The holidays are often the one time of year when the whole family’s guaranteed to get together and contribute to a common effort. For a family business, the season for navigating these relationships is all year round! At Compass Point Family Business Consulting, Senior Business Advisor & Managing Partner Tom Garrity helps these workplaces thrive—and his advice offers insight, whether your family is in business or not.
The Perks
Working in a family business imparts a lot of pride. Our communities are made up of businesses meeting their neighbors’ needs with the fruits of their labor, creating wealth and opportunity, and often being able to contribute impactfully to charitable causes.
“Most family businesses are in it for the long term,” Garrity says, “more so than publicly traded companies being pressured to make short-term decisions for the benefit of the shareholders.” Good family businesses are resilient, and attract people who will buckle down and help through ups and downs.
A well-run family business can foster a more independent, emotionally intelligent next generation, Garrity says, “ready to go out into the world and make a difference.”
The Challenges
That said, the challenges inherent in any family are present in a family business, along with business-specific permutations, and a lot rides on overcoming them. “If a family in business doesn’t work at being a good strong family,” Garrity says, “all that comes out in the business.”
A lack of direction, strategy and communication can lead to dysfunction and inefficiency. “Where so many businesses get in trouble is they don’t communicate,” Garrity says. The older generation keeps things close to the vest, trying to maintain control. Assumptions are made about who’s doing what and why. “Have the conversations,” Garrity says, “because they’re being had.”
Whether real issues are festering in covert mutterings or misconceptions are running wild, bad communication erodes a family and demands attention.
Create a Constitution
An important part of the governance work Garrity leads family businesses through is drafting a Family Constitution. Just like the one framed by the country’s founders, this collaborative declaration sets out the values and rules for the family.
“Why do we exist? What do we stand for?” he asks. “What’s our purpose, why are we in this kind of business?” What are your core values as a family? What does it mean to be someone with your surname? “There’s something powerful about putting words to it.”
Get everyone on the same page about whether you want a multigenerational business, what your dreams are, whether you’d ever consider selling, etc. Set down traditional activities as a family, like annual vacations to a favorite spot and where holidays are spent each year. This is something concrete to align around, guiding everyone on the same path.
Keep Communicating
Garrity’s first comment on communication: “There can never be enough.” Vital to your constitution are the expectations and boundaries around it.
Regular meetings are critical, and everyone should feel comfortable having their say. “Agree while things are friendly how to handle conflict,” Garrity advises. “Like if something comes up that starts escalating, you set it aside and tackle it separately.” Whatever rules you choose, the goal is to make necessary conversations easier.
A monthly or quarterly meeting provides the assurance that concerns and ideas will be aired in a purposeful forum. An organizationally healthy team can disagree and still commit, feeling that everyone’s been heard out and brought on board.
New Angles
All the talking amongst yourselves in the world will only get you so far without a little fresh perspective. An advisor like Garrity can shed a game-changing light on the business, and to perpetuate the effects, help to build out a board.
“Along with some family representation,” he says, “you want some outside advisors to counsel, bring accountability and offer connections in the marketplace.”
A good board isn’t afraid to say what employees might fear to, like pointing out that Jim’s still here after underperforming for three years. Is it just because he’s related?
Family businesses can be insular, smothering themselves with secrecy or mindless habits. With a sharp-eyed board, the strength of tradition is balanced with the advantages of networking and honest input.
The Three-Circle Model
Garrity applies the famous three-circle model to family businesses he’s advising, organizing those involved into a Venn diagram of Family, Owners and Employees. People associated with the business can wear just one, two or all three of these hats, and depending on where they fall in the diagram, their roles and perspectives are different.
This is a good way to start the conversation about what each member of the family and workforce wants from and brings to the business. Self-awareness about the structure of the family and the business, and each person’s place in them, is key to success.
The Expert:
Photo by Michael Straub
Tom Garrity
Senior Business Advisor & Managing Partner
Compass Point Family Business Consulting
