The Three Keys to Successful Sibling Collaboration A work book for a sibling partnership Christian G. Stewart Managing Director Family Legacy Asia (HK) Limited www.familylegacyasia.com Contents THE THREE KEYS TO SUCCESSFUL SIBLING COLLABORATION ................................. 1 Sibling partnerships at their best ............................................................................................................. 1 The transition from first generation to second ......................................................................................... 2 What is the alternative? The traditional hierarchical family ..................................................................... 3 THE THREE KEYS ...................................................................................................................... 5 Key #1 Communication ............................................................................................................................ 5 Key # 2 Optimism ..................................................................................................................................... 7 Key # 3 Leadership ................................................................................................................................. 10 SOME RELATIONSHIP GUIDELINES .................................................................................. 12 Principle # 1 Raising all boats ................................................................................................................. 12 Principle # 2 Work on yourself ............................................................................................................... 12 Principle # 3 Plan ahead and make family policies ................................................................................. 13 Principle #4 What really matters are the automatic reactions ................................................................ 13 Principle #5 Try to avoid Triangles .......................................................................................................... 14 Principle# 6 Open systems last longer .................................................................................................... 14 SOME HELPFUL TOOLS ......................................................................................................... 16 Tool #1 Personal Preferences Assessment Tools ..................................................................................... 16 Tool # 2 Family Genogram ...................................................................................................................... 16 Tool # 3 Managing your Hat Collection ................................................................................................... 16 Tool # 4 Becoming aware of Individual Life Stages .................................................................................. 17 Tool # 5 Conversations about “Stewards & Inheritors” ........................................................................... 17 Tool #6 The Family Council ..................................................................................................................... 17 Tool #7 A Family Constitution & Family Policies ..................................................................................... 18 Tool #8 A Board or an Advisory Board .................................................................................................... 18 Tool #9 Use a Family Therapist for Training & Coaching .......................................................................... 19 What about Family Trusts? ..................................................................................................................... 19 SOME USEFUL BOOKS ........................................................................................................... 21 THE THREE KEYS TO SUCCESSFUL SIBLING COLLABORATION This is an article about family owned businesses here in Asia and how they can successfully transition from a first generation business into a second generation business. It is suggested that, for a second generation family business to be at their best, the heart of this transition entails a change from a traditional hierarchical family culture to a more horizontal, collaborative, family culture. Making such a change requires an investment in new relationship skills; it requires optimism that you can make the change and it requires a certain leadership, most likely from the eldest sibling.1 Sibling partnerships at their best “This is the central truth about relationships in family business, the all‐encompassing reality that your family business will rise or fall based on how you handle your relationships.”2 When a sibling partnership is at its best, the siblings can work together as a team of equal collaborators. This is based on a more egalitarian3, and horizontal relationship structure, at least in the business setting4. What is the justification for this assertion? Simply that the alternative to this (which is described below), the traditional hierarchical sibling partnership, based on a “Confucian” system of family values, leads you to a well trodden path of family conflict, and business disintegration.5 In “Generation to Generation; Life Cycles of the Family Business”6 one of the key challenges for a sibling partnership is stated to be “developing a process for shared control among owners”. Another challenge identified for this stage is “controlling the factional orientation of family branches”. The authors make reference to a Greek myth about a revolt on Mount Olympus in which Zeus led a group of his siblings in overthrowing their father, Cronos, as chief of the gods.7 1
This article does make certain assumptions. The first is that the business is of sufficient value to sustain the second generation of the family. The second is that the siblings are all more or less equal shareholders in the business (which is often the case in Asian families). The third is that the siblings (or a majority of them) want to continue together as a family business; they see the family business as part of the family legacy. They all see themselves as “Stewards” rather than as “Inheritors”. 2
Getting Along in Family Business; The Relationship Intelligence Handbook, by Edwin A Hoover and Colette Lombard Hoover, Routledge, page 9 3
Queena N Lee‐Chua, Successful Family Business, Ateneo De Manila University Press 4
The focus here is on what goes on in the business circle, not the family circle. 5
