Observations
The actions and inactions of non-family: Directors, Managers, Employees and Advisers (“Externals”) are a common cause of conflict in Family Business.
Family Businesses are notorious for birthing warring cliques and factions – supporters for: Mum vs Dad; siblings against siblings (or cousins); generation against generation; and employees against family – please get them out of here so we can run this place properly! If you need proof just read your Shakespeare, watch almost any popular series on Netflix, or follow the latest news reports of obscenely rich families imploding, as reported in your preferred newspaper.
The motives of said Externals may be pure, or not, and may be driven by the best interests of the business, the family, or neither, or those of the Internals themselves … it depends.
Many Externals have their loyalties tested when family businesses reach a tipping point – where some major change simply has to happen (modernisation, succession, expansion, contraction, sale, merger or acquisition), and there’s no clear consensus, or credible leadership directive, about what the change needs to be; how it should happen; why it should happen, or the results being sought:
- Non-family directors, both executive and non-executive, and Advisory Board members, are usually employed to provide objective and independent perspectives and experience to strengthen and enhance the governance functions of the business. Their primary commitment and loyalty should be to the best interests of the business, but this can be seriously stress tested when family members seek to enrol support for their attack campaigns, or blocking actions, against other family members.
- Employees, at all levels, are forced to consider their own, and their own families’, current and future situations. This can throw them into conflict with one or many family-led cliques that are seeking internal support.
- Long term (trusted) advisers are fundamentally conflicted: do they support the business leader who’s been paying their bills for years, and with whom they’ve developed a strong relationship, or do they throw their lot in with the future needs of the business, and in so doing also address their own commercial interests, by backing the new horse – the anointed successor?
- Short term (project-based) advisers can find themselves in conflict with some business factions, and with each other, if the project for which they were engaged is directly associated with, and dependent on, the continuing support of a specific family or leadership clique. Do they stay true to the project, or follow the power, and try to stay employed?
Solution
To prevent the development of family-oriented cliques within the business, the family needs to present a united front about where it wants things to go, and who’s leading the charge to get there. This helps to remove most of the reason cliques emerge in the first place.
These choices should be reflected in formal Strategy Plans, preferably developed through credible, inclusive, annual planning processes that encourage the building of active consensus amongst leadership and executive management teams.
Good Plans reassure everyone that the family’s focus is on the future of the business, not on who’s going to win the battle to lead the business.
The family also needs to make clear to everyone that it doesn’t welcome partisan support for individuals, or groups, against others. Referring to family values can help, assuming they include things like: integrity, loyalty and respect.
Ensure that all major levels of governance, leadership and executive management meet on a formal and regular basis to discuss plans, performance and problems. The better the quality of shared communication and problem-solving amongst key personnel, the stronger the relationship-base of the business, the easier it is to spot potential pressure points and cliques, and the less likely it is they’ll be allowed to develop into conflicts.
Also, given the fundamentally social nature of most humans, the more closely your people work together on appropriate, shared tasks, the better the relationships they’ll develop, and the sooner any disruptive influences will be discovered, called out, and dealt with.
3rd Parties (2) – Cuckoo Consultants
This cause is different – it refers to an imported conflict generator that commonly causes conflict in Family Business. With most of the previous 49 causes, the family does a terrific job of generating its own conflict, from within. Here, we’ve introduced a conflict generator from outside – wilfully or unintentionally.
Cuckoos are “brood parasites” – they lay an egg in the nest of another bird; their chick hatches early and evicts all the others as they hatch; then they cajole the nest owners into feeding them until they’re grown big enough to be independent. By then, they can be bigger than the parents – and still nary a “thank you.”
Cuckoo Consultants are similarly invasive. They’re a noxious type of adviser, driven by self-interest, with significant behavioural issues. Engaged to provide specific services to a family business, as soon as they’re safely in the nest they create confusion and conflict by disempowering targeted family members, selected business executives, Advisory Board members, employees, and other advisers – all of whom they see as competitors, not as collaborators.
Relying on unverifiable qualifications and claimed former triumphs in large organisations, Cuckoo Consultants sound credible, confident and persuasive. However, their advice is not grounded in real knowledge of, or genuine concern for the business, the family, or their people, nor do they actually have the skills the family business needs. Their advice is self-serving, superficial, and fictional – and all the more dangerous for sounding credible.
Cuckoo Consultants disempower and displace others to create space so they can grasp authority and exercise control over the agenda of the business. Their inability to satisfy client needs forces them to dissemble, which exacerbates the problems they’ve been engaged to help manage / resolve.
Rather than solve family and/or business problems they manipulate individuals to create conflict to generate smokescreens to mask their own incompetence. Conflict thrives in this environment.
Solution
Approach every family business adviser engagement as a life or death project – because it could be, for your family and for your business.
Check your proposed adviser’s relevant credentials, including their training and experience. Much more importantly, seek out trustworthy referees. Don’t rely on accreditation alone, especially if it’s not from a recognised source. Real knowledge, experience and skills, are far more important.
Test (1): Meet the adviser, face-to-face if possible, and ask lots of family business specific questions. Judge them (provisionally) on the quality, depth and directness of their answers.
Test (2): Importantly, as with all adviser engagements, assess them for the quality of the questions they ask you. Their questions will tell you more about them than any sales pitch can do. Note that any adviser who recommends doing anything with your family business before they’ve gained a reasonable understanding of your needs is a salesperson, first and foremost. In all probability, that’s not the key skill you need!