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Articles - Successful Management Techniques in the Family - Business

Preparing spouse to manage business can ease succession later

Thursday, March 25, 2004

By Kathy J. Marshack, Ph.D., P.S.

Jay was 28 when he founded his sign business. He and his wife Teddie were thrilled when they opened their storefront. As a young couple, they had a lot of energy and worked long hours getting the office and shop ready, buying supplies, developing a business plan, joining the local chamber and greeting their first customers.

Jay took over full management of the operation while Teddie kept her full time job as an account executive for a women's fashion company. But Teddie was there through all of the growing pains of the business too. She helped with billing and emptied the trash. She took messages for Jay at home in the evening when he was working late. The goal was to build the business to a level where she would quit her job and come to work with Jay. In the meantime her job provided a steady paycheck and other benefits such as insurance.

As the business grew, so did Jay and Teddie's family and responsibilities. By the time their second daughter was born, the sign business was doing well enough to support the young family without Teddie's income. It would be tight, but the couple decided to take the plunge. Teddie quit her job to have the flexibility to care for her children and help out at the business.

For years Jay and Teddie ran the business this way. Although they shared equally in the ownership of the business and both worked long hours, Jay was really the manager and Teddie the home manager. Teddie would leave early to pick the kids up from school and get them to soccer practice. On some mornings she would come in late to the office because there was a dental appointment or a school field trip. At the office, however, she was fully in charge of her department . . . everything that Jay didn't do, such as the bookkeeping, billing, purchasing and replanting the flowerbeds by the front door. Jay did the management, hiring and firing, marketing, customer service and the technical work. Amid all of this the children got more involved with the business, at first just watching dad build a sign, and later learning complex computer work.

If you are typical of most family business owners, you could probably plug your names into this scenario and change only a few details to make it your own story. Likewise, if you are typical of most small business owners, you do not have a succession plan. You have been so busy establishing and growing your business that you haven't looked that far ahead. You may not even have the confidence yet that your business will be around that long. Or you may decide to sell the business and build several other empires before you retire or die. When you were getting your business underway, it never occurred to you that you were building a legacy; you were just going after your dream.

If you are among the rare few who have considered succession planning, more than likely you and your spouse have discussed which child is best suited to be president or if management responsibilities should be shared by siblings. If you are in partnership with your brother, mother, sister-in-law, or some other family member, you probably have a legal and financial plan for how the partnership will transition should one or the other of you die or wish to be bought out. However, if the family business is a sole proprietorship such as Jay and Teddie have, and the husband is the founder and president, it's highly unlikely that you have considered your wife as a successor to the business leadership. Yet it is the wife who is most likely to be thrown into that position with the death of the founder where no succession plan has been established.

In 1984 McKinley conducted an interesting study in which she found that a widow was more than willing to take over management of the business upon her husband's death, especially if she had been working with her husband. But even among those widows not working in the business side-by-side with their husbands, there was a strong desire to take over the management. These widows reported that the business was very meaningful to them that it was a part of their identity, that they had psychologically helped build the business. They did not want the business to pass out of their hands, even if they didn't know how to run it.

Furthermore, most of the widows studied did not know how to manage their husband's business, because they had not been trained. Their function had been auxiliary. They provided support such as Teddie has done for Jay. Therefore, these widows, untrained in the ins and outs of managing the family business, had to turn to their attorneys, CPAs and other advisors to educate themselves about the business. This is not sufficient training for the complexity of running a small business, as any business owner knows. But these particular women were determined and they learned as their husbands had done . . .by the seat of their pants.

This seat-of-the-pants training may have been sufficient for the founder, but it seems a waste to have the successor not benefit by her predecessor's lessons. Unless the business is a professional practice requiring college and certification that your wife could not readily get upon your death, preparing your wife to take over the business is a logical and practical step for most business owners. A side benefit is that once she is trained, the founder can turn his interests elsewhere, such as expansion or developing a second business entity. Growth of an empire is possible only when you have the flexibility and freedom to explore uncharted territory. If you are busy manning the helm, your growth will be limited to raising prices on product or adding a new line.

Preparing a wife for the presidency is no easy feat, however. It means acknowledging that the founder may die or wish to move onto something else. It means putting things into writing, such as compensation plans for your wife. It means letting go of control and allowing your wife to know all of the company secrets. It means that the marriage itself will be challenged. As the protégé grows in ability and leadership, the mentor may find himself eased out of power before he is ready. Can your marriage stand the strain of your wife being the boss, for example?

Making your wife your equal partner at work (provided she wants the job) and teaching her everything you know, will provide a solid succession plan. She will most likely be a devoted fan of yours and the business, and therefore a loyal and responsible guardian for the business. She will be a much better prepared widow than McKinley found in her study and less likely to lose the business. However, this also means redesigning the business today to accommodate two owners, two managers, two leaders. The consensus model of marriage that most Americans accept as the standard today will be brought into the business setting. Not only will husband and wife have to adjust to this change, but so will employees, customers and others used to a more hierarchical model.

Be prepared to change the structure of management when your wife becomes your management partner. No longer can the founder fly by the seat of his pants. Although you may feel that your style is cramped when there are two of you to answer to, remember that having a well trained successor (and one who loves you) means that the business has a much more bright and stable future.

Cultivating resilient leadership can help a family business to succeed

Friday, August 23, 2002

By Kathy J. Marshack, Ph.D., P.S.