Wong Siu Lin, Family Business Review, vol VI, no. 3, Fall 1993; Feuds and Legacies: Conflict and Inheritance in Chinese Family Businesses by Tong Chee Kiong, National University of Singapore; Trust, The Social Virtues and the Creation of Prosperity by Francis Fukuyama 6
Gersick, Davis, McCollom Hampton and Lansberg, Harvard Business School Press 7
For the (fictional) storey of how Cronos attempted to take back control over Mt. Olympus see Percy Jackson and the Lightening Thief and other books in this series by Rick Riordan. 1 After the rebellion, Zeus was accepted as the leader of the sibling group, but when he started adopting the quasi parent role – demanding that he be addressed by his siblings as “Father Zeus”, they tied him up in a hundred knots to teach him a lesson in humility.8 Successful sibling partners will also have clear boundaries between family and business roles, as well as ownership and management roles; they know how to “manage their hat collection”; they can balance being together as a family with allowing for individual freedom and outside interests, and when it comes to decision making they make decisions based on reasoned principles9, not automatic reactions. In addition they are also able to examine their “family messages” and consider whether those messages are appropriate and helpful in a business context or not.10 They are capable of having “adult – adult conversations.”11 They exhibit “fair process” in their decision making, or at least in relation to decisions where it is necessary to balance the family, ownership and business circle.12 The transition from first generation to second However, in an Asian family, siblings often don't have the ability to work together in this horizontal, egalitarian, way while the founder is still in control. While the founder is still in control the family structure in a typical Asian family is a very hierarchical structure. It is a vertical structure, not a horizontal one. There are five types of relationships in traditional Confucian culture and only one of those relationships – that between friends – is a relationship of equals.13 Dennis Jaffe, Ph.D. who is Professor of Organizational Systems and Psychology, Saybrook University, San Francisco, USA, notes: “When a Chinese family shifts from the patriarch, the traditional, paternalistic model, to a group of stewards, collaborating, including both genders, this is quite a departure. I think this shift represents a great cultural shift, from one single leader which was always the way it was, to a team of equals. The skills of collaboration, openness and respect that the next generation need to work together are ones that they often have to learn. Specifically, they do not have good models for collaborative cultures, and how a leader can be a collaborator rather than a solo leader. There are many difficult issues that arise, and they need help to constructively engage them. In my experience this challenges even a modern Chinese family to develop new habits of transparency, talking about issues and shared authority which may be hard to learn. The families I’ve worked with have trouble learning how to do this. But when it works, they have a lively vitality.” As such “siblings as collaborators” in the majority of Asian families does not come naturally and is something that needs to be deliberately worked on and developed. So how can a team of 8
Generation to Generation at page 42. Roberta M Gilbert, Extraordinary Relationships 10
Family Business, Risky Business, by David Bork 11
James E Hughes Jr. 12
Professor Randal Carlock 13
The Effect of Confucian Values on Succession in Family Business, Jun Yan, Ritch Sorenson, Family Business Review 2006 9
2 siblings go about making this transition from a vertical family structure, based on family hierarchy to horizontal family structure based on collaboration. It is suggested that there are three important keys to successfully making this transition. • The first key is Communication. • The second key is Optimism. • The third key is Leadership. What is the alternative? The traditional hierarchical family Before looking at each of these three keys in greater detail let us first briefly consider what can happen if the siblings don't make this transition and if they retain their more traditional hierarchical family structure. What happens to a family that stay on the more traditional path? In the traditional model, the sibling stage of a Chinese family owned business can be referred to as the “segmented” phase of the business.14 • First, the eldest sibling, after the patriarch has gone, does not enjoy the same degree of authority as the patriarch exercised, and finds themselves under closer scrutiny, and with less flexibility, than the patriarch. It is a mistake to think that the eldest sibling will simply step into the shoes of the founder.15 Younger siblings start to rebel. • Second, often continued working together as siblings under the traditional model is based purely on economic considerations (rather than based on a shared goal of continuing the business and creating a family legacy.) By the time the share ownership starts to be divided up among the third generation, the economic interests of each shareholder typically become too small to justify their continued support for the business. • Third, the siblings will often look for their own separate territory or business that they can work on independently on their own, so that they have their own individual freedom. This is not of itself inconsistent with a collaborative horizontal family structure – the question though is whether the siblings also have the ability to come together and effectively work jointly on issues16; if they can only function if left alone in their own space, and they have difficulty working together, then that is what is problematic. • Fourth, as siblings get married and their own children start to mature into young adults, conflicts start as each sibling now becomes concerned about the interests of his or her own children and nuclear family. Most traditional Chinese family owned businesses will 14
Wong Siu Lin, Family Business Review, vol VI, no. 3, Fall 1993. Another mistake the founder may make is to focus only on the management leadership role ignoring the importance of the ownership role. In a first generation family firm the founder may well be able to ignore ownership, but in a second generation family firm if there are some siblings who are “outside” shareholders, not playing a role in management, you cannot take those outside shareholders for granted. 16
