Communicating in Family Owned Businesses Can be a Nightmare

By: Rajiv Tewari

Having worked in several family owned organizations, I have had a first-hand experience of the confusion and chaos due to lack of a well-defined communication structure. In some cases, I could convince the owners to create a suitable communication structure while in some others, I completely failed.  Have also witnessed the fall of some great businesses due to this factor along with great successes in my long journey of over four decades. Sharing this article on the basis of my own experience and observations of communication challenges in family owned businesses.  

Fundamentals of a Communication Construct for Family Businesses

1. Setting up of communication rules & processes for the active & non active family members.
2. Communication rules and processes for engaging with the employees, board of directors, investors, media, government and society at large.
3. Coaching for capacity building.

Rules for the family members

It looks simple but in most cases the family members do not take the rules seriously in absence of a monitoring and review system. They need to be sensitized that this is a basic requirement for the growth of the organization. An essential for a better utilization of human and material resources. Lack of a good understanding can lead to bitter relationships and loss of profits. To be able to achieve this objective, a lot of practice will be essential. Like any other habit this too would take time to build with consistent efforts. Starting point for demonstrating a resolve to do this has to come from the head of the family. Blockage to change usually comes from the head of family who may be over confident due to past successes. Once he changes then others have a higher chance of accepting the changes.

Second step for the family would be to agree to a separation of the family, ownership and operational areas for communication processes. Family would need to agree to a basic discipline of discussing family issues in the family meetings only and never ever with the outside members. It will be important to have separate meetings with clearly defined agenda with the active family members and separate joint meetings with the non-active family members. The formats of these two kinds of meetings would need to be formal as well as informal with a defined frequency. Active members may meet at least once a month whereas meetings with the non-active family members may be organized once or twice in a year. The voices of spouses, for example, can give valuable insights even if they may not be active in business.

Main objective should be to allow as much interaction as possible in a friendly and happy environment. Here are some important points which may be used as a guideline:

• Create an agenda with the active participation of all the active and non active family members and share it in writing with all the participants at least a week in advance.
• Define the composition of participants depending on the nature of the meeting. The family would need to take a call on whether children should or should not be invited in some of the meeting.
• Share stories of sacrifices made to build the organization and express gratitude to the elders in the family and acknowledge the contributions by employees and associates.
• Instead of focusing on technical issues, it may be a better idea to focus on connecting the family members through the heart.  Deep listening & observations will make every one aware of the likes, dislikes and passion areas of the other members. Sharing failures and mistakes openly as learning experiences would then be possible in such an environment. Otherwise blaming each other would dominate the meetings.
• Reconnecting on non-business areas in the beginning will lay the foundation for talking about serious business related issues later on. Family members must have something unique for their personal bonding. This can be achieved through common interest areas and hobbies. Some may like to play golf together while others may like to travel or create events and so on. Connections in these areas create deeper bonds and a better understanding of the other family members and are critical for building one on one relation. In India there are abundant opportunities through festivals so the presence of all members on select festivals can be a great opportunity.

Rules for communicating with other stakeholders

Family members need to agree to follow an agreed protocol for interacting with the board of directors, investors, employees, suppliers, associates, government and the society at large. They need to appreciate the fact that an organization is single corporate brand and therefore unity of command in communication is critical for avoiding conflicts, confusion and loss of business. Family members and particularly the founder has to understand that they have to stop assuming that communication has been understood or has taken place once they have taken a decision & informed others. This can be a big illusion in the absence of a monitoring process.  

These sessions would need to be separate events for preparing the active family members and the non -active family members and would need an outside expert to facilitate the meeting. The outside facilitator would ease out the process as he or she would only listen and present the opinions of each member for creating a communication system through further meetings.

For interacting with the other stakeholders, a formal meeting format and an informal meeting format will have to be created. Formal meetings would focus on core business issues and operational issues including strategic issues. Active family members relevant to the subject may join these meetings along with the family head. These meetings should not be started unless Step 1 has been fully implemented and the family members have been briefed about their boundaries and protocols of communication.

One important point to remember is that while hiring the applicants must be informed about the family hierarchy, legacy and the family business culture. The HR team has to ensure that induction of every new employee includes this as an essential part. A presentation by the head of the family on the first day may be a good idea on these areas. For the current employees this can be achieved through a separate session.

Informal meetings should focus on building personal bonding. The non-active family members may also join in some of these informal meetings. No business talk should be allowed in these meetings. A Friday late afternoon meeting may be most appropriate over drinks. By late evening all may go home for the week end.

Coaching for capacity building

Building communication capacities usually does not figure in the priority list of business owners. If this is not considered important then the first two steps would be a waste of time. Being great at Finance or Marketing or HR and assuming that communication can be done by simply informing people would be a big mistake.

To encourage everyone to contribute in these sessions, a process of dialogue has to replace monologues by those who wield power. Debates can be counter productive too as the outcome of debates can be bitterness and dominance over the views of the opponent. A lot of time people simply avoid getting into debates due to fear of creating enemies and ill will. Dialogues on the other side are based on the simple premise of point of views adding to each other even if these seem to be contradictory in the initial phases. A lot of coaching would be required to develop this capacity as most of us may have practiced a lot of debating format right from our school days.

If the spirit of dialogue is dominant then deeper listening on issues, which may appear to be trivial, will begin to make sense. For example, I used to get very irritated if someone did not honour time commitment and failed to even inform. In many cases I simply rescheduled my work and left the place leaving the other person quite disappointed on arriving at the venue even ten minutes late. Later on I learned to allow for some extra time, developed a good reminder and follow up system to minimize such situations.  There may be persons in the team who may get upset if some one’s mobile rings up during a meeting while some others may like to ensure that urgent calls are not missed even during meetings.

Once the team members speak up about their likes dislikes and their understanding of what and how others are expected to conduct themselves then solutions can be found even for seemingly most challenging situations. Otherwise these are hidden and keep boiling up within the person till the steam is let out in several unpleasant ways.

The dialogue sessions require expertise and an outsider is usually better suited to conduct these sessions as he is seen as impartial with no interest in the organizational power plays and operational issues.

I have kept this article as concise as possible to ensure that the words limit is not exceeded. If you wish to know more then simply inbox me on linkedin with your questions or queries.

Rajiv Tewari