Healthy levels of mutual respect and trust are key indicators of a good family business culture. Their absence is a common cause of conflict.
“Trust” is a combination of thoughts and feelings that give confidence you can rely on the character, ability, strength, or integrity of someone, or something, to meet your expectation that they (or it) will perform in the right way, at the right time.
Trust in people comprises respect for their character and ability, PLUS evidence of their actual performance in the relevant area of interest. That evidence is found in their actual doing, and (provisionally) in their reputation for doing. In the final analysis: performance > trust; failure to perform = no trust.
Families & family businesses alike cherish the belief that their “familyness” effortlessly conjures high levels of unconditional love, honesty, integrity, respect & trust between family members. But sometimes the very opposite is true and, in reality, there’s remarkably little trust between family members. Unfortunately, this usually means high levels of conflict in the family, which can leech or bull their way into the family business, with potentially devastating results.
The most common cause of the conflicts that result from low trust can be traced back to broken promises, especially vague and/or privately made promises relating to future leadership and ownership of a family business. “One day this will all be yours, my boy/girl” is what lawyers call a “mere puff.” It’s not a bankable commitment!
When family members, rightly or wrongly believe that promises made to them have not been kept, it’s a quick slide down the razor blade of life into the waiting vat of iodine: first, respect goes out the door; then trust takes a hit; then people realise that trust has completely gone – and that there’s no respect, and very little apparent love left, between family members. At that point, it becomes easy to demonise the despicable promise-breaker by dredging up other historic instances of their unreliability and general lack of integrity. The temperature rises and family cliques begin to form.
The “Family Business Curse” refers to the damage that troubles in a family can inflict on its family business, and vice versa. Serious relationship tensions amongst family members, especially those who work together in a business, can find lots of room for expression in a business setting, usually to the profound embarrassment of any staff who have to witness it, and to the ultimate detriment of the business, if it’s bad enough to cause serious disruption.
Minimise the risk that promises made can’t, or won’t, be kept.
Causes #17 and #18 talk about problem-solving and decision-making. When a family has a good, inclusive process for making decisions, and formally records said significant decisions, there’s not a lot of room for confusion about what major decisions have been made, and what they’re about.
To create certainty on a much broader front, the family needs a Family Plan, with all relevant family members being involved in its development. The Plan should include agreed objectives and major milestones, such as key timings in a structured succession process, to ensure that everyone knows:
(a) what the deal is;
(b) what their role is in the deal;
(c) when everything is going to happen and,
(d) how it’s going to happen.
Specific roles and responsibilities should be allocated to specified individuals – so everyone has clarity, certainty, and commitment about the plan, and their personal accountabilities, described therein.
Working together constructively to create a long-term Family Plan helps to realign family members around personal and shared values, visions and goals. The process helps to rebuild mutual respect and trust. Individuals, and the family as a whole, invariably come out in better shape on the other side.
However, follow-up is critically important. Don’t leave The Plan swinging in the wind, or you’ll undo all the progress that’s been achieved and probably end up further behind the 8-ball than when you started. Raising, and then dashing hopes for the future, is a sure path to worsening latent conflict.
Follow-up should comprise getting together to review the performance of assigned tasks. This is best done through regular family meetings – preferably, at a quarterly Family Council session. Provided individuals do what they’re supposed to do, their actual performance of agreed tasks will demonstrate how they can and are keeping their promises to work for the benefit of other family members, and for the family as a whole. This can go a long way towards reducing concerns about megalomania, selfishness and narcissistic egocentricity, without needing pills.
Re-building trust is all about performance. It’s about doing the doing, rather than just talking about it, and being authentic in the doing, whatever that means to the family group. Contrary to popular belief, respect and trust can be built, or rebuilt very quickly, provided people are open and willing to make it happen.
Healthy levels of mutual respect and trust are key defences against conflict.