welcome, disrupting things, promoting disharmony, upsetting family members and causing disagreement.
There are qualitative truths that business leaders (usually patriarchs) must understand about elephants in the room:
1. Ignoring the elephants in the family business does not make them go away. In fact, once they have found a home, they tend to stay for good.
2. Baby elephants tend to get bigger over time. Most of the time, the problem starts small and escalates into something weighty.
3. I am also highlighting the top “elephants” that must be addressed immediately lest setting them aside might cause disruption and throw the family business off-course, creating unnecessary frayed nerves and strained relationships:
a. A “Fredo” or a black sheep family member causing problems b. Sibling rivalry spilling over to power struggle c. Next generation sense of entitlement d. Patriarchal shadow (refusing to hand over power to the next generation) e. Misaligned ownership f. A wide array of conflict of interest and self-dealing among family members g. No succession plan in place h. No estate planning 4. Having an elephant in the room is demotivating to the family and the business as well as to non-family members, especially the professionals who will not hesitate to abandon ship when these issues are wantonly ignored by the patriarch.
5. If the elephant is not dealt with, the leader/ patriarch is perceived as weak, ineffective, biased, and lacking in leadership skills.
The consequences of ignoring “elephants” are extremely risky. And the “do nothing” attitude, aggravated by a procrastinating mindset among family members should never be an option. As a business leader and family member, it is important that you deal with these elephants with the help of experienced family business advisors before it’s too late.
As the head, perhaps it is high time to ask yourself: are you ignoring and tolerating “elephants” in your family business?
Under the TRAIN, the tax-exempt bracket in the schedule of annual income tax rates is P250,000. The tax-exempt threshold for 13th month pay and bonuses, on the other hand, is now at P90,000.
Please be guided accordingly. Punongbayan and Araullo is the Philippine member firm of Grant Thornton International, Ltd.