What makes a leader? Is leadership a genetic trait or a learned ability? Are men better leaders than women? Is leadership ability universal or situational? Do leadership skills fade if not used?

These are questions that research has yet to answer. But leadership development is one of the major concerns of American executives. Business owners are frequently faced with the problem of developing leadership skills among executives and managers. These same executives and managers may be highly skilled in their particular specialty, but lack what it takes to lead his or her people to excellence in their industry.

The qualities of a leader are many. And to some extent the type of leadership style that works in one setting may not work in another. What is common to all successful leaders however, is the ability to communicate with his or her subordinates, colleagues and superiors. The confident leader communicates this confidence and encourages the best from others. Over the years I have often been surprised at how many successful and wealthy business owners have such poor communication and leadership skills. Apparently having good interpersonal skills is not a requirement for business success, but it certainly makes things go more smoothly. One wonders how much more could be accomplished by these wealthy and successful people if they had improved interpersonal skills.

When you are the boss you can compensate for poor people skills by firing troubling people. Most entrepreneurs are extremely hard workers, so another way to compensate is to put in more hours to cover for your lack of leadership ability. In family firms, if no family member emerges as a successor to the founder, the business can be sold.

These strategies seem rather primitive when good communication and interpersonal skills can be learned. It may be that some people are just born to lead, but with training in communication skills, a natural leader may be discovered who may otherwise have been overlooked.

The kind of skills that will enhance any leader's position and that could create a leader from someone with raw talent, come under what I call the "resilience factor." Within this factor are the qualities of flexibility, the win-win philosophy, quality over quantity, toughness, and foresight.

No matter what surprises lay in store for this leader, he or she is flexible enough to do what works in the moment. He or she can learn from even the lowest employee in the hierarchy. A father can take direction from his son or daughter.

Competition is a waste of time for this leader. A husband and wife who work together learn to appreciate the unique talents that each brings to the business. This leader's philosophy is that everyone wins.

Doing things fast is replaced by doing things thoroughly, efficiently and with quality. The leader who has mastered good interpersonal skills has a devoted work force, family and clientele. Therefore, taking the time to do it right and to learn from others pays off.

Leaders who win are tough. They don't give up. Their employees and family members can count on them to come through. They aren't afraid to speak, nor to speak an unpopular position. And when they speak, they have thoroughly researched their opinion. Winging it was OK in those start up years, but if you want people to follow you, be thorough.

Among family business owners, cultivating leadership is even more difficult. The development of interpersonal skills is often thwarted by the system of primogeniture. That is, the leader of a family business may take leadership solely because he is the eldest son of the founder. He may have little leadership ability, and poor interpersonal skills, but as the son (or eldest son) no one looks further for true leadership.

Leaders of family firms who want the best for their families and their business confront the problem of cultivating leadership openly and honestly. They insist on training the next generation in the development of problem solving skills, communication skills, confrontation skills as well as the skills of the specific product manufactured.

Passing the business on to the next generation requires foresight, another quality of successful leadership. Being wrapped up in ego needs, leaves a business owner with no one to trust the business to when he or she retires or dies. The truly resilient leader is one who has planned ahead and created a resilient business.

Resilient leaders recognize the abilities and talents in others as well as themselves. These leaders realize that their greatest contribution to the business is their ability to lead, to cultivate excellence in others, to create a quality business with longevity. Without developing the interpersonal skills that create trust and confidence in the leader, this is just not possible.

Should your children leave the nest - and business - behind?

Friday, April 12, 2002

By Kathy J. Marshack, Ph.D., P.S.

Every parent faces the day when their children are no longer children. They must make their way in the world as adults. Some are off to college, others to travel, others the military, and many straight off to work. Whatever their direction, they are no longer kids. We may think they still need guidance, but they will move into adulthood without looking back. If we haven't prepared them for this move by now, the parents in their lives have little to say anymore about the life paths they will choose.

In a family-owned business, preparing children for entering into adult life is different in some ways than for other families. In addition to teaching life skills, parents assist their children to integrate independence and confidence. They are preparing their children to fly freely and strongly when they leave the nest.

But in a family business the assumption may be that the child will stay in the nest; that they are being groomed to take over the family business when the parents retire. There is an inherent conflict in grooming your child for independence and yet holding that independence in suspension until the parents retire from the business.

Family business owners, who wish to groom their children to succeed them in managing the business, need to work with this inherent conflict. Too often the mistake is made that the child is never fully prepared for leadership and thus they remain a child indefinitely (much like Prince Charles). Another mistake is to assume that the child will take over the business when they are not interested nor inclined to so.

Preparing children for taking over the family business requires that parents selflessly attend to preparing their children for healthy independent adulthood first. A child who has grown into a self-sufficient, wise and autonomous individual is in a much better position to assume the role of leader. A child who remains subordinate to the parent into his or her 40s can hardly be practiced at autonomy or leadership.

Therefore, parents with family businesses who plan ahead for succession require a more thoughtful approach to emancipating their children. Having young children work in the family enterprise teaches them skills they could not learn otherwise. They not only become familiar with the product and style of the business, but they acquire confidence. They are participating in taking care of the family - an important value to instill.

As children get older they can be given more responsibility, even management duties. However, their progress up the ladder should not be based upon the fact that they are the son or daughter of the owner. They need to be evaluated, as would any other employee. This teaches the child to do the hard work of improving themselves.

