There is nothing more fascinating to me than family company dynamics. I’ve spent the past three decades smack in the middle of family issues within family businesses saturated with 2nd, 3rd, 4th, and even 5th generation owners. I’ve experienced first-hand the various degrees of love, hate, and habit that occur at one time or another. I’ve witnessed that the “family” in family business can present even more challenges than widely swinging fuel prices and seemingly stupid competitors. In fact, the more family in the business, the more conflicting ideas about growth and company direction. Whether you are the family, or just work for the family, knowing where each family member is in the love, hate, habit cycles and your ability to manage each will have major impact on your company’s success. Let me elaborate.
Love– Easy to recognize, this cycle is charged with energy, enthusiasm, forward focus and clear vision for the company. It’s often found in younger generations as they enter into management and decision-making. So what’s wrong with this cycle and why would you need to manage it? While it’s contagious and exciting, those in the cycle may lack the ability to see any negatives. Remember your first crush? When you didn’t see the warts or pimples on the first date? Love is truly blind but, to run a company effectively, you need all blinders off. Proactively managing this cycle without dampening enthusiasm is tricky. The key is to create healthy risk boundaries. The solution is written rules for risk tolerance. Most CEOs have these rules in their head, but have never written them down. The CEO wants the next generation of leaders to make wise decisions, but without knowing the experiences that created the mental rules you’ve gained over the years, how can they? By helping your upcoming leaders gain a clear understanding of risk boundaries, their excitement and ideas can still flourish within your tolerable risk parameters.
Hate– This cycle may be cleverly disguised because no owner or executive wants to admit to anyone, much less themselves, that they hate their job and its responsibilities. So, the way to identify a hate cycle is through behaviors. Avoiding work, or conversely working long hours with lots of verbal blaming. “It’s my suppliers, it’s my stupid competitors causing all the trouble, my customers just won’t pay, if only the economy were better we’d be fine, blah, blah, blah…” are all signs of a hate cycle which typically occurs in conjunction with times of financial stress. If you observe someone (and maybe even yourself) in a hate cycle, realize that at this point in time, the person doesn’t have the energy, the creativity or even the “want to” for leadership much less the visionary force needed to drive a company to its next success. Therefore, it’s critical this cycle be broken. If left unchecked, it is a cancer that will spread to the entire organization and can literally destroy the company. To help any person in a hate cycle you:
- Tactfully tackle the problem with the individual. Remember ignoring it adds to the problem. In the case of a CEO, consider enlisting outside help from an already trusted advisor who can address the hard truths without fear of repercussion.
- Discuss the observable behaviors and the impact of those behaviors on the company.
- Determine if the cycle is caused by a mismatch in talents and responsibilities (think round peg in square hole) or simply overwhelm from inability to deal with the velocity of change in our industry.
- If overwhelm, engage the person in a positive future vision, including actions needed to get out of the rut. In most cases, the person has lost hope and can’t see the future vision without outside help. (Let’s face it, if they could have done something different they already would have.) So pair them with a person with propensity for vision, whether from inside or outside the company.
- If mismatch, arrange for their exit. It will bless them and all the employees!
Habit – This may be the most difficult cycle of all. Why? Because it’s so lukewarm that no one gets it, even the person in it! There are no glaring hate behaviors, and of course, no passion either. Imagine a robot showing up to work. The person in the habit cycle walks in, does the same thing each day, and is not miserable or elated. Think flat line and you’ll have the picture. At first blush, they can even appear quite content. Their daily rut feels comfortable to them. So what’s the problem if they are happy and the company is profitable? The problem is lost opportunity and fun! The “Habit” person doesn’t really care that the company could be more profitable. They don’t have their head stuck in the sand, but are just ambling down their rut rather than jumping out of it and achieving greatness. The consequence is lost opportunity — the company and all its employees miss the thrill of high performance and bigger profits. From an employee perspective, that means missing higher paychecks that ultimately bless entire families.
So now let me share with you a practical application in a real family. This petro family is in third generation ownership trying to make it to the 4th. As the number of active family members in the business increased, their solution to ego wars was to divide responsibilities by division. One person ran the lubes, one ran retail, one ran trucking, one worked in the office (and was pretty much useless but tolerated according to the others). Oh, and of course, Mom and Dad still own 100% (which is why the useless one hasn’t been fired – where else would they be able to work and make a living?) Each month they have a family board meeting. Now this can be good thing if there is functional communication (you guessed it – completely dysfunctional in this family). And, to complicate matters even more, one sibling runs an outside real estate company which everyone notices is making more money than the entire petroleum company! On a conference call, talk began to center on which divisions were profitable and which should be divested. Of course, no one agreed on the overhead allocation to their division and no one wanted their division and certainly not their own salary to go away. The lubes guy was in Love cycle, trucking guy in Habit, retail in Hate but not willing to part with the income, the incompetent office worker in Habit. I can’t evaluate the real estate guy as I haven’t met him and the family doesn’t say much about him, but my guess is he’s in “Visionary Leadership.” While I love to see all my clients in Visionary Servant Leadership, with this degree of infighting, the “servant” part may not be tops on his list!
So what was my solution? First, get them all on the same page via my webinar coaching program, a structured, methodical monthly series where the real strengths and weaknesses of a business surface. I knew this would force them to start working together toward common goals. Each session has homework –sampling techniques that usually take no more than 15-30 minutes to test and determine the degree of cash and profits currently missing in their various business sectors. At minimum, the family members would get a reality check that I know translates to increased profit. At best, they gain clarity, focus and lots more profit! (For more info on this specialized coaching program check out M-Power.)
What I really want you to understand as you read this is that being able to recognize the love, hate, and habit phases and take appropriate action is critical to achieving peak profitability. Take a hard look first at yourself and then the people in your organization to detect and break any destructive cycles.
Meridian Associates has been partnering with family-owned businesses for over 30 years to remove barriers, accelerate business growth, build their legacy, and reduce stress levels. With three, high-impact business events each year, The CEO Exchange, Women in Family Business, and The Family Business Intensive, we continually provide best practices & proven strategies that keep multigenerational businesses thriving. Discover how Meridian can help your business thrive through our combination of high impact business coaching, advisory, M&A, and precision company valuations by visiting www.askmeridian.com or calling us at 817-594-0546.