In other words, are they able to balance having their individual space with being able to work together as an effective team of siblings? 15
3 fail as a result of family conflicts.17 •
Fifth, as the share ownership fragments over time (especially as shares start to pass onto the third generation) it becomes too hard for the family member owners to make decisions together concerning the business. In summary, the traditional hierarchical family structure, when coupled with the equal division of share ownership, leads down a predictable path. Hence the saying in Chinese that “Wealth cannot survive three generations”. It is suggested that if a family in business together want to overcome this cycle of creation and destruction, they have to try a different approach, and they have to learn new relationship skills. So let us now explore the three keys to successfully transitioning to a new way of working together. Some questions to reflect on: ¾ How do you think your family culture compares to other business owning families you know at the same stage as you? ¾ Is your family a very traditional family? ¾ What are some of the advantages or strengths that your family – and your business – gain from being a traditional family? ¾ Are there some ways in which having very traditional relationships among siblings may not be optimal for you, especially in the business setting? ¾ Are there ways that you can respect traditional values in the home or family setting, while exploring a different approach in the business setting? ¾ Are there times when as a group of siblings, or in pairs, you have worked together as a team of equals, and it was a successful enjoyable experience? ¾ As a group of siblings, or in pairs, have you talked about and openly shared your hopes of how you will work together in the future? ¾ What would it look and feel like, what might happen, what are the possibilities, if you could realize your full potential as a sibling partnership? 17
Feuds and Legacies: Conflict and Inheritance in Chinese Family Businesses by Tong Chee Kiong, National University of Singapore 4 THE THREE KEYS Key #1 Communication The first key is Communication. A family owned business is one in which the family dynamics, the family emotional system, has a significant overlap with the business system. Hence understanding what the family system is like is a very important exercise.18 Different families have different cultures and different inherent capacities. One way of getting a better understanding of a particular family is to look at (i) the dimension of “family cohesion” and (ii) the dimension of “family flexibility”. Family cohesion refers to the family’s emotional connection and how the family system balances togetherness as a family with their separateness as individuals. 19 Family flexibility looks at how well the family system retains stability when facing lifecycle changes and external influences. 20 In terms of family cohesion, when a family is too “enmeshed”, when the family members are “too close together” and are not well “differentiated”, times of transition will likely be times of high anxiety; i.e. they may not handle transitions well. At the other extreme, if the siblings in a family are too emotionally distant, if they are too “cut off”, they won’t have any interest in working together or in collaborating. The ideal is a family that are able to find a comfortable balance between being together and having their own separate identities and space. A good way to imagine this balance is to think of a “yin & yang” symbol. In terms of family flexibility, again if a family is very inflexible and rigid, if they don’t see themselves as being able to change, then it is hard for such a family to adapt to life cycle changes – such as the change to a sibling partnership ‐ or to the changing business environment.21 Again the ideal is a family that has a good ability to balance change and stability.22 18
An external family business advisor would often start with an assessment of the family which would include a consideration of the family culture. For a family that want to explore their own family culture, creating a family genogram is one way to approach this. 19
Family Business on the Couch; A psychological perspective, Manfred FR Kets de Vries, Randel S Carlock, Elizabeth Florent‐Treacy, Wiley 20
Family Business on the Couch. 21
Family Business on the Couch. 22
In fact, in the context of business owning families in the Philippines, it has been noted that a well balanced family system correlates with a healthy family business. See Queena N Lee‐Chua, Successful Family Businesses, Ateneo De Manila University Press. 5 “Communication is identified as a ‘facilitating variable’ …. Meaning that it can assist the family’s ability to move to a more balanced position on the cohesion or flexibility scales. Positive communication skills …. Include listening, showing empathy for others’ points of view, having a capacity to speak out, self‐disclosure, sharing feelings, and staying focused on the topic.”23 In other words, communication is a critical key to successful change within a family, and therefore plays a major role in the transition from first to second generation family business, as well as in the transition from a hierarchical family culture to a more horizontal family culture. However, if you come from a traditional, hierarchical Asian family, maybe you do not have all of the communication skills necessary to help you to transition to a more collaborative, horizontal, egalitarian family structure. Remember the starting point for a Confucian family would be a series of one‐to‐one relationships, with one person being at a higher level than the other. This means you can help yourselves to make that transition by intentionally investing in and developing your communication skills. If you were a senior manager or executive in a non family corporation, it would be quite routine for the company to invest in developing your communication and relationship skills; you might have one on one executive coaching; you might have media and public speaking training; you might have training on how to give appraisals and feedback; you probably get exposed to various personality assessment tools; as a management team you would do team building exercises and training on conflict resolution and negotiating skills. How much of this is done in the family business space here in Asia? Yet how much more important are these skills in a family owned business? In a family owned business, one way to enhance communication among the family members (siblings) is to hold periodic family meetings – or form a family council ‐ which are focused on the relationship between the family and the business, and are separate and distinct from management meetings and board meetings. If you have a formal family council, or an education committee, one of the tasks of that council or committee can be to develop an education program so that the siblings and other family members will get professional training on enhancing their communication and relationship skills. More ideas on how to how to develop communication and relationship skills are listed in the Helpful Tools section at the end of this article. 23