There comes a point in adolescence when a decision needs to be made about whether a particular child is leadership material. If so, a new path must be developed for this child. It is impossible for the child to become a leader and continue to work under their parents. They need a period of proving themselves in the world, apart from their parent's protection. If they have never worked for anyone other than their parents, how can they or you be sure that they really can handle decision-making alone?

Parents are often very reluctant to let their children leave the nest. In a family-owned firm this reluctance is extremely strong. The business has evolved as a reflection of the family identity. It almost seems as if the family or business is breaking up if a family member leaves. But for the health of the child, the family and the business, children must leave and discover their own talents.

Family firms who have handled this transition gracefully, have encouraged their children to leave home and work elsewhere for a period of years. If after this time the child is ready to return to the family enterprise, and there is a suitable position for the child, then the match can be made.

The risk, of course, is that once out of the nest the child will never return, that they will find another life that suits them better than working in the family business. But then isn't that what parenting is about? The business will be much more successful being managed by strong capable leaders who want to be there and by a leader who has proven his or her talent in more than one arena.

It is important for families in business to be open about their planning for business succession. Children should be advised early about who is being considered for leadership. But there should also be flexibility about this decision. Over time another child may prove to be the better successor. Or perhaps the chosen one chooses another direction.

If parents keep in mind that their job is to raise healthy autonomous children, then they are a success no matter which direction their child chooses. Whether the child chooses to return to the family business or not, they can always be a contributing member of the family.

Will your family business survive the death of its founder?

Thursday, January 03, 2002

By Kathy J. Marshack, Ph.D., P.S.

The death of the founder of a business can take many family businesses by surprise. A strong willed entrepreneur takes advantage of an opportunity, builds the business to success, then dies leaving the family totally unprepared to continue the business. The business gets sold and the family legacy dies with the founder.

Family business owners are notoriously poor at planning for the future of their businesses. They literally act as if the founder will never die. They don't think about the possibility even when that person is in his 70's or 80's. As a result, most family firms don't live beyond the first generation.

Death is not an easy subject to talk about; nor is retirement, especially for rugged individualist and entrepreneurs or their families. But it a subject that needs to be addressed by all members of a family firm. Is the business merely a reflection of the founder? Is it his personal property? What part do other family member play, shareholders and stakeholders alike? Who will run the business after the founder steps down? When will the founder step down?

Answering these questions and others leads to the development of what is known as a "succession plan." Even though it is tough to plan ahead to the day when you are no longer running the business you founded, it can be exciting and rewarding to know that your creation will live on and prosper under the guidance of a trusted family member. Equally rewarding is knowing that you have provided for your family.

While it is too late to work on a succession plan after the death of a founder, it is never too early to plan, even if you have no successor or just started your business or your kids are too young to even work yet. Succession plans can evolve over time to fit the changing needs of the family or the business or both.

At first, you plan may be nothing more that the understanding with your spouse that you both want the business continued after you retire. The initial plan my include provisions for how to groom the successor when one is chosen, for example. The key ingredient in all plans is that the stakeholders are communicating with each other about the need and that you are looking towards a healthy future.

When considering a succession plan it is best to enlist the aid of professionals who are knowledgeable about the unique needs of a family firm. Attorneys and CPAs can assist you in addressing the issues of estate planning. Management consultants can advise you about the most desirable business structure. Perhaps it is time to look at professional management, for example. Or perhaps your niece is better suited for he presidency than you son.

The toughest questions that need answering about succession, however, cannot be answered in an attorney's office. The founder and his or her family need to break down the old barriers to talking about death and retirement. All of the old "skeletons" in the family closet need to be cleaned out. Emotions, biases, age-old grudges need to be vented, explored and settled.

Until the family can talk openly and honestly about how they feel about each other, they cannot make a reasonable decision about how to run the company. Like it or not, the family system or style is what really dictates how things will go in business. So understanding your family system and improving it contributes to a healthier business.

Just as with legal and financial decisions, the emotional or psychological aspects of succession planning usually require the assistance of a professional. Psychologist trained in the dynamics of families as well as the workings of a family business are best suited to guide you through the emotional process of succession planning.

The psychologist's job is to meet with all stakeholders individually and in a group to discuss absolutely everything that can affect the succession plan. This is not a time to be secretive. The future of the business and you livelihood depends upon open and honest communication. Families who don't plan ahead not only lose control of the business, they often have a myriad of other problems associated with the loss of the business, such as infighting, divorce, alcoholism, depression, etc.

A psychologist understands these kinds of "people" problems that are intertwined with business decisions. Their goal therefore is to help you create a plan that suits two purposes, 1) To ensure the success of the business, 2) To ensure the health and happiness of the family.

In order to accomplish these important goals family members need to face the tough issues that most other people avoid.

E-consultation is ideal for members of a family business

Friday, August 03, 2001

By Kathy J. Marshack, Ph.D., P.S.

"How can I help my Dad? He is part of a family business that he inherited from his father. Now Dad and his brother run the business, except that my Dad does all of the work. Dad is stressed all of the time but doesn't want to disrupt the family. I'd like to come to work for my Dad but I don't want to be part of carrying my lazy uncle. What should I do?"

