By Michele Lent Hirsch, published on March 15, 2011 - last reviewed on November 21, 2011
It's hard enough to navigate sibling rivalries, spousal resentments, and parental interference at home: Imagine if you also had to do so at work. You might think the sure way to improve a family firm would be to get to the bottom of old wounds and patterns. In fact, the best tactic is to set aside the blood-thick drama and focus on practicalities and protocol.
Though each family and their enterprise is unique, William Pounds, dean emeritus of MIT's Sloan School of Management and former adviser to the Rockefellers, has a universal principle: "Minimize as much as possible the requirement that people get along." Rather than hope relatives will see eye to eye, says Pounds, implement plans that don't pit them against each other in the first place.
Here are some common family-business dilemmas, and expert insight into the best way to approach and solve them.
Vying for a dangling crown can be ruinous, as Dave*, who has six sisters and brothers, learned when his mother couldn't keep running her company. After overseeing a hospital staffing agency for twenty-three years, she handed control to three siblings. "It went to their heads," says Dave. One brother stole assets; a five-year lawsuit between factions ensued.
"My mother wanted everybody to get along, and they just kept pushing for power," says Dave. She fired the three in charge, and the agency "fell into the lap" of a brother who was neither prepared nor hoping for the job. Five years later, the family remains divided. "We're not sure what's going to happen when my mother passes away."
How To Deal: Once a parent has stepped down, Pounds says, "the chemistry changes," destabilizing even the most harmonious sibling sets. So siblings should plan ahead and choose neutral assistance. If the old guard leaves assets to be managed by non-family trustees, unbiased decisions can be made in the interest of all parties.
Parents who wish to pass the business along to their children must acknowledge that they are not equal, says Kathy Wiseman, a faculty member at the Bowen Center for the Study of the Family. "The ability to talk openly with all family members about skill sets without being personal is critical," she says.
After separation or divorce, it may seem necessary for exes to break up that shop they started as lovebirds. Not so for Sally Dunn, manager of T. Schreiber Studio in New York. After separating from her husband of 20-plus years, she took a break from managing his acting school—but stayed on as a teacher. After a financial crisis, Dunn felt compelled to return in full force. She cared deeply for the school and wanted to remedy management missteps her replacement had made.
Seven years later and one divorce later, she and Schreiber still work side by side. "We continue to parent our daughter," says Dunn. "I think this school is our second child."
How To Deal: Couples should make an agreement beforehand, says Pounds. They shouldn't leave the future ambiguous—even if they can't dream of splitting up. "It's like discussing a prenup with someone you've just fallen in love with. An awkward conversation," Pounds admits, but a proactive one. In the rare case of Dunn and Schreiber, no "prenup" was necessary. Working as exes even has benefits. "We used to talk passionately about a particular student, enrollment, or financial issues at the dinner table," she says. Now, says Dunn, "we work together, but I go home and have my own life."
Sometimes the only the way to salvage an endeavor is to move beyond it—at least generationally speaking. Steve Rosen, a 59-year-old who began working part-time at his father's appliance store at age 12, faced difficulties upon returning in his 20s. When he and his father, Herb, disagreed over operations, Steve began a separate furniture division. Though sales out-grossed those at the appliance store, it took a decade before he could convince his father that the appliances had become a liability.
Despite his father's "constantly second-guessing" him, Steve bought the whole company and profits soared. Herb kept working, but to the business's detriment. While the industry called for a targeted, web-based approach, he insisted on buying big classified ads in the paper and putting items on sale. Steve knew they could avoid markdowns if they sought the right customers online. After a few years, Steve told his father, "I think we're gonna have to have you retire. Your heart's not in it and we don't agree."
How To Deal: Tread lightly. "Know what it's like to take a car away from an older person?" asks Wiseman. "That process takes a long time and lots of strategy. This is that on a larger scale." Grownup children should think carefully and talk amongst themselves about how to best approach a parent: Don't drop the idea the moment it hits you. Also, says Pounds, keep in mind that business needs good leadership—not just "anyone but Dad." The search should be framed in terms of what the business needs to carry on the wonderful legacy that Mom or Dad began.