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I'd like to share some correspondence with you. A colleague sent me the letter below. My reply follows.
Dear Paul, I'm working with a family who's dealing with a difficult issue, and would appreciate your opinion. Two brothers and a sister ranging from their late-60s to mid-70s are equal owners in multiple international businesses they founded together. The siblings get along quite well as partners, and their businesses have enjoyed great success -- but the siblings have no family feeling.
As bad as the sibling relationships are, relationships among the dozen second-generation family members are even worse. They all have different interests. They don't want to work in the family businesses or try to improve the family connection. Meanwhile, they all have a stake in ownership and will find themselves holders of significant wealth when their parents pass on.
The board of directors consists of only the three sibling founders -- no members of the second generation. One of the founder-siblings has shared his concern with me about the future of the business. But he doesn't think his conflict-averse sister and brother are willing to address the issues. What are your thoughts?
Sincerely, Carline
A lack of willingness by family members to address significant issues is, sadly, rather common. With an inability to manage conflict and a desire to avoid it, family members often get trapped, and the issues only worsen.
Fortunately, at least one family member has reached out to you. The clock is ticking -- and despite the current business success, the future could turn out rather grim in the absence of some resolution of these issues.
You say the business owners have no sense of family. In this case, I doubt a sense of closeness will appear instantly. Rather, I suspect, it will develop, if at all, only after years of hard work. Assuming I'm correct, the place for the family to start connecting is around the business -- not around the family. A valuable building block: the success of the businesses and the siblings' ability to work effectively together as business partners. Perhaps you can help them focus on these strengths.
FAMILY COUNCILING. Affluent families face the additional burden of dealing with the responsibilities of wealth. I hope you can help the family shareholders, especially the second generation and even their children, to nurture a sense of stewardship through some "educational gatherings." Family-member shareholders can share stories that might reveal enduring values from generations past.
I recently saw a wonderful Patek Philippe watch advertisement with the tagline, "You never actually own a Patek Philippe. You merely take care of it for the next generation." What a wonderful message to give to business families.
The relations can try to address these issues via a shareholders' council. Within this structure, shareholders can discuss their differing concerns, goals, needs, and expectations. Many families with substantial holdings even create a family office.
The operating companies fund the family office to provide services for the shareholders. These often include financial and accounting help as well as investment and philanthropic opportunities for family members. Some even have a mini family bank that can help fund new business ventures for individual family members. This could make an ideal way to support the diverse interests you mention in this family.
BUILDING TRUST. If the shareholders' council is effective, you might suggest the founder-siblings invite some of the next-generation family members onto the board of directors. Perhaps some involvement in governance will give them a deeper appreciation of the businesses and their potential, as well as an opportunity to experience the art of leadership so critical to their futures.
After trying to build on the apparent strengths (rather than attempting to immediately "solve" the inability of family members to communicate effectively and address and resolve conflict), family members have a chance to recognize their ability to work together and build some trust in one another.
Ultimately, maybe this will propel family members to unite and address their unresolved concerns around the lack of a "family feeling" and, even more important, to address the consequences of failing to do so.
Paul Karofsky is Executive Director Emeritus of Northeastern University's Center for Family Business, and a member of the Family Firm Institute. A former third-generation family-business owner, he's currently the principal of Transition Consulting Group in Boston, where he advises families, businesses, and educational organizations
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