This was the first problem ever presented to me when I hosted an Internet Chat for members of family firms. We "chatted" for about an hour, via our computers and covered a lot of territory. Even though the young man who contacted me lived on the East Coast, he was able to get expert advice on the precise subject he needed help with because he was comfortable searching the World Wide Web. And by the tone of his messages, he was pleased by the end of our hour to have a plan of action to present to his father.

This new medium of e-consultation is ideal for all business owners, but especially family business members. A son can't always call up his father's accountant or attorney and talk over such problems. He is not likely to feel brave enough to confront his uncle or even his father on such a touchy subject. He could hire his own local consultant or psychologist, but isn't likely to find a local expert on families in business. But from the comfort and privacy of his home, he can "surf the web" until he finds just what he needs. In this case it was a psychologist whose specialty is helping families in business solve those sticky problems that cross over from loving relationships into the business marketplace.

E-consultation is ideal in many other ways as well. It's tailor made for travelers and those of us who work odd hours. You can get on line anywhere, anytime. The convenience means that you will probably take advantage of the service more often and get to the bottom of the problem faster. In fact, a study at Johns Hopkins University found that people open up more quickly using a computer than they do face-to-face with a psychologist. E-consultation may attract those who are too embarrassed to bring a problem up fact-to-face or it may just be that they can ask the questions when they come up, rather than having to wait for an appointment.

As a psychologist for many years I have encouraged my clients to educate themselves about life's problems by reading books and articles. Now in addition to some excellent books, I recommend highly regarded websites. Ignorance about life slows you down. Educating yourself helps to reduce your fears and defensiveness. With knowledge you are in a much better position to problem solve. With knowledge comes confidence and with confidence comes creativity and with creativity, options and solutions start to materialize. It seems to me that the World Wide Web provides us with a wealth of information in a convenient form that can shorten your problem solving time.

Of course there are downsides to this form of consultation too. How do you know who you can trust? Is your e-mail or chat confidential? In addition to a wealth of helpful advice, there is a wealth of garbage and damaging material on the Internet. The surfer does have to beware. You can't assume because someone has a website that they are honorable, legal, credentialed, caring or experienced. However, if you use the same common sense you use in business to size up any person or situation, I think you can sort the wheat from the chaff.

For example, on both of my websites, I not only provide a lot of information on the common issues that families in business face, but I include all of my credentials, extensive information on confidentiality, and several ways to contact me for more information to check on my background. If you are not going to meet the person face-to-face or you do not have a personal referral from someone you trust, take the time to read what the consultant has posted on their website about their qualifications.

If you are still shy about accessing the World Wide Web for information take the plunge. As a business owner you need the Internet to stay alive and ahead of the competition. You already know that. Now consider using the services of websites to keep yourself up to date on more personal issues such as those vexing problems of keeping a healthy balance between your work and your home life.

Your ideal employee may be seeking ideal employer - like you

Thursday, March 01, 2001

By Kathy J. Marshack, Ph.D., P.S.

"Employees are the worst part of having a business. If I could run a business without employees, I'd have no problems!"

This is a quote, more or less from my Uncle Phil. Uncle Phil was an electrician, who eventually started his own electrical contracting business. He grew that business for many years, becoming wealthy and successful. Eventually he was able to retire to Palm Springs and turned over the well-established business to his two sons. I am not sure, however, that his hiring practices are what fueled his success.

Uncle Phil was one of my favorite relatives when I was a little girl. He made big fluffy pancakes for breakfast, bought real firecrackers on the Fourth of July and took his family on adventures, like to wilderness lakes to hike and canoe. He also had many stories to tell of his early life, when he left North Dakota as a teenager to find his fortune in Oregon, during the Great Depression.

Naturally when the grownups talked I liked to overhear the conversation to learn of some of Uncle Phil's adventures. I often heard a lot about Uncle Phil's business when I visited, but I didn't always understand what the adults were talking about. For example, a common theme for my feisty uncle was complaining about his employees. Even as a kid I thought he had a negative attitude about employees. I certainly admired my uncle, but it was not his personality that was so engaging. It was his rugged individualism that appealed to me. I just figured that his disparaging remarks about employees meant that he was a bit of curmudgeon. . . until I hired employees.

Like my uncle I too struggled with the mystery of how to hire capable, responsible, hard working employees. For small business owners this can be a major obstacle when you don't have the benefit of an HR department, with professionals trained in the science of hiring. Most small business owners rely on their instincts or those of their managers, but that leaves a lot of undiscovered employee problems. But after a few years of trial and error, you probably have come up with a system that works most of the time, or you are out of business.

To save time for those of you just getting started I thought I would share my formula. And I would love to hear from other employers about the methods they have discovered that really work.

First, ask yourself, have you ever had a terrific employee that you wish you could clone? If so, make a list of that employee's qualities, from their actual work skills, to personality traits, to even seemingly superficial qualities like style of dress or music they like. Don't leave anything out. This exercise is a kind of free association test for you. As you examine the qualities of this ideal employee, you will open your mind to the traits you are looking for in your next hire.

Out of this free association you will develop a list of the qualities you need to fit your particular setting. From this list, begin drafting questions that will elicit from prospective employees whether they have these qualities.

Second, always use screening tools to search out personality traits, emotional problems and psychological issues that do not surface during an interview. It is probably best to use the services of a psychologist who is expert in interpreting these tests, because you want more than a simple label. The Myers-Briggs Type Indicator is a popular test for employers, but often the results are used by untrained people much like astrological signs are discussed at a party.

