by admin on November 11, 2009
Family businesses possess great strengths — and potentially devastating weaknesses. One weakness involves the challenge of planning for a day when some or all family members leave the business.
On November 1, 2009, the New York Times ran an article by Charles V. Bagli titled “Flipping a Coin, Dividing an Empire.” In it, he described the buy-out agreement of three Elghanayan brothers to divide up a $3 billion real estate empire built over four decades. Mr. Bagli captured the situation in a nutshell: “Compared with property breakups of some other New York real estate families — often long, messy affairs replete with blood feuds, lawsuits and ugly recriminations — the Elghanayan brothers’ split has been relatively swift, smooth, and secretive.”
The brothers had drawn up a detailed partnership agreement after they were forced, twenty years ago, to resort to binding arbitration (with their father serving as arbitrator) to resolve a family business conflict when a fourth brother left the family business. The process they created involved a coin toss, a reverse auction, and other details based on game theory principles.
Even that detailed process proceeded with horse-trading, some tension, and some sadness. But, by planning ahead and creating a process that they understood and freely adopted, the brothers did some valuable conflict management. They reduced the scope and severity of a potential family wealth conflict and then, when the agreement was needed, they had a far easier conflict to resolve. One that they could put to rest without destroying their wealth, their company, or their family.
by admin on July 31, 2009
Last week’s state-wide conference for women business owners brought together more than 100 Connecticut women business owners. Full marks go to the Connecticut Permanent Commission on the Status of Women for all of the leg work and to the National Association of Women Business Owners for the funding.
I had the pleasure of co-presenting a workshop on “Smooth Business Transitions” with dynamic attorney (and business owner) Diana Bartolotta. Diana is based on Main Street in Middletown as principal attorney at her law firm, B-law, LLC.
We had an engaged group of women in our workshop who had questions, suggestions, and insights that complemented our presentation and reflected the wisdom of the group.
by admin on July 20, 2009
On Friday, July 24, 2009, I will be co-presenting a workshop on “Smooth Business Transitions” at a conference for Connecticut women business owners. The conference, “Transition Your Business Through Challenge”, is sponsored by the State of Connecticut Permanent Commission on the Status of Women (PCSW) and the National Association of Women Business Owners.
My role is raising some questions about planning ahead for your business and its structure for the time that you are ready to (or must) make a change in ownership. Other workshops will cover smaller transitions, such as partnering with another business, expanding your understanding of Quickbooks, expansion through access to capital, etc. The PCSW website has more info: http://www.cga.ct.gov/PCSW/
Planning ahead for business transitions, especially in family businesses, is essential to minimize potential conflicts.
by admin on June 27, 2009
The New York Times published an article on June 23 by Bill Vlasic titled “Family Loyalty Anchors Ford in Risky Times”. The article discussed some of the challenging times that the Ford family business has faced, along with other auto makers, especially in recent years and months. Last time I wrote about the regular family meetings that help the Ford family manage conflict.
The second point the article made about the Ford family’s success in managing conflict involves how the family deals with disagreements. Any organization will face disagreements if it is growing and evolving. The key to success often turns on just how the organization deals with these inevitable frictions.
In 2007, a few Ford family members tried to hire a Wall Street firm “to advise them on long-term strategy — including possible mergers or even a sale.” Other family members opposed the idea. The family voted down the proposal. It’s the next step that is essential: “unwavering support once decisions are made.” By not trying to undermine a decision that has been made, but instead rallying around it, a family acts to help itself and its business.
by admin on June 27, 2009
The New York Times published an article on June 23 by Bill Vlasic titled “Family Loyalty Anchors Ford in Risky Times”. The article discussed some of the challenging times that the Ford family business has faced, along with other auto makers, especially in recent years and months. As the piece noted, tough times have “led to splits in other famous business families like the Bancrofts who owned Dow Jones until they sold it to the News Corporation of Rupert Murdoch.” (Type “Bancrofts” into the search bar to find earlier comments about that situation.)
Two points are noted in the article which help preserve the Ford family and its family business.
