In almost any family business, succession planning is a challenging topic. Family members don’t want to talk about it, entrepreneurs are seldom engaged and many just think it will all evolve naturally.
The Jones family (not their real name) owned a profitable manufacturing business in the Upper Midwest. But family members had stopped talking to each other, and when they did talk, they argued about the business.
Let’s start with a summary of the situation, and ask yourself, “What would I do to solve the problem?”
The entrepreneur, Mr. Jones, died and left the business to his family:
- Wife Mary, 72, retired from the business.
- Son Jon, 52, a Ph.D. economist, was recruited to be president and CEO.
- Daughter Kathleen, 48, was vice president and in charge of the business office and administrative functions.
- Son Michael, 46, was a physician with a thriving practice and was not involved in the business.
- Daughter Michelle, 44, was a utility infielder and did odd jobs around the office.
Mary gifted her business stock equally to her four children. At the time of the gift she told each child something different about what she wanted in terms of the management of the business and the roles each should hold.
To further complicate matters, Mary recently was diagnosed with Alzheimer’s disease. She had no memory of the plans she shared with her children, and there was no written record of her wishes.
Because Mary told each of her adult children something different, there was a lot of tension between Kathleen and Jon about the strategic direction of the business and how to capitalize on available opportunities.
Conversations sounded like this:
Kathleen: “I’m an owner, Jon, and I expect my ideas to be discussed and acted upon.”
Jon: “I’m the CEO, so I make the final decision on things.”
Kathleen: “Jon, you’re an academic, your head is in the clouds and not grounded in the needs of the business.”
The other sister, Michelle, was not involved in the management of the business. She regularly sided with Kathleen.
Michelle: “I think Kathleen is right. We’re all equal owners, so you can’t make yourself the only leader.”
This made the business management team largely dysfunctional, and was the main reason Jon and Kathleen rarely spoke to each other.
Given these circumstances, imagine that the Jones family members hired you for consulting assistance; how would you help them resolve their problems?
Here’s what I did.
First, I compiled facts. I held individual interviews to identify each person’s perspective. I learned what they each understood of their mother’s wishes.
Then we held a Jones family meeting. Its purpose was to develop a plan to address and resolve the issues. I realized the key to making this meeting successful was to involve brother Michael, the physician, to break the critical deadlock between Jon and Kathleen.
In the family meeting, all four children were asked to clarify their roles as owners, family members and employees. Through discussion, they realized that they were equal as family members and owners. But in the business, there was a hierarchy and each had to accept that Jon was in charge.
Almost immediately I facilitated conversation between Jon and Kathleen to help them clarify what they expected from each—both as a brother and sister and in the business, where Jon was the president.
A breakthrough came when Jon expressed his willingness to address Kathleen’s business concerns about her voice being heard. He agreed to be more understanding of her concerns, commit to the development of a strategic plan and meet for lunch once a week.
The family decided to have quarterly all-family meetings. Michael’s medical practice was not in the Midwest, but he traveled to participate in the meetings. With the siblings working together, I helped them create an active board of directors with Michael as chairman of the board. As a family, they also recruited and selected four outside advisory members to serve on the board. These actions significantly helped resolve many of the issues between Jon and Kathleen.
With structure and formality added, the business functioned much more smoothly and professionally. Jon and Kathleen learned to work together effectively for their business. Michael became involved and engaged through his leadership of the board.
The Jones family continues to hold regular family meetings. The sessions serve as a platform to uncover friction early, manage differences and prevent problems from escalating.
See the original article on Twin Cities Business Mag