Balancing the needs of the family and business

Some families may have rules around separating business and family discussions by setting ground rules such as ‘no business talk at the dinner-table’ or ‘don’t bring a domestic disagreement into the office’. Like many families in business, these ‘rules’ have been established over time, and may not be written anywhere, so there is no clear protocol for when to discuss a concern that might involve both the family and the business.

The Family Business Survey

In the Family Business Survey, the top source of conflict was the ability to balance the needs of the family and the needs of the business; this was also the number one issue for both male and female leaders of families in business.

So, where you have competing needs, particularly if it intersects with both family and business, how do you go about resolving a problem and avoiding conflict along the way?

Where should you start?

Firstly, conflict is not necessarily a bad thing. You should feel comfortable and safe to raise a concern, even if it may be controversial or has the potential to be divisive – it should enable a balanced discussion. 

When someone avoids a discussion on the basis it will cause conflict, this can mean parties may not feel heard, or certain perspectives may be missed or not taken into consideration. This poor decision-making process can lead to negative outcomes – not the issue of having conflict in the first place.

When understanding the needs of the business and the needs of the family, there are two main resources to consider: time and money. Neither resource is infinite, and generally once ‘spent’ cannot be retrieved, so balancing these two needs is very important, and will be dependent on the problem.

When the business or the family feels its needs are not being met, it is difficult to know how, where or when to address them. 

An example of time or money needs not being met may be:

• Time: We often see one parent investing their time in the family business, but it comes at a cost. It results in their spouse feeling like a single parent and the next generation feeling as if that parent has missed all their soccer, dance concerts, awards nights etc.; or
• Money: Family members are taking cash or having personal expenses paid from the business and this is leaving the business strapped for cash to pay its suppliers and can often lead to an inequity amongst the siblings.

When a Family Charter is in place, it enables all family members to discuss potential issues and follow structure to ensure they do not become a problem:

• Time: This allows the family to consider how they can all play a role to ensure there is work/life balance for everyone while the business continues to thrive.
• Money: By having a dividend or trust distribution policy in place, it ensures family members know the set amount they will receive each year and no personal expenses are run through the business. It ensures clean company accounts, equity amongst siblings and transparency.

How to raise a concern

In any business, there should be forums to raise an issue, and these may be informal or formal. Understanding where to put it ‘on the agenda’ is the first question; where does the concern sit within a business – is it operational or strategic?

Operational issues may be relevant to raise in a weekly job or progress meeting; strategic problems are more likely to be raised in a monthly Board or Directors meeting. If a matter is ‘family’ related, how it will be raised can differ. If a family is large or has a Family Office or Family Council, these may be the forum to raise it as these family meetings usually have regularity and set agendas.

Formal documentation should be considered

As a family business, it is worthwhile considering the preparation of a Family Charter – sometimes also called a Family Constitution. While a Family Charter document is not a legally binding document, it usually contains many agreed upon items such as the family’s values, rules and policies in relation to the business. It also commonly includes agreed upon procedures for resolving conflict and places structure around family meetings. 

Raising the issue is the first step

Raising a concern is only the first step – identifying the consequences of action (or inaction) and then resolving a problem to the satisfaction of all interested parties can be a difficult and lengthy process.

Identifying and understanding why an issue is of concern is important – and then finding the right forum to raise it. It is good to have a suggested solution, or at least some potential options, at the time of raising the concern to assist in the decision-making process. This isn’t always an easy thing to do, as sometimes the solution to a problem may not be apparent – we recommend an objective, third-party advisor for these scenarios.

Our process

Our Family Charter process will provide detailed step-by-step process to identify how you can have detailed action plans in place for when family conflict arises.

We’re here to help

If you’ve experienced or are experiencing conflict when issues in the family business arise, it may be time to engage expert facilitators to help you. We’ve had experience in creating formal documentation to outline agreed upon processes when conflict happens with many clients.

Should you be interested in looking to have a Family Charter prepared or need expert assistance to mediate or resolve conflict, please contact our team today for assistance with your family business.

“It was fantastic, we were quickly able to identify where the family members were aligned and very clear on those areas that we were not aligned. The process uncovered some topics and views that had never been discussed before! Most importantly we came away with a list of things to discuss/decide which we then used over the following years to help us prepare.” – Grant Thornton client