Equal Does Not Always Mean Fair

In our experience, when it comes to succession planning for a family business, parents have a tendency to treat children equally. We’ve found that equal doesn’t always mean fair. The difference between equal and fair can sometimes lead to the demise of the family business.

In our previous post, we discussed how succession planning is a journey and not a destination, with challenges along the way. Particularly in a family business, the added dynamic of family relationships brings the added element of emotion to the workplace.

There was a situation where two siblings worked in the family business but oddly enough, neither had ever spoken to each other about the future with the company.   There was a clear imbalance of time and effort vested in the company between the two siblings.   The eldest child was more involved with the day-to-day operations and spent many more hours at the office, while the younger sibling was involved in sales but was not around nearly as much. Each had their own vision and goals for the company. The problems began when the parent had decided to initiate their succession plan which he intended to give equal equity and control to the siblings.  When we spoke with the parent years after, he mentioned that he never had a formal discussion with all his children present about the succession strategy. He had his own vision for the family business that was apart from each respective child’s own outlook. There was no continuity from parent to children which resulted in a general misunderstanding of the roles and leadership amongst the siblings that caused friction and animosity that eventually severed the family business.

Since there is no template on family dynamics, each family business must be treated independently. Each relationship has a nuance that is unique to one another.    Some examples of the unique relationship dynamics of the family-run business include:

  • Parent to Child
  • Sibling to Sibling
  • Parent to Extended Family
  • Sibling to Extended Family

One key strategy that all family businesses can use is to incorporate a ‘Family Meeting’.   What we found is that communication is key and that having establishing a ‘common ground’ and a structured forum to express each individuals thoughts, concerns and goals is essential in developing a sound succession plan. Our good friend Dr. Tom Deans, a professional speaker and author of the New York Times Top Ten Book, Every Family’s Business and Willing Wisdom, has shared on numerous occasions the merits of a Family Meeting.

To find out more about Tom, here’s a link to his website: http://everyfamiliesbusiness.com.

One of the most important considerations in a family business is continuity. At Succession Strategies Group, a big part of what we do for our clients is to promote Family Harmony.   Please check out our page about Family Harmony to learn more.