Third, you must ask yourself if your workplace is attractive to the type of employee you want. Do you need to remodel to make the workplace more ergonomic? Is your management progressive? Are there other benefits and perks you can offer? Remember, a healthy, hardworking employee is looking for a good match in an employer too.

Fourth, it is important to realize that all employees have problems in their lives from time to time that will affect their work. If your goal is to screen out all "bad apples" you will not succeed. Rather, after doing a thorough screening, and hiring the very best person for the job, make sure you have a back up system to deal with problems as they emerge. For example, providing a child care allotment, or flexible scheduling, or some form of employee assistance plan, goes a long way in correcting stress in an employee's life, so that they can solve life problems as quickly and effectively as possible.

One final word on finding the perfect employee. Remember that is you the employer who knows what he or she needs. Don't expect prospective employees, or even current ones for that matter to know what you want. You must take the lead and define the job. If you are clear about this and have followed the advice above, it is likely that the ideal employee for you is looking for an ideal employer like you.

'Soft' side of estate planning in the family business

Thursday, February 08, 2001

By Kathy J. Marshack, Ph.D., P.S.

Most entrepreneurs are so caught up in the passion of their enterprise that they rarely plan ahead for the wealth that will accumulate. Although there is a desire to make money, only a select few entrepreneurs actually make money their goal. Rather wealth is a byproduct of having done well. Furthermore, most entrepreneurs did not grow up in wealthy families, so they don't have role models for managing their money or planning for the continuity of the family business. As a result when it comes time to develop an estate plan, many entrepreneurs are at a loss for where to start, or to even know they should start.

It would seem that the logical place to start is with your attorney, CPA, investment advisor or banker. However, while all of these professionals should play a part in the development of your estate plan eventually, the first stop on the way to a successful estate plan is the psychologist's office to deal with the soft side of the family business. Many an estate plan has been left undeveloped because the interpersonal relationships in the family were counter to the best interests of the business.

It is important to understand that the most important part of our lives are spent not as individuals but in relationships. And the relationships that we hold most dear are those of our family (whether or not we hold them fondly or with resentment). Within the context of a family business this fact is quite evident. Regardless of how successful, famous or old the family business, the family still comes first. Understandably the system that has been around the longest has priority.

Gerald Le Van, an attorney explains this concept from the perspective of the changes that have occurred in the business world in the latter half of the 20th century. The Industrial Revolution that lead to the technological revolution created the philosophy that the business world was like a clock, where successful enterprises were machines, conceived by engineers and monitored by accountants, where the goal was maximum industrial productivity at minimum cost, and workers were a collection of individuals or parts of the machine. Today, however, the business world is not envisioned like a clock, but like a rain forest.

According to Le Van, "Enterprises are no longer machines, but ecosystems whose fitness to survive is determined by their relationships to other organizational ecosystems in the rain forest world. Enterprises are no longer collections of individuals, but systems."

Within the world of family business the rain forest model is very effective. Family firms are a system of family members, in-laws, shareholders and stakeholders. These systems interact with vendors, customers, employees, and the commercial community at large. It is a delicate balance to maintain a successful business and a successful family enterprise when the systems are integrated into a family firm. The stress on the system becomes even greater when it is time to develop a plan for the continuity of the business and the family, and a fair apportionment of the wealth. If the family does not have mature and healthy interpersonal relationships, the process of estate planning can be costly, painful and unsuccessful.

Consider for example a CEO who is about to retire. He has two daughters and his instruction to his attorney is to develop a plan that gives each daughter an equal share. One daughter has worked for years for her father, helping him to manage his investments. She has proven to be a leader and visionary, much like her father. The CEO wants her to succeed him in managing the business because he believes in her competence. The other daughter has never worked for her father but has benefited indirectly from the growth and wealth of the business. Although she has never been interested in the management of the business before, now that her father is retiring, she and her husband want to take a more active position in the company. The first daughter doesn't mind continuing as the president of the company. In fact she believes she deserves the position. But she is not pleased about her sister's new interest, nor her father's decision to treat them equally. Where this family once got along just fine, a new problem is growing that they never had to face before. How would you are your advisors handle this "hot potato"?

Consider the entrepreneurial couple, who for decades have successfully founded and managed three enterprises. They have sent two children through college and now one of them works for the family business. The husband, now 58, would like to retire to the new vacation home they have recently built in a resort community. However, the wife is ten years younger and is not ready to retire. She is still excited by the challenge of managing their investments. Furthermore, she is grooming for the presidency, her son by a previous marriage. She would like to stay on long enough to see him well established in the leadership of the business. There are more than business challenges that this couple faces. Will the marriage withstand one working while the other retires? Will the husband trust that the new president will be trained well by his wife? How do other family members feel who are not related to the wife's son?

Consider the attorney who must advise his client on an estate plan. The attorney and his client, a CEO of a national corporation, have always trusted each other and seldom had a conflict. The attorney has always known that his client is alcoholic, but the alcoholism never interfered in their dealings, even though it did cause great personal tragedy for the CEO (i.e., a divorce and estranged children). Now, however the attorney is in conflict over the advice he must give his client. The CEO wants to place in the presidency the only child who is not estranged from him. Unfortunately this child is alcoholic too and has never held a responsible position within the company. The CEO is ignoring other possible successors, such as loyal executives who are not family members. The attorney appears to be in a no-win situation. If the attorney says nothing, the CEO may proceed with a plan that will ruin the company. If the attorney confronts a non-recovering alcoholic with the foolishness of his plan, he may lose a valuable client. In either case there is no healthy solution.

