For the past three years I have been writing this weekly blog that deals mostly with issues surrounding family business. Some subjects have been treated more than once, in different ways, and I have touched on a variety of things to think about.
Today’s subject is one that I am touching on for the first time, and to be honest, I am not sure why it has taken me this long to get to it.
A few weeks ago I was reading a book called The Trusted Advisor Fieldbook, and there was one sentence that really struck me, so I highlighted it and put it into the “future blog post” pile. Here is that sentence:
For most human beings, the only thing worse than being controlled, is being controlled AND being lied to about it at the same time.
This sentence was in a section that dealt with people’s attempt at “closing” a sale with a potential client. I agree that closing objectifies the customer and I personally HATE being “closed”, and hence I stay as far away from those techniques as possible.
But what struck me was how applicable that sentence is to the world that people in business families live in for large periods of their lives.
All too often the generation that is currently in the driver’s seat will be preoccupied with staying in control of as many things as possible for as long as possible, and they will usually believe that they are acting this way because they know best. This is where they may also be lying to themselves.
Those who are in the “Next Gen” seats (now often called the “rising generation”) are often left to wait for their turn behind the wheel, and that can be a very frustrating place to be, just ask Prince Charles.
Thankfully, a family business has quite a few moving parts, which offers forward-thinking families the opportunity to take a very incremental approach to transitioning control from one generation to the next.
There are roles within the management of the business where responsibility can be handed over gradually to those who show an interest and some abilities, to gain experience and slowly move into more senior roles.
There are ways to transition ownership of shares from one generation of owners to the next, and the ways to do this are limited only by the imagination of the CPA’s and lawyers you can find to put together the legal documents.
And let’s not forget the family circle, where some family members can be encouraged to look after the non-business issues, and some form of family governance structures can begin to be instituted.
In the end, if it is to remain a “family business”, then the family will be expected to continue to control the business, into the next generation. But how are they going to control it, if they have not figured out how they are going to work together?
The lawyers and accountants can come up with all sorts of ways to make things fit together in the legal sense, but if the family harmony is not there, chances are something is going to give.
Control is a very tricky issue to figure out, and when it rests in the hands of fewer people, it is often much simpler. But when you go from one generation of owners to the next, you often increase the number of people who will be sharing control.
When a parent is the person who “controls you” by being the one who calls the shots surrounding important things like wealth, it is one thing.
But in a situation where that family member is a sibling, or a cousin, then being controlled can be much more difficult and uncomfortable.
If that is a scenario that you are looking at someday, you may want to begin the process of working out those control issues NOW, or else some family members may begin to feel like they are being controlled in ways that they may not stand for.
And don’t think that you can lie your way out of it either.