What is in this article?:
Family business consultants provide advice on how to solve the toughest family business problems.
Three common problems in estate planning discussed below.
The reluctant coach
• Problem. Roger is a longtime employee with tremendous skills. You feel he’d be a great coach for your child, Marty, but you’re afraid Roger might feel threatened or even think he’s training his replacement.
• Solution: “Understand that Roger will be conflicted between the two primary emotions of elation and fear,” says Tee Persad, a partner with the law firm of CPLS, PA, Orlando, FL (www.cplspa.com). “Initially, he’ll be flattered that he was chosen as teacher and mentor. However, it’s likely he’ll develop concern about being replaced and wonder if there is some ulterior motive.”
How can you encourage Roger’s cooperation without sparking anxiety? Be explicit in terms of how you anticipate utilizing the skills of Roger and Marty. By communicating your specific plans you will obviate any fears Roger may harbor.
Establish the parameters of the coaching assignment by identifying the skills Marty needs to acquire. “Make a concrete list,” Persad suggests. “Then let Roger know where Marty lies in terms of competence in each item on the list. Rank them in order from one to four, the first being the absence of any skill and the last being maximum competency.”
Develop a plan of action that identifies what Marty should know and be able to accomplish by the completion of the assignment. This plan should be reasonable in terms of time and scope. Finally, establish performance evaluations for Roger to review with Marty.
“The above approach increases the likelihood that Roger’s fears will be alleviated and replaced with a sense of importance, value and trust,” Persad explains. “Moreover, Marty will learn to respect and trust Roger and continue to see him as a mentor.”
Bonus tip: Periodically evaluate your plan’s execution to assure consistent progress. Establish measurable performance benchmarks.
Keeping the peace
Family businesses can be hotbeds of emotion that erode the bottom line. Here are some suggestions for reducing conflicts from Stacey A. Lundgren, a former family business owner and now a consultant in Howell, MI (www.staceylundgren.com).
• When discussing business matters, address the siblings as a group rather than as individuals. “Private conversations create suspicion and lack of trust,” Lundgren says. “They can lead to conversations where one sibling says ‘Dad told me you said this’ and the other sibling replies ‘No, I didn’t say that.’”
Group meetings keep conversations up front and allow everyone to stay up to date. Hold them at neutral locations. “Avoid home settings in favor of office meeting rooms or hotel conference rooms,” Lundgren says. “The environment has an influence on how people behave.” Assign someone to take notes.
Have everyone sign the document drawn up from the meeting notes to indicate they agree with what was said and concluded. That will help reduce “He said, she said” scenarios.
• Avoid dividing corporate shares equally. A parental tendency to treat everyone alike can lead to costly turf battles. Infighting can go on for years when no one person is in charge.
• Pre-plan when you can. A lot of grief can be avoided by laying the groundwork for succession years in advance. Be prepared though: The real world can throw the best of plans into turmoil. “Sometimes you do not know who will want to come back into the business at a later time,” says Lundgren.
• Avoid shop talk at family dinners and functions such as holidays and birthdays. “People can get upset when casual conversations remind them of workplace issues,” Lundgren cautions. “That can ruin family events.” ❚❚ ❚❚
Phillip M. Perry is a New York-based writer specializing in management and legal issues.