Ten Qualities Of Healthy Family Businesses

Running a successful family business can be an answer to prayer – or it can be the thing that drives you to pray! Relatives working together must work to develop the type of communication and qualities that will help them to succeed in the business world. What does it take to keep a family business healthy?

Family business consultant Leslie Dashew points out that families must “discuss the undiscussables.”

One of Dashew’s main points was that communication may mean one thing to the speaker, and something very different to the listener. When this dynamic is stirred into an already-seething cauldron of personality types in a family business, the result may cause indigestion. Dashew calls these messages “unintended communications,” For example, a father may think he’s communicating a message of pride in a child, but his body language conveys distance-and the younger member gets an unintended message that his or her deeds are not important. Eventually, these incidents become bricks in a wall, and there can be so much distance between two family members in business that there is no longer any direct communication.

Messages get conveyed through an intermediary, setting up a “triangle.” But triangles tend to make matters worse. When direct communication is replaced by hearsay, conflicts are made worse, rumors and innuendo fly around, and the real business of the business gets obstructed. Of course, interpersonal communication is only one piece of the family business dynamic.

Basing her conclusions on a study of 250 family businesses that all survived generational transition, Dashew identified ten qualities of healthy family businesses:

  • Shared values: The principals have similar ideas about substantive issues, such as whether to stay debt-free or capitalize growth through massive borrowing, what kind of qualities they value in people, workaholism versus family time. In Dashew’s view, it doesn’t matter what the answers are-as long as the family more-or-less has a consensus about what the answers are for that family and that business.
  • Shared power: Across generations, between spouses, among siblings. Shared, however, does not mean equal. There can still be a hierarchy. But all the stakeholders feel they have a part in the decision-making process. Dashew pointed out that this kind of situation drastically eases the pain of transition during succession-especially if that succession was unplanned
    (e.g., because a CEO suddenly dies or is incapacitated).
  • Traditions: The family business should have some rituals that allow the members to say, “this is what makes us special.”
  • Willingness to learn and grow: As individuals, and as an organization. Dashew, like many previous Family Business Center speakers, suggests family councils as a tool to foster this growth.
  • Activities for maintenance of relationships: Doing things together when there isn’t a crisis builds the teamwork necessary to get through the hard times when a crisis does strike-the members are used to working together, delegating tasks, and trusting each other, so those skills can be harnessed effectively. In Dashew’s words, “When I have to tell you bad news, we have that [pre-existing] bond.”
  • Genuine caring: If people work hard to maintain their personal
    relationships, that reservoir of deep friendship will be there when it’s needed.
  • Assistance and support: This is especially vital in times of personal
    tragedy. “Grief and shame are part of the bond that holds families together.”
  • Mutual respect: The solid recognition that not only can you trust the other person, but that his or her role is important, and she or he has a valid reason to be involved.
  • Healthy interpersonal boundaries: Work one-to-one to resolve conflicts; stay out of triangles. Personal moods and styles can be a factor in such discussions, but shouldn’t dominate the dialogue.
  • Privacy: The right of every family member, business participant, and family unit to have private space, and to do what they want without feeling like they’re on display in front of the other units.

Siblings in managerial positions should have time to be together as siblings, for example, but also need time to be with their spouses and children-and their parents-without feeling like that time is begrudged, and without feeling like they’re under a microscope. But it wasn’t all lecture, either. Dashew broke up the group into teams-each table was one team-and handed out packets of drinking straws and pins. The task: to make the tallest, strongest, and most elegant structure-without any talking. The results were striking. Most teams went for one, or at most two, of the three qualities. One table, led by plumbers, engineered an extremely elegant and stable structure, but it was only a foot tall. Others went all the way from table top to the ceiling-a distance of six feet or more-but their structures were wobbly and weak. But Dashew’s goals in this exercise went beyond the obvious.

In a group debriefing, we examined:

  • What are the differences in working toward measurable, specific goals (height) and intangible ones (beauty)?
  • How did leadership emerge? Was there cooperation? Joint leadership? Hierarchy?
  • Did everyone feel valued and included?
  • How did people determine their roles?
  • How do people participate when there is no obvious plan?
  • What tools and signals were employed to communicate when talking was prohibited?

Dashew’s point? “When you have trust and are secure in your roles, you need less communication.” But if boundaries are blurred and descriptions are unclear, high levels of communication are needed.

She suggests a multipart strategy to “create a container for communication” within the family business: a family council for family matters, the business management team for operations, and the board of directors for decisions involving the owners-the stockholders-as stakeholders. But she believes there’s no one right answer. “Every family needs to create their own set of rules. The most important aspect of a family council is to create a safe environment for open discussion,” in order to discover the rules of each individual family business.

And these work best, she believes, when they “err on the side of inclusion.” If you’re not sure whether individuals should or should not be part of a decision, bring them in. When they participate in the decision, they’ll more likely want to see it successfully implemented.

Shel Horowitz is Director of Accurate Writing & More, a family-owned firm in Northampton, MA, offering low-cost marketing strategies for businesses. His latest book is Marketing Without Megabucks, published by Simon & Schuster. He can be reached at his web site frugalfun.com. This article originally appeared in Related Matters, the newsletter of the University of Massachusetts Family Business Center.