To create an estate plan that truly integrates the success of the family and the firm, it is necessary to seek the help of a psychologist who understands the soft side of families and particularly those families who are in business together. Cleaning up root interpersonal problems can mean the difference between the development of a meaningful estate plan or the development of increased family conflict. For example, with the help of a psychologist, the father with two daughters learned that "fair" was more appropriate than "equal" when it came to dividing the wealth and the business with his daughters. The entrepreneurial couple learned that their marriage could survive the transition of the wife's son to the presidency if they developed a clear buy-in for the son. Fortunately for the CEO of the national corporation, his son went into alcohol treatment after a serous auto accident. The CEO participated in family therapy at the treatment program, which forced him to look at his own untreated alcoholism. He eventually could see how he was letting his alcoholism make business decisions that were neither sound for the business, nor his family.

If you have worked hard to create an enterprise you can be proud of and if you want to create a legacy to pass onto your children and grandchildren, first evaluate the soft side of your family system for any unresolved issues that could spring up and bring the whole system down, during the process of estate planning. Also be prepared to deal with problems that never would have surfaced except for the need to discuss money matters with family. Then take these concerns and realizations to the psychologist, the professional uniquely trained to help with untangling family knots and reweaving a healthy family/business tapestry.

Investing in yourself pays off in business, personal relationships

Friday, October 06, 2000

By Kathy J. Marshack, Ph.D., P.S.

"I feel like I'm always walking on eggshells around you!"

"I never seem to know what will make you happy!"

"Why can't you make up your mind?"

If you have ever made these comments or heard them from others, then you know how exasperating this kind of relationship can be, whether it is a personal or business relationship. Never really sure where you stand with the other person leads to this problem. Either you are not being clear or the other person is holding back. And often the reason for the reticence is fear of appearing selfish.

Especially among women there is a fear that if she speaks up about her desires, or dares to put her needs first, she will appear selfish and unloving, or worse yet, aggressive. Not wanting to rock the boat, the woman holds back her own opinion, only later to find that her husband, coworkers, even employees are mad at her. I have had more than one entrepreneurial husband complain that he would love to know what his wife's opinion was on the subject. Because he doesn't know where she stands, decisions are unclear and projects are stalled.

A side affect of being "nice" but unclear is that the woman often develops resentments because she is not being recognized. These resentments grow and do not go unnoticed by others. Unfortunately others do not know why she is annoyed, but do feel as if they are walking on eggshells around her. If the spouse, friends, coworkers or employees are not able to cut through the communication problem, they may also begin to hold back for fear of an argument. Then no one knows what anyone wants or what is going on. Obviously this is not good for business relations not to mention the marriage.

The reason this problem is more common for women than men is that women are more concerned about maintaining balance in their relationships whether they work in a family firm or not. Unfortunately most women tire themselves out trying to keep everything in balance, when a few shakeups are in order. For example, in one study the researchers found that career women (including entrepreneurial women) are very reluctant to change things in their work environment if it will upset their spouse, their employees or their customers. Instead these women just do more and more and more to accommodate the wishes of others, growing more tired, annoyed and depressed as time goes by. While balance is a nice goal, it is not always the way to get there. In order to keep creativity alive, in order to grow a business (or a family) there are many changes and corrections that need to be made along the way. Maintaining the status quo may mean stagnation.

The best gift you can give people you care about and work with is to be clear with them about your goals and desires. Even if they don't agree with you or don't like your goals, at least they know where you stand. Nothing is hidden. The agenda is on the table and negotiations can proceed. It also may be that your difference of opinion is just what the system needs to be more profitable and productive.

Remember when you were a small child and got a new dress or a new toy or accomplished a new feat like tying your shoes? Weren't you excited about the acquisition? Didn't you want to share it with others and watch their faces light up too? Didn't you feel proud? Those days have long gone and we have been socialized to hide many of our accomplishments and opinions because they may not be acceptable, especially if you are a woman. But it is very important to put your true self out there or you will confuse others and deprive them of your talents.

Here's another way to look at it. Most people spend their paycheck and if there is anything left other, they may put it into savings or invest it. The problem is that there is usually nothing left over to save each payday. The advice of many financial planners is to put money into savings first and then adapt your budget to live on what's left. With this latter method you are much more likely to actually save money and create wealth. Just as with saving money, it is equally important to put yourself first (or invest in yourself first). By putting yourself first, by letting people know what you want and who you are, you are investing in yourself in a way that will pay off tremendously. People won't have to walk on eggshells around you. They will know what your talents are and how to benefit by them. You will surround yourself with people who appreciate you instead of people who need you to appreciate them. This creates an energizing flow between people, just as wealth invested, creates more wealth.

People - Making in the Family Business

Thursday, September 14, 2000

By Kathy J. Marshack, Ph.D., P.S.

When she was about six, I overheard my eldest daughter describing my work to one of her school friends. She said, "A psychologist is a mommy who sees clients in the basement." At the time my office was located in the basement of my home, remodeled for just that purpose. And, since I often work at home, my daughter has been able to see me in many of my roles, the most important to her, of course, is that of "mommy."