Family Business on the Couch at 175 ‐176. 6 Some questions to reflect on: ¾ What type of skills do you believe are important to being able to work together effectively as a sibling team? ¾ How would you self assess yourself in terms of communication and listening skills at the present moment? ¾ What are the skills you are good at? And which ones can be improved? ¾ Ask your other siblings to give you some constructive feedback on your communication skills! ¾ Do things change when you are under stress or pressure? ¾ Do you find that you tend to react in certain ways with one or more of your siblings? ¾ Do you have, or have you had, an executive coach? ¾ Have you recently had any professional training on communication or relationship skills? ¾ Can your HR department organize an appropriate training program for you, using external professionals? Key # 2 Optimism The second key is Optimism. In “Getting Along in Family Business; the Relationship Intelligence Handbook”24 it is explained that positive relationships depend on more than just relationship skills – there is also the question of the “relationship paradigm” of a particular family. “The second cornerstone of Relationship Intelligence is the Relationship Paradigm: the spirit, morale, and culture of the group. This determines such important relationship factors as the level of trust, hope, respect, confidence and openness within the group.” A transition from first to second generation implies a change. As we have seen above, communication is a gateway to change in a family system. Communication and other relationship skills can be learnt and developed and practiced. However whether the family members will actively pursue these new skills and work on communication also depends on the optimism level of the family. If the siblings have recognized the importance of developing their relationship skills, or even just that things might be better, are they optimistic enough to think that they can change the way they interact? Are they optimistic that developing their relationship skills will actually help them to become even better than they currently are?25 In this article, the optimism level of a group of siblings would be a component of their Relationship Paradigm. Optimism here means a general belief that things can improved, made even better, by engaging in the necessary learning and development; a positive expectation that 24
Routledge, Edwin A Hoover and Colette Lombard Hoover. This comes back to the concept of the flexibility level of the family which was also referred to above. 25
7 they can together improve their relationship skills. In summary there is a relationship between (i) optimism (ii) skill and (iii) change. How can you enhance the optimism level of a group of siblings facing a transition?26 • Optimism and enthusiasm could come from any of the siblings. • It would be particularly powerful if it came from the eldest sibling (see the third key below). • Alternatively, a key role for a non family advisor (which might include a non family member of the board of directors) to the family would be to help build and encourage such optimism. A non family advisor could help facilitate the transition towards a more collaborative, participative sibling partnership, by helping the siblings believe in their own ability to enhance their skills and change their ways of interacting for the better. The non family advisor can help by encouraging siblings to “have a go at it”. The advisor can provide enthusiasm and encouragement. The best way to do this is for the advisor to help the family members to reflect on the things that they do best; focus on the positives and seek to build on those positives. Indeed it has been found that change within any organization is often best achieved by looking at what is already being done well, by looking for the best in interactions, and then seeking to cultivate, replicate and expand upon those experiences. Hartley Goldstone27, based in Denver USA, coaches trustees and beneficiaries on how to optimize their “arranged marriage” using abundance28 approaches drawn from appreciative inquiry, positive psychology and solution focused coaching.29 Goldstone says that a person who is a sibling in a sibling partnership (or in a family that will shortly face this transition) might benefit from trying the following exercise. 26
As a starting point, it would be worthwhile carrying out an exercise to assess the Relationship Paradigm of the family, using the process described in Getting Along in Family Business. 27
http://navigatingthetrustscape.com 28
“identifying, understanding, enabling and sustaining the highest potential of what people, both individually and collectively, have to offer”. Linley, Alex, Oxford Handbook of Positive Psychology and Work at 4. 29
Goldstone has also written on the how beneficiaries and inheritors can find meaning and happiness. 8 An exercise for starting a family meeting Starting a family meeting with positive reflective questions may raise the level of energy and engagement. Consider suggesting that family members reflect upon one or more of the following questions for several minutes. After a period of silence, each family member is given an opportunity to share their response to one question with the rest of the family. • Think of a time when you participated in a peak experience meeting with one or more of your siblings where you were all engaged to the point where all “noise” was put aside. What was the situation? What was the driving force behind the success of this meeting? What were the conditions that promoted this? Specifically, what role did you, your siblings, the physical environment, and/or the work of the meeting itself play in helping to quiet the noise and make the experience great? • Think of a recent meeting or interaction with one or more of your siblings. How would you rate the meeting, on a scale of 1 to 5, with 5 being the highest, in terms