Unhappy families
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In any haulage business blood is thicker than money, but if the balance between family and commercial issues tips the wrong way, good governance, profitability and perhaps even survival can drop off the agenda.
Hauliers assume that being a family business provides channels of free and open communication to allow disruptive issues to emerge and be diffused.
Effective mechanisms for communication inside the family firm seldom exist, despite being the first barrier against conflict. Although small firms are often thought of as autocracies, experts say family firms are based on "negotiated paternalism" in which all the family members have some sort of stake in decision making, even if only a passive one.
This style creates hidden agendas covering a series of potentially sensitive family issues that might generate conflict.
The mots of disagreement often lie as much in psychology and emotional baggage as in real issues of strategy or management. Family relationships are fixed before business ones.
Business consultant Peter Chan, formerly a partner in a family firm, says "The sibling problem is not totally comprehensible. Suppose you have seen a close relative pass away and there are assets. You can appreciate the brothers' points of view. I saw relatives, who had cared nothing about the assets before, change their attitudes overnight, fighting to get their `rightful portion'."
Rivalries begin in the cradle. Perceptions stick. It is difficult for a parent to treat chil
dren as anything but that, even when the offspring are in their 50s. Letting go and handing over can be so difficult. Spouses can add new complications, for good or bad.
Many transport firms flounder, holed by nepotism which has encouraged unsuitable family members to enter the business and alienated both family members and staff. Good managers are discouraged from entering family haulage firms because of the fear that their performance will count for nothing against blood.
On the other hand an autocratic founder may be reluctant to allow his heirs into the business.
Equally, he or she may not recognise that the next generation have different aspirations. All family members should spend some time working outside the business to help them crystallise personal ambitions.
Outsiders
Admitting outsiders will be a danger point, unless handled with great care. If most family members believe the firm is family first and business second, the MD's decision to allow a new finance director on to the board might not go down well with children who have distinct ideas on what they want to do.
When the family is considering the succession issue all the conflict factors can rear their heads. Secondary crunch points occur where the business has become too large and complicated to manage as a single family unit. Diverse camps of passive family shareholders and family managers seldom see entirely eye to eye.
To minimise conflict a family forum is desirable; somewhere where all family members know that they are on neutral territory and can speak their mind. The boss needs to make an effort to listen and to give everyone a voice. The forum has the objective of building a consensus, not imposing edicts.
In the forum the family should set commercial objectives for the business, having decided whether it is a family concern or a commercial enterprise. All family members must express their reservations about any project or decision.
These reservations need to be expressed face to face, not through a messenger, who may have his or her own agenda or interpretation of the issues. Finally, a forum should never allow for attacks on family members or placing blame.
Family members must accept that commercial reality requires evolution. So the forum must discuss change, as the firm is where many family members will spend the rest of their lives. Individual objectives change and need to be respected.
Decisions taken about the business may affect different family members in different ways, leading to changes in roles and ambitions that also need to be aired.
Along with communication goes information. Family owners and managers should communicate their thoughts, expectations, plans and decisions as early as possible to the family and the firm as a whole. The more important the issue, the more important it is that other stakeholders should be informed and consulted, rather than left to nurse their hurt pride after finding out on the grapevine. The presence of independent outsiders pro-. vides the most effective check on disputes once they have begun to emerge and the best means to resolution.
Once a conflict has started there may be structures in place which channel the dispute, perhaps through a forum, a special family council, or non-executive director arbiters. Equally an outsider may be given the task of finding the answer. Peter Chan suggests:
1. Define the conflict
Interview the combatants. Obtain as detailed a story of the conflict as possible and continually update it as new information becomes available. This process will both ensure that you have a real understanding of the key issues and will give you useful insights.
2. Add other people's opinions
Having an eye to any issues of confidentiality, compile a list of people who have the status and experience to give different appraisals, views and conclusions. This should not just include the immediate family, but both professional and personal counsellors to family members: bank managers; lawyers; or priests.
3. Brainstorming
All information and ideas need to be aired, discussed and argued (brainstormed) for an answer. Depending on the nature of the family business, this might be done in the family business forum or externally.
4. Draw up a solution
A consultant's job is to write the report, analyse the conflict, report on the brainstorming session and put forward a solution without input from partial family members.
5. External appraisal
Ensure that you have a second opinion on your proposals from someone who is disinterested, but who knows the business.
U by David Harvey
David Harvey ACCA ACA is secretary of the Small Business Committee at the Chartered Association of Certified Accountants and a director of the institute for Small Business Affairs.