Being the owner-manager of a family firm requires juggling many roles, too, not just with family members but with employees as well. The way marital and family obligations are handled affects management style with employees and vice versa.

For example, in family firms where spouses work together, management style must be assessed in three arenas: 1) marital, 2) parenting, and 3) business management. Furthermore, the integration of these three styles must be assessed.

What is your marital style?

Let's take marital style first. Are you both leaders? Is one the leader and the other the support person? Does the style change depending on context? Are you a team? Or are you both separate and dedicated to your own spheres? Does your marital style differ greatly from your parenting style or your management style?

Marital partners find each other for myriad reasons. Some are attracted to opposites. Some want someone like Mom. Whatever your marital style - know it. Don't assume that it is irrelevant in your family firm. This style shows in the boardroom and on the production floor. If it is incompatible with the business, then you will have many problems. Employees sense the discrepancies. They know when there has been a marital fight.

What kind of a parent are you?

If a couple has children, whether they work in the business or not, be aware of parenting style too. Parenting style is affected by business-management style and vice versa. We learn a lot from our children about human behavior. Those lessons are translated to the work place.

Are you an authoritarian parent? One business owner orders his family around at home just as he does his employees at work. His wife and children don't like it and are, in fact, a bit intimidated by him, but he says he can't help himself. Are you permissive? Permissive parents often have children who are rebellious because they have always had to make their own decisions. Are you authoritative? This type of parent generally has a good balance and makes decisions as the leader of the family, but includes children when appropriate so that the children gradually learn the responsibilities of adulthood.

Parenting style is obviously related to marital style. If two marital partners do not think alike about parenting, there will be a disorganized, and possibly, very depressed family. Discussing differences about parenting and making a united plan is the best thing parents can do for the family structure. Equally so, it is important that parent/owners determine if they are treating employees the way they treat their children.

What about your management style?

Management style at work is the third aspect of family/business style that needs to be evaluated. It can be categorized as one of the four styles: 1) telling, 2) selling, 3) participative, 4) delegating. Which are you? Are you apt to tell employees what to do? Or do you build a good case for what they should do? Or do you include employees or other managers in the process of developing new business? Finally, are you inclined to run the show yourself but delegate tasks to team members?

Americans have been successful in the world marketplace because of their emphasis on the "rugged individualist." We have been willing to fight to protect the rights of the individual. But as we move into the 21st century, Americans are beginning to realize that we are all part of one planet and one global economy.

We cannot afford to be isolationists. We have influence and others influence us.

Members of a family firm are in the position of understanding these influences better than most. A family business is a delicate balance of the interacting systems of marriage, family and business. How you manage and respond to these systems will determine your success.

An authoritarian father with a "telling" business-management style and a traditional marriage characterizes the entrepreneurs of the 1940s. But, because that model is so dominant, many family-business members don't know what other styles exist. If following in Dad's footsteps works for you, look no further. But, if you desire alternative styles to keep up with the changes in your business and your personal life, look for answers to the questions in this article.

Will your style work in the 21st century?

First accept who you are. Whatever your style, it is probably the most comfortable way for you to be. This doesn't mean there is no room for improvement. But it's best to start with who you are and then to build marital, parental, and management styles around your personality.

Second, accept your spouse's style, too. She or he has developed a certain personality that is unlikely to change. Rather, you two are looking for ways for both of you to realize your full potential. Don't compromise before you have explored all of the ways for both of you to be fully who you are in the marriage and as parents.

Third, when considering a parenting style, not only do your consider your partner's style, but you must also include the personalities and needs of your children. Most parents are astounded at how wildly different each one of their children are. While a permissive style may be appropriate for one child, another may require more authority.

Fourth, remember that your management style at work is more related to your marital and parenting styles than you realize. It is in the family that we first learn to relate to others. We learn about male/female relationships from our mothers and fathers. We learn about power and control and decision-making, too. We learn about love and friendship and sibling rivalry or competition.

These early lessons shape us for the rest of out lives. How you treat employees and how you want them to treat you is dependent upon your understanding and utilization of these early lessons.

The business of people making.

Virginia Satir, a noted family therapist once said that parents are in the business of "people making." In a family business, I think this is true in more ways than one. As parents, certainly our children are shaped by the family firm - just as my daughter saw me as a mommy

who works in the basement. And, as family-business owners and managers, your employees are also shaped by your marital/parenting/management style. You can cultivate the best in your people or contribute to something much less desirable.

Understanding your unique management style in the workplace and how you have integrated past and present family lessons into a family business will help you to be flexible and to adapt to the requirements of the 21st century.

Are you 'Daddy's little girl' in the family business?

Friday, August 04, 2000

By Kathy J. Marshack, Ph.D., P.S.

My mother was fond of telling me this little aphorism when I was a girl. Perhaps it was because she had two daughters and no sons. Or perhaps it is because she was the only daughter in a family of sons. Whether she was trying to teach me the lesson, or to merely advise me of a fact, I have noticed the truth in this saying more often than not.

The value of relationships does seem to be more important for women than for men. Not that men do not enjoy loving relationships, but that women tend to define themselves more in terms of their relationships. Women and girls are more willing than men and boys to put their needs aside to maintain a relationship. Within a family firm for example, it is often the wife who does not take a formal salary. She is equally likely to forgo a formal title in the corporation, although she is just as hardworking an asset to the business as her husband.