of engagement? What was going on such that your rating is as high as it is (even if you chose a “low” number)? What would that meeting have looked like for you to increase your rating by 1 point? Who did what? With what effect? • Describe a high point meeting or interaction with one or more of your siblings where you, were absolutely at your best. You were proud of the way that you conducted yourself at the meeting such that you and your siblings would agree that the meeting/ interaction met or exceeded expectations. How did your role in the meeting / interaction unleash your capacities? How did your role in the meeting/interaction unleash the capacities of your siblings? • Reflecting on these and other experiences, what are the core qualities and practices that bring out the best in your meetings or interactions with your siblings and lead to full engagement? • You now have three wishes that, when granted, will make an extraordinary positive change in the capacity of you and your siblings to bring out the best in your meetings. What are they? • What is one thing that you can do, no matter how small, to actualize one or more of your wishes at this meeting, or during your next interaction with each other? 9 Key # 3 Leadership The third key is Leadership. In a traditional Asian family the elder sibling will be in a natural leadership role over his or her younger siblings. The elder sibling as leader can encourage Optimism and investment in new communication and relationship skills. Better yet they can act as a role model for their siblings. Dr. Ron Law, based on Denver, USA and founder of the Family Building Institute30, believes that in a traditional Asian family, the leadership, or lack thereof, displayed by the eldest sibling, will be one of the most critical factors in determining whether the siblings can make a successful transition or not. He refers to this as the “serendipity of birth order.” Dr. Law explains his thinking in the following terms: “Leadership is the essential element if legacy and successful generational wealth management are to be achieved. What is leadership? Leadership is that quality that moves others to act. It is something that is difficult to define but readily recognizable when present. Leadership is what you would do when no one is watching. Legacy and successful generational wealth transfer are more likely when: The G1 wealth creator is a leader in matters of legacy and wealth transfer. This is often not the case and his/her skill may in fact be antithetical to succession. If the G2 'first born male' has the right stuff for leadership, success is much more likely. If the G2 ‘first born male’ (gender may be less of an issue today) is lacking in leadership, then success is unlikely. Thus I believe that a strong predictor of success in legacy and wealth transfer in Asian families has to do with the serendipity of leadership in the first born.” Therefore in an Asian sibling partnership a critical question is going to be whether the eldest sibling is willing to help lead the change to a new, more horizontal, way of interacting, and the associated investment in skills development. 30
http://www.familybuildinginstitute.com 10 Some questions to reflect on if you are the oldest sibling: ¾ Are you a good facilitator – do you give a space for each of your siblings to have their voice heard? ¾ Are you a good listener? ¾ Are you accepting of the different personalities, communication, decision making and learning styles present in your generation of family members? ¾ Do you encourage your siblings to hold family meetings together, where all of you can come together at the same time as a group and talk about the future and talk about any issues you have today? ¾ What could you do to enhance your own communication and relationship skills? ¾ What could you do to enhance the optimism level of your family? ¾ What could you do to encourage the sibling partners to make an investment in developing their communication and relationship skills? 11 SOME RELATIONSHIP GUIDELINES Family systems theory31 provides some interesting and helpful insights into how a family works and how a family can develop and grow in maturity. Family systems theory shifts the focus from the individual onto the family.32 The family systems concepts of family cohesion and family flexibility have already been mentioned above. The following additional principles33 may be useful to a member of a sibling partnership (or an advisor to a sibling partnership) who would like to see his or her family make the transition from a traditional hierarchical culture to a more horizontal culture, at least in the work place. Principle # 1 Raising all boats First, one interesting thought from family systems theory is that if one member of a family can improve their own level of “differentiation” (broadly, the ability to make decisions based on reasoned principles and thinking, rather than getting caught up in reactive patterns) then this will have a positive impact on the whole system. In other words, it can still be beneficial if even just one of the siblings in a sibling partnership will start to work on their own communication and relationship skills. The theory is that if just one member of the sibling team can improve their own level of differentiation, this will raise all boats. In terms of the discussion of Optimism above, this means that if just one sibling can be encouraged to invest in their own skill development, this will in fact be helpful for the entire family.34 Principle # 2 Work on yourself Second, another “rule” of family systems theory is that you cannot try to force another member of your own family to change the way they are. There is no point in complaining about the behavior of your other siblings. Your complaints will not make them change. Playing the blame game gets you nowhere. It is always easy to see fault within another person and it is extremely hard to see your own role in the family dynamics – however if you are a member of the family system then you do play a role in the dynamics. The rule is “just take responsibility for your own behavior and focus on how you can enhance your own skills”. Take responsibility for yourself. 31
The comments in this section are more specifically drawn from the theories of Murray Bowen, or “Bowen Family Systems Theory”. 32
For an explanation of Bowen family systems theory as applied in a family business context see Family Business Risky Business by David Bork 33
The comments in this section are based on the works of Roberta M Gilbert, author of Extraordinary Relationships. 34