First, the family has been meeting every three months, in good times and bad, for the last twenty years. The quarterly meetings now include up to 35 family members. By maintaining a schedule of regular and frequent family meetings, the family has created a forum for discussions that both ensures that family members have a steady working relationship and allows challenges to be faced before they escalate even further.
A few words about the second point next time.
by admin on January 31, 2008
The keynote speaker at last week’s Connecticut Business and Industry Association and UConn Family Business Program Conference was Stew Leonard, Jr. He discussed the challenges and joys of the family business, which had grown from milk trucks delivering door to door all the way to busy supermarkets in several locations. He talked about the G-1 generation (his parents), G-2 (the adult siblings), and G-3 (their teenage children) and how the family worked on a regular basis with a family business consultant. The family has even created its own guidebook of principles important to success of the business and the family.
One of his most interesting points involved communication: the need to keep it open in order to keep everyone in the loop. The game of “Telephone”, where a message works its way down the line and around a circle, is all about the good fun in the twists and turns the original message makes as it moves from one person to another. But a wildly distorted original message that secretly moves through a family or business isn’t fun — it’s a sure invitation for conflict.
by admin on January 31, 2008
Last week, the Connecticut Business and Industry Association and the University of Connecticut Family Business Program presented their Family Business Conference. Various panelists discussed a number of issues that family businesses face — or at least that they should face and not ignore or gloss over. Some, of course, are important for any closely held business; others are unique to family businesses.
Two points stood out because they were repeated in different forms throughout the day. First, recognize explicitly that a family business is a blend of your family and your business. Both are important to you and both should be supported so that they remain healthy. Second, fair does not always mean equal. Most starkly, the consensus is clear that simply dividing control of a family business among siblings may seem equal but frequently isn’t fair.
Honoring these two points isn’t necessarily easy, but that fact makes them no less important.
by admin on December 30, 2007
Last time I talked about the great benefit to a family that comes from creating a communications plan before one is needed and how having family together over the holidays can provide an opportunity to create that plan.
Sometimes being together over the holidays and seeing everyone face to face provides unmistakable proof that some difficult decisions need to be made, involving a family business or family member — or both. An important first step is to acknowledge explicitly that those decisions need to be made, whatever they may be. If those involved can agree to start a decision-making process (instead of engaging in denial or delay), they may keep open options that will be unavailable if they fail to take action.
by admin on December 26, 2007
“…’Tis the season to be jolly….” It’s no secret that the holidays can be a stressful time for families. Old wounds can be reopened, old grudges renewed, buried emotions reignited. People who are rarely see each other may be together for days on end.
But the holidays also present an opportunity for families.
Sometimes a family should focus simply on setting up some kind of communications plan for the future. Just having some agreed upon method for communicating can be a great benefit if communications need to be made in a crisis. Whether in a family business or in an extended family with an aging parent — or a combination of the two — thoughtful planning can avoid missteps or bruised feelings when time is critical and emotions are running high.
by admin on November 30, 2007
Dale Dauten’s The Corporate Curmudgeon column in the November 19, 2007 Hartford Business Journal was titled “Fomenting Mutual Respect.” In it he quotes a study that found that executives felt that some 18% of management time was wasted resolving staff personality conflicts. He went on to discuss the completely divergent reactions of two management pros: one said that too much conformity was a bad thing and more conflict was essential, the other said some of the best analytical and creative thinkers will be driven away by perpetual conflict. Dauten concludes that organizations need personality and personalities but not personality conflict.
As a mediator and someone who thinks about conflict and its causes and consequences, I would tweak that observation a bit. Personality conflicts are part of life and part of organizations — part of any setting where people are thrown together. The key is to handle conflict constructively: neither to create a situation without conflict (by assembling a group of people who are completely homogeneous and never disagree or by suppressing even healthy conflict in a diverse group) nor to create a situation where destructive conflict is the normal state of affairs.
Instead, any organization — be it a private firm, a not-for-profit company, or a family — needs to address conflict effectively. Mediation and related techniques can help.