“A quiet bias seems to exist among many family business consultants and advisors that keeping the business together, regardless of individual costs, is beneficial and should always be a primary goal.” This is an intriguing opening sentence from Michael Klein’s article, No Stone Unturned.

Klein says that bias can also be shared by the family business client and many of the family members. Any bias can limit the creation and growth of a viable solution to family business issues and, especially the issues of post-first generation family members, many of whom do not want to participate in the family business, even peripherally.

As Klein says, “One solution for advisors and consultants is to reframe their own definition of success.” By doing this and also by asking the family a series of pre-engagement questions the advisor/consultant can be more proactive in his/her strategies and more sensitive to family issues that may have been kept hidden for years.

No Stone Unturned
By Michael A. Klein, Psy.D.

A quiet bias seems to exist among many family business consultants and advisors that keeping the business together, regardless of individual costs, is beneficial and should always be a primary goal. From this deeply held conviction sprout the following beliefs and tactics:

• Problematic relationships can be worked out, or at the very least worked around;
• Formal hiring and promotion processes can be instituted;
• Family councils can be created to encourage responsible family behavior;
• Job roles can be clarified, and so on.

And while all of these statements are true and can provide incredibly powerful and effective solutions, knowing when and how to say “enough already” must be an easily accessible tool in every advisor’s toolkit.

Some have understood and opposed this hidden bias for many years, including professionals from psychology, law, accounting, and finance. Their recommendation, and the advice of many family business advisors, has been for the 2nd generation and beyond to pursue educational and/or career paths outside of the family business before joining fulltime. Despite the perceived risk of “losing” a family member to another organization or path, providing this option avoids potential underperformance, conflict, and misery among family members.

However, for too many consultants and advisors, considering a plan for individual exit(s) from the family business or business dissolution might be experienced as being passive or giving up. In fact, one may frame their professional reputation or identity as built on success in finding commonality, creating consensus, or maximizing value. And this conflict can be further compounded when a patriarch or matriarch has explicitly (or implicitly) communicated a desire to keep everyone, and everything, together.

An ongoing awareness, or examination, of one’s own unconscious motives can be especially relevant when working with family businesses.

• For the financial advisor, working with all members of the family business often translates to enhanced profit when managing both business and multiple personal assets (and/or life, disability and long-term care insurance).
• For the family business consultant, a family separation or selling of the business can be viewed as a professional failure.
• Financial motivations, professional identity and success, or perhaps one’s own psychological, family-of-origin issues can get in the way of objective advice and recommendations.

Whether one consciously or unconsciously acts as healer, savior, rainmaker, or sage, openness to separating individuals, assets, or selling the business should be considered by the advisor in order to act in the best interests of the client(s).

One solution for advisors and consultants is to reframe their own definition of success. Perhaps one (or more) individual’s professional and personal satisfaction and effectiveness are just as important and fulfilling as keeping a family business intact. All too often, the underlying unhappiness or bitterness of one or more family members is kept hidden because addressing it almost always complicates matters. Whether it delays investment decisions, slows down organizational growth, or inhibits succession planning, bringing attention to underlying individual dissatisfaction can seem like an unnecessary distraction when much larger issues loom that include many more family members. However, without addressing individual needs directly, or providing avenues for addressing them, dissatisfaction, resentment, and unhappiness fester.

Even when open-ended questions that can unearth these potential individual problems are asked (e.g. what are your personal and professional goals?), for those raised in family businesses answering honestly and directly can be exceedingly tricky, as everyone’s goals have been entwined since birth. As we all know, fuzzy boundaries between family and business and between son/daughter and mother/father are typical.

Now, rather than simply filing this article away as shedding light on a situation that may or may not emerge (i.e. “I’ll need to remember this if and when the issue comes up,”) consider actively exploring these possibilities during fact-finding or discovery interviews. These questions will also be seen as less threatening at this early stage of engagement because they are not based on any data, but rather seem more like a checklist that a physician or nurse employs when gathering a comprehensive medical history for a new patient. Do you have a history of any of the following: Heart disease? Liver disease? Wanting to divide assets and close the family business?

On a more serious note, I recommend being exceedingly clear with family members that these are standard questions you ask of all new clients, and that they may elicit some uncomfortable, or even strong, feelings. This will “inoculate” the interviewee so that they are less likely to hide or bury any reactions or comments that may arise, thus providing you with useful background for your work with them.

Based on your work and professional role, some of these questions will be more relevant, and thus useful, than others:

• Has anyone ever discussed leaving the business?
• Has anyone ever discussed dividing assets?
• Has anyone ever discussed starting a new company?
• Was this ever presented to you as an option?
• Have there ever been discussions about these possibilities (at family council meetings? Management meetings? 1-on-1?)
• What are your thoughts about those options?

Making these questions part of your standard process will serve several important functions:

• It compels you as advisor/consultant to bring these questions into the conversation rather than avoiding them.
• It provides you with a foundation to draw from if, in the future, such options are met with strong resistance (e.g. “But didn’t you tell me, when we first talked, that nobody in the family deserves to be miserable in their work and that you want your children to be happy above all else?”)
• It educates and supports the family, the business, and the individuals, by unlocking the door to other strategies for moving forward; options that might never have been, or might never be, voiced by a family member for fear of the repercussions or reactions or others.

Once these options are brought out into the open, once they can see the light of day, better decisions can be made, better results will be achieved, and, in a very practical way, you further your status as that priceless advisor – the one person who is not afraid to ask the big questions and consider all the options.

About the Contributor :
Michael Klein, Psy.D., is the author of the book “Trapped in the Family Business®: A Practical Guide to Uncovering & Managing This Hidden Dilemma.” He works as a consultant, facilitator, and speaker to family businesses and their advisors. Dr. Klein has over 15 years of experience in industries including manufacturing, insurance, healthcare, construction, financial services, education, pharmaceuticals, real estate, and entertainment. He also works with business schools, providing work-based psychological assessment for undergraduate and graduate students. Michael can be reached directly at mailto:[email protected].

 Yours in Practice,