To be more specific, if one sibling can become more “differentiated” – which essentially means becoming “less reactive”. Therefore learning skills at a rational logical level is not helpful unless those skills can be applied “automatically”. 12 How can you change? In the context of the above discussion of Leadership, if you are the oldest sibling in an Asian family owned business, the question to ask yourself is whether you are showing the necessary leadership and motivation to encourage your siblings to invest in enhancing their communication skills. Are you setting the example by encouraging an investment in skills development ‐ and by modeling an effort to apply new skills in practice. However, if you are not the oldest sibling, while you could encourage the eldest to show this leadership, don’t blame them if they don’t display it to your satisfaction! Instead go ahead and do your own work anyway – you be the model. Principle # 3 Plan ahead and make family policies Third, family systems theory posits that decisions can be made in one of two ways. The first way is that decisions can be made thoughtfully, and logically; that you can decide based on reasoned principles. The second way is that decisions can be made automatically or reactively – as in an automatic reaction. The theory also says that as anxiety increases in a family (which can often be the case in times of transition, or for example if there is a death in the family) it is more likely that family members will tend to be reactive, rather than to make well thought out and reasoned decisions.35 Putting this in to the context of a family owned business it means it makes a lot of sense to create family policies that address how the family will deal with predictable family business conflicts, well before you need them. The lesson is that there is much value in planning ahead. If you make family policies (for example an employment policy or a remuneration policy) at a time when it is just a rational logical exercise, when everyone is calm and reflective, the decision will be far superior to one made at a time of conflict or anxiety. Principle #4 What really matters are the automatic reactions The other lesson to be drawn from this distinction between thinking, and automatic reactions, is that when you look at this topic of relationships and communication among siblings, the real issue is going to be the automatic patterns of behavior. This means that when you – or the family education committee ‐ think about getting help to improve communications and relationship skills, look for coaching and approaches that can help you to deal with your automatic reactions and patterns of behavior.36 35
Different families have different capacities to separate thinking from reacting in times of anxiety or stress. 36
For example, learning a negotiation technique may not be that helpful if “you keep losing it in the thick of things”. 13 Principle #5 Try to avoid Triangles Next, try to avoid becoming the “piggy in the middle” between two people. If two of your siblings have differing perspectives on an issue, it is often best to encourage their direct communication. Try to avoid “triangles”. A triangle is described in “Family Business Risky Business”37 in the following terms: “When anxiety builds up in people or organizations, it pours over into other relationships. Two people can manage only so much anxiety. Enter a third person to whom the anxiety can be shifted. This does not resolve issues, but it does slough off anxiety by involving another in the issue. With the involvement of the third person, the system is temporarily stabilized…..Triangling is particularly visible during times of high anxiety, but is in operation all the time. …Families often try to resolve difficulties in the midst of a system full of triangles. Rather than dealing directly with the conflict, the person goes to a third party in the system for support or reassurance. Only when triangles are eliminated can two people resolve their conflict with each other…” Principle# 6 Open systems last longer Finally, if a family system tends to be a closed system, not open to non family members and not open to new ideas or to help, then Jay Hughes, author of “Family Wealth: Keeping it in the Family”38 says the system will tend towards entropy. No new energy can come into a closed system. On the other hand if the family system is open, receptive to new ideas, willing to think about change, and it allows for non family members (such as senior employees, directors and advisors) to provide advice and input, then that system is more likely to postpone the effects of entropy. In short, an “open” family system lasts longer. If your goal is to continue the family business and the family legacy, be an open system. The example given above of how a non family advisor could help bring about the Optimism necessary to encourage change is a good example of how an open system can benefit from external inputs. 37
Family Business Risky Business How to make it work, by David Bork Bloomberg Press. 38
14 Some questions to reflect on: ¾ Do you notice the same conflicts or disagreements repeating themselves in your family? ¾ What role do you think you play in the family dynamics? ¾ What is one thing that you could do which could help to improve a particular relationship between yourself and another family member? ¾ Do you tend to get in between two people? What would happen if you did not get in the middle? What would happen if you encouraged them to try to work out their issues directly? ¾ Do you think you are an open family or a closed family? ¾ If you probably tend towards being a closed family, what is one thing you could do to open it up a little bit? 15 SOME HELPFUL TOOLS Following are suggestions for some useful steps that can be taken or tools that can be used to help a group of siblings in business together move towards a more horizontal, collaborative working relationship. Tool #1 Personal Preferences Assessment Tools There are a number of readily available assessment tools that can be used for team building and communication exercises. Examples include the Hermann Brain Dominance Instrument (HBDI) and the Myers‐Briggs Type Indicator (MBTI) which can be used to measure individual brain preferences and predict patterns of behavior in thinking, learning, and doing. These tools can help individuals understand diversity in thinking and behavior, and can lead to greater self knowledge. The great benefit of this kind of assessment tool is that it makes you realize that the way your