Likewise with daughters. Daughters in family firms often see their roles as supportive of the family. They are not as driven to be leaders as are their brothers. This does not mean they do not want recognition. Rather their first priority is to ensure the success of the loving relationships. After all, these relationships came before the business. They are the driving force behind the business; the reason it came into being.

The research indicates that family owned firms were started by their founders primarily as a way to support the family. The women in family firms still recognize this intent long after the men have turned their attention to developing a thriving enterprise.

But this concern for family first often gets in the way of founders considering their daughters as successors. Although their daughters may be hardworking, college educated, committed to the family enterprise, and have many other talents, founders most often groom their sons to succeed them in the leadership of the business. The research shows that even founders who have no sons overlook the possibility of a daughter taking over the business.

Considering the importance women place on nurturing the family, and considering that a successful family firm requires a cohesive and committed family, daughters may be the most likely choice to succeed the founder of a family firm. In her study of 8 family firms, Collette Dumas identified the roles that daughters typically plan in family firms. Dumas chose only those family firms where the daughters held management positions. She also identified the qualities that make for a successful transition of leadership from fathers to daughters in family firms.

The majority of fathers and daughters that Dumas interviewed expressed great difficulty in managing the ambiguity in defining the daughter's roles in the family and in the family business. The roles assigned by both fathers and daughter ranged from "Daddy's little girl", which emphasizes a fragile, defenseless, dependent position, to that of a tough and independent manager in the business.

While the daughters studied were capable and assumed several roles in the family business, their primary role with their fathers (and which was learned at an early age) was that of defenseless dependent. As one daughter put it, "Even though I've been working here a long time, I still have to kiss him every morning. Otherwise he'll be hurt. I don't think he's made the transition to seeing me as an adult. I'm still his little girl."

While sons may also stay boys in their father's eyes, at least sons come into the family business with the expectation that someday they will take over. Daughters rarely have this illusion. Therefore, they may remain Daddy's little girl indefinitely. This position leads many daughters in family firms to struggle with a sense of identity. Many daughters in family firms, as well as their mothers, work wide by side with their brothers, yet their names are not on the organizational chart.

All of the fathers Dumas interviewed reported that they had never considered their daughters as potential successors in the business before their daughters came to work for them. And all the fathers reported that long periods of time went by after their daughters came to work for them before they considered the idea. Dumas refers to this phenomenon as the "invisible successor." Only when a crisis emerge where the daughter was needed to help out Dad, did either party consider her potential as a successor. Unlike sons, who come to work for the family business to further their career and eventual ownership, daughters come into the family business out of dedication to Dad and the family.

As a result of struggling with these issues (role ambiguity, invisibility and identity), daughters in family firms develop one of three styles according to Dumas: "Caring for the Father," "Taker of the Gold," or "Caretaker of the King's Gold."

In the first style, "Caring for the Father," the daughter may feel a lack of purpose and direction. She has not developed a clear and strong identity. Such people often attach themselves to strong leaders or father figures and become dependent on them in an attempt to fell "alive." In the family firm these daughter are largely oriented toward pleasing the father and caring for his comfort and wishes. His needs come before the daughters.

While there is nothing unhealthy about caring for another person, to do so exclusively not only robs the daughter of her identity, but may harm the firm. If the daughter's behaviors are oriented toward caring for her father to the exclusion of actions that would be beneficial to the organization's effectiveness and survival, she will not be prepared to take over the CEO's role when she succeeds him.

In the second style, "Taker of the Gold," the daughter has taken the opposite extreme by developing a rigid identity or sense of self. She works hard to achieve, even overachieve, but she thinks only of herself. In the case of daughters trying to become independent of fathers, the takers-of-the-gold become more interested in taking charge of the business assets than in responding empathetically to the father or recognizing this accomplishments.

While these daughters are strong and quite capable, they operate independently and thus do not take advantage of the resources available to them to make informed decisions. These daughters have behaviors that are rebellious and disrespectful of the business's norms. In the long run this style produces a great deal of conflict between father and daughter and potential distress for the business.

The third style, "Caretakers of the King's Gold," represents a midpoint between the first two styles where the structure of the identity is harmonious and stable and at the same time less rigid and dramatic. This daughter suffers less from a sense of inner emptiness and is less inclined to continuously prove her existence to others. In other words, this healthy sense of identity allows the daughter in a family firm to simultaneously take charge and take care of the "king's gold" (the business), "the king" (the father), and herself.

This style may seem to cast the daughter back into the dependent role of "Daddy's Little Girl." However, daughters who represent the style of "caretaker of the King's Gold," have found their identity through interdependence with their fathers. While sons cannot feel like men until they break away from Dad, daughters mature through affiliation and interconnectedness. Fathers with this type of daughter find that they can gradually phase out of the business. Their daughter is capable of running the business with out them, but she also values working with her father for as long as he is capable.

Murray Bowen, a family systems psychiatrist has suggested that interdependence is one sign of a healthy family. Certainly this is no less true for a family firm. Fathers and daughters who are able to be respectful of each other, nurture each others developmental needs and both creatively pursue the business are in a better position to make a healthy transition from father to daughter when the time comes for the succession of leadership.