Family communication: A key to success or the root of all problems?

by Tamanna Bhasin | April 1, 2024 2:51 pm

By Danielle Walsh

Often issues around decision-making, roles and responsibilities, authority, management, ownership, and overall strategy in a family business can be pinpointed to a breakdown in communication. One of my clients recently told me he had stalled his family business’ management and ownership succession process—he simply did not believe his three daughters had the required management skills to take over operations. After a long conversation, we figured out the core issue: it was not that they did not have the skills, they just weren’t working together.

Once I met his three daughters, it became clear there was a breakdown in communication channels. They had been holding weekly meetings, which quickly became toxic with conflict and screaming matches. None of them wanted to participate in meetings anymore and they had not spoken in-person for two months—who can blame them? Of course, if the three daughters can’t be in a room together, they can’t prove to their father they are ready and willing to take over the business. So, what did we do to help reset?

Building communication

We restarted bi-weekly operational meetings (weekly can sometimes be too much) with a set of ground rules. These meetings were only for me and the sisters. Once this operational meeting was over, their father would join to provide us with his own update and to provide feedback on any decisions made. This ensured the sisters could get on the same page before bringing items to their fathers’ attention. The structure allowed the sisters to become a united front, helping them work together—which in turn helped their father see they can manage the business together.

Further, we implemented a formal agenda and notes for each meeting, guaranteeing everyone entered and exited the meetings with the same understanding. We also used the notes as a way to help track our action items and deadlines.

I facilitated their meetings, as an unbiased third party ensures everyone is on their best behaviour. A third party can also help focus the meeting to the agenda, with family it is easy to lose track of business items. Before you know it, you’ll somehow end up talking about last Sunday’s family dinner! I also made it clear from the beginning that disrespecting one another was not acceptable. Once family members get used to speaking down to one another in front of staff, it can be very difficult to change.

A large part of their issue was traced back to their father. When he didn’t like something, he would turn to other staff members and advisors—telling everyone about the “horrible” decisions his daughters wanted to make. This created a confusing and uncomfortable work environment, not to mention a very deflated set of sisters. One of the first rules their father was held to was no disrespecting family members in front of others. It only took me speaking to him once about the issue to really turn things around.

Sometimes, small steps make a big impact. In this case, Dad was worried about having to sell the business, but the major impediment to succession was an overall lack of family communication. Once a formalized structure was in place, with a set of ground-rules and a neutral third party to hold them accountable, everything started to improve. It didn’t take long for the management succession to be back on track and for the ownership transition to follow.

Streamlining communication

Keep in mind that too much communication can also be a problem. I had a client tell me that governance and communication of her family business was well under control. However, as I started speaking to all family members, I realized this actually meant they were holding an abundance of meetings. Most of their conflict stemmed from too many meetings with unclear purposes.

It is important to ensure each “type” of meeting has its own terms of reference. The terms of reference should answer questions such as:

• Why are we here? What is the purpose? Is it business issues? Family issues?
• Who attends?
• What kind of decisions are made (if any)?
• If decisions are made, is it made via majority? 75 per cent approval? Unanimous?
• Is there a Chair to this meeting?
• Who oversees the agenda and notes?

If you can’t answer these questions about a meeting you’re holding, you have no business holding the meeting. It will only end up creating more conflict. While this client wanted all family to remain informed of business matters, most family members didn’t understand the goal of the meetings—leading them to wonder if they even had a say in the business. So, in this case, most meetings caused frustration instead of effective communication.

The client who thought she had it all under control, very quickly realized it was not productive to hold over five meetings every two weeks. Once we put down to paper a basic understanding of each meeting that was held, it became clear that four out of the five meetings were largely with the same group of family members. We amalgamated these meetings, cutting the total number of family meetings down to two. We also took steps to clarify, for the entire family, who attends what meeting and how, where, and why decisions are made. Streamlining communication here reduced the burden on some of the active family members. It also clarified who participates where, and who is not needed for certain situations—not always an easy message to hear, but necessary.

Creating balance

Communication is tricky—too little leads to conflict, and too much leads to confusion. It’s crucial you find the level of communication that meets everyone’s comfort level without burdening their time. This is a balancing act and may need to change over time. The best way to ensure effective communication is to clearly outline the terms of reference—if you cannot put them to paper or they aren’t clear, you likely don’t need an additional meeting.

There are also some discussion items that don’t warrant a meeting. This is another dynamic in family businesses that can be hard to navigate. You don’t want different groups having separate conversations, but not all conversations need to be had in a meeting.

A few tips to improve communication and create balance:

1) Always have terms of reference that cover…

• What is the goal? What kind of decisions are made here?
• Who attends this meeting?
• How are decisions made (i.e. majority vs. 75 per cent vote)?
• How often is this meeting held?

2) Consider having the first few meetings facilitated, especially if they are likely to get heated. It is amazing how well-behaved family can be when a third party is present.

3) Having a formal agenda and notes makes a difference. An agenda can help get everyone back on track during meetings. Further, adding times to each agenda item gives the Chair an easy excuse to pull the meeting back without hurting feelings.

4) Sending out notes after each meeting. These notes ensure everyone is on the same page when it comes to group discussions and business decisions. This can be key to recognising instances when multiple parties have different understandings. Without the notes, you likely would not be aware of these misunderstandings until a conflict or issue arises.

5) Allow space for respectful debate. Most leaders of a business are not going to see eye-to-eye all the time. However, being comfortable with respectful debate, as opposed to disagreement and conflict, can lead to better decision-making. Asking questions and voicing different perspectives should be viewed as an opportunity rather than an issue. Meetings would be much more productive if family members can share honest feedback. Far too often, family members’ fear of communicating differing opinions greatly reduces a business’ opportunity to evaluate all options.

Communication is hard, period!

In our current environment, direct in-person communication is becoming less and less common. Why call your sibling to ask a question when you can more easily (and comfortably) send a passive aggressive email to get your point across? However, if you don’t work on your in-person communication and set boundaries on when in-person is preferrable, your family business will continue to struggle. Text, email, and other impersonal modes of communication are often a source of great conflict in a family—it’s hard to give someone the benefit of the doubt when, growing up, they would steal your toys! When in doubt, go speak to a family member in-person.

 

Danielle Walsh is a chartered professional accountant (CPA), chartered accountant (CA), and holds certificates in family business advising and family wealth advising from the Family Firm Institute (FFI). Walsh developed her philosophy and desire to help family businesses from her father, Grant Walsh, who has worked as a family business practitioner for more than 25 years. She and her father published a book titled, A Practical Guide to Family Business Succession Planning: The Advice You Won’t Get from Accountants and Lawyers. Walsh also currently teaches the first family business course offered at the undergraduate level at Carleton University in Ottawa and recently joined MNP as a partner, focusing on succession. She can be reached at danielle.walsh@mnp.ca[1].

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