brain is wired has a huge impact on the way you relate to the world, including with your own family members. Tool # 2 Family Genogram A family genogram is a special kind of family tree that pays particular attention to family relationship dynamics.39 It is a useful tool for starting a discussion about family communication and dynamics. This exercise is helpful in showing that communication patterns within a family are often transferred across generations. It is advisable to do this exercise with an appropriately qualified professional. Tool # 3 Managing your Hat Collection Life in a family owned business is very complicated simply because of the multiple roles that each family member can play40. Role confusion quickly leads to conflict. One communication technique that can help to minimize role confusion is to be explicitly clear, both to yourself, as well as to those you are communicating with, which “hat” you are wearing at any particular time when you are talking. This is very useful technique to use in family meetings. The rules to managing your hat collection are as follows41: • First, what kind of decision am I making? Is it ownership, governance, management or family? 39
Genograms Assessment and Intervention by Monica McGoldrick, Randy Gerson, and Sueli Petry. Jay Hughes. 41
The rules of managing your hat collection are explained in Hats Off To You by Ernest A Doud, Jr & lee Hausner 40
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Second, do I own the right hat? Do I have the right to be involved in the decision in the first place? Third, am I wearing the right hat? Am I prepared to act in the role what will enable me to make this decision from the right perspective? Fourth, do I have a voice or a vote? Do I have / share the responsibility to make the decision, or do I only have the opportunity to give input to the decision makers? Tool # 4 Becoming aware of Individual Life Stages Jay Hughes, author of “Family Wealth; Keeping it in the Family”42 recommends asking siblings to become aware of the concept of individual life stages and to start by reflecting on which stage of life they are now in themselves (and this can be both in terms of individual life stage, as well as the life stage of their own nuclear family assuming they are married and have their own children) and how they have themselves changed as they enter into different stages. Hughes explains that once a person can see how they themselves have changed over time, it becomes easier to appreciate that other members of the family have also changed with time. This then makes it easier to have “adult‐ adult” conversations among siblings. Tool # 5 Conversations about “Stewards & Inheritors” Jay Hughes also says that in his experience of Asian families, in the majority of cases, some of the siblings will see themselves as being stewards of the family legacy, but often not all of them. Hughes says that there are often members of the second generation who do not want to work together with the other members of the family, and who view their stake in the family company in pure economic terms, without any particularly strong emotional attachment to it. Accordingly the logical starting point for a group of siblings in an Asian family business is to be able to have “adult‐adult” conversations as to whether each sibling sees themselves as a “steward” willing to learn the skills of collaboration; or as an “inheritor” who is not particularly interested in working with his or her siblings. If a group of Asian second generation owners cannot have this kind of honest conversation then most likely they will find they are “stuck” and unable to move forward.43 Tool #6 The Family Council One of the lessons about family owned businesses is that if there is no separate forum created for family issues (and ownership issues) to be discussed, then such issues will inevitably come up in the wrong forum (for example the board meeting) and often result in conflict44. As such a family council is an important tool to help continue the family business and a tool that facilitates 42
Bloomberg Press. See more detailed article on The differences between the belief systems and practices of Stewards and Inheritors within single Asian families and the confusion they create, by Christian Stewart available from www.familylegacyasia.com 44
This is a conclusion stated in Generation to Generation, cited above. 43
17 better communication among family members. It can also be a forum to address family conflict and a platform to drive family member education. Most families find that it helps to start by working with an external advisor who can help the family to create their own family council. This is because forming a family council, and agreeing on how family council decisions will be made, requires a departure from the normal family decision making process, and most families find they can only do this with the help of an outside facilitator.45 Family councils ideally are horizontal organizations designed to give each member an equal voice. They are not necessarily a decision making body. Creating a family council while the business founder is still alive is a good way for siblings to start practicing collaborative communication and decision making. It has been said that creating a family council marks a change from being “Dad’s business to the family’s business”.46 Tool #7 A Family Constitution & Family Policies There are as many different types of “family constitutions” as there are family businesses. One way of thinking about a “family constitution” is that it is the written description of how your family council works, who gets to be in the family council, what it does, and how it makes decisions, including dealing with conflict.47 It is perhaps better to think of a family constitution, not as a document, nor as a set of rules, but as an ongoing process of learning how to make joint decisions together.48 Dennis Jaffe describes a family constitution as, “…. a legal, or quasi legal, guide for family behavior, decision‐making, and setting up the succession from one generation to another. Beginning with the mission statement, the constitution then extends the mission into practical actions. It sets up a framework and a forum for a group of equals to deliberate issues, create policies and procedures, clearly define family member’s rights and obligations, and make decisions about the important issues they share.”49 Having a family constitution will therefore assist a group of siblings in making the kind of transition this article is about. Tool #8 A Board or an Advisory Board Barbara R Hauser, an international family governance expert, and author of “International Family Governance50 says that one tool for helping siblings to work together more effectively can be to create an active board of directors (or advisory board) with strong outside directors ‐ especially where there are strong personalities among the siblings. She says: “It is like having guests coming to your home to dinner ‐ everyone tends to be on their best behavior”. The idea is to find 45
International Family Governance by Barbara R Hauser Ricky Mercado, Ateneo University Manila 47
International Family Governance by Barbara R Hauser 48
James E Hughes Jr, and Barbara R Hauser 49
Stewardship in Your Family Enterprise, Developing Responsible Family Leadership Across Generations 50
Mesatop Press 46
18 independent directors, with good quality business experience, who are willing to bring objectivity and new ideas and who are able to question and test the thinking of the siblings. Hauser says that if carefully chosen, strong independent directors can help keep the focus on board and business issues and away from family dynamics. Tool #9 Use a Family Therapist for Training & Coaching Dennis Jaffe says: “There is no such thing as a perfect family and every family has things that can be improved”. However in the case of a family owned business, the economic ties that bind the family members together make it perhaps even more important than normal to look at the question of how the family members communicate and relate to each other. Training and coaching from a properly qualified family therapist might be one of the best ways that a group of siblings can learn new ways of communicating and relating to each other. Think of family therapy as investing in improving critical essential skills. In the Philippine family business context Queena N Lee‐Chua, author of Successful Family Businesses, Dynamics of Five Filipino Business Families51, concludes that a healthy family system correlates to a healthy family business. In her book she gives specific recommendations for how family therapy could be used to enhance sibling relationships and other critical dimensions of the family owned business. What about Family Trusts? Ownership of the family business can often be tied up in one or more family trusts. Is a family trust a tool that can be used to help a group of siblings transition from a traditional hierarchical family structure to a more horizontal collaborative structure? A trust structure can be helpful in terms of setting out clear rules as to how shareholder level decisions are made, but in many cases a trust structure is usually not a tool for enhancing communication among siblings or other family members. In “Succeeding Generations”52 Professor Ivan Lansberg warns: “In large and complex family business systems, ownership may be indirect and difficult to untangle. The family holdings are often tied up in trusts that have the effect of giving a few trustees ultimate authority over the company’s destiny. In many cases, the structure is designed not only to reduce taxes but also to prevent family emotions from disrupting the management of the business. The lawyers for the principal owner purposely design the trusts and write a shareholders agreement that will block any effort by dissident family members to challenge the principal’s control. This containment strategy is, in my view, basically wrong headed. It usually reflects the principal owner’s unwillingness to deal with the human side of running a family business – the messy emotions that come with the territory, especially in later generations when there are many more family members with varying interests and points of view. No matter how strong the legal dam erected by the principal owner, it is likely to give way under pressure from members of succeeding generations.” 51
Ateneo De Manila University Press Harvard Business School Press 52
19 Therefore, even if the ownership of the family business is structured through a family trust, it is still going to be very important for the siblings to work on developing their communication and relationship skills in order to make the kind of transition to a more horizontal working relationship that this article has been discussing. Some questions to reflect on: ¾ Why not review this list of tools together with your siblings? ¾ From this list what are three tools that you or your family could benefit from using? ¾ What do you see as the benefits that can flow to you or your family from the three tools you have identified? ¾ Give yourself a deadline – by when will you take steps to use your three tools? ¾ For each of the tools you have identified, what could be some of the “roadblocks” that might prevent you from making use of the tools? Then for each roadblock you have identified, how could you overcome that roadblock and get around it? 20 SOME USEFUL BOOKS Book Author The Seven Habits of Highly Effective Families Stephen R Covey
Extraordinary Relationships, A new way of thinking about human interactions Roberta M Gilbert
International Family Governance, Avoiding Family Fights & Achieving World Peace Barbara R Hauser
Hats Off to You Ernest A Doud, Jr & lee Hausner Stewardship in Your Family Dennis T Jaffe
Enterprise, Developing Responsible Family Leadership Across Generations New Passages, Mapping your life across time Getting Along in Family Business; the Relationship Intelligence Handbook, Gail Sheehy
Brain Lock, A four step self treatment method to change your brain chemistry Jeffrey M Schartz
Triversity Fantasy, Seven Keys to unlock prejudice Stephanie West Allen
Edwin A Hoover and Colette Lombard Hoover Topic In particular introduces the concept of an emotional bank account and a discussion of the skill of listening An introduction to Bowen Family systems theory A simple description of how to go about creating a family council and a family constitution Introduces the concept of managing your hat collection and learning to distinguish between different roles in the family business A general text on the family business. In particular see the section on building communication and resolving conflict A description of the adult life cycle
Provides a description of the concept of Relationship Paradigm and Relationship Skills A book about obsessive compulsive disorder (OCD) but the four step process described could also be applied to other automatic behaviors, e.g. the way you react to a particular person In the form of a fictitious storey, un‐
pegs the elements of communication and conflict 21