Many business owners who are also parents have a recurring nightmare. The business enterprise that they built with their sweat equity is destroyed because the children they raised to run the business can’t get along.
The parents don’t understand why there is conflict, jealously and mistrust. They are siblings. They should get along, shouldn’t theyω Many family business owners would prefer the next generation to manage and jointly own the family’s business.
As the founder you have worked your whole life to prevent the curse of sibling rivalry, but the elephant suddenly enters the room. The siblings don’t see it as rivalry, they see it as just being competitive with each other.
In many family owned businesses making a successful transition from the founding owner to a sibling partnership is a challenge. This transition should be carefully planned, and should take place over a set period of time. There are concerns that need to be addressed during such a transition of management. These include ambiguities about authority and a prevailing notion or belief that the future will only resemble the past, and neither sibling will embrace the changes that need to take place for the business to continue to grow profitably.
If the older sibling does have great financial acumen, but he or she is weak on the interpersonal or sale side of the business, it may be wiser to put the younger more savvy siblings in key leadership roles, while the older sibling manages the business from behind the scenes.
Another way to diminish sibling rivalry is to let the children work out for themselves how they will run the company. In this manner the children determine without parental influence who is the best to fill each critical role in the company. As a result, family members who will run the company choose the future leadership. The founder’s goal should not be to choose his or her own successor, but to have the successor chosen by the new management team. This type of arrangement will also reduce potential future family disputes over the running of the business.
Sibling partnerships can be difficult to manage because the natural competitiveness of brothers and sisters often carries over into adulthood. Siblings in business tend to be exceedingly attentive to each other’s salaries and perks. This attention can be magnified by their significant others, who raise questions like: why does your brother or sister have a larger office, a bigger car or a bigger homeω Many times the significant other can undermine the transition’s success by pressuring their partner to push for more control, influence and remuneration.
There are two types of sibling partnerships: “first among equals” and a “shared leadership arrangement.” They each have their strengths and weaknesses.
First among equals: The management team has one acknowledged leader. He or she uses consensus-building techniques. He or she struggles not to assume the role as the parent. There is a high risk for conflict among family members, because one or more siblings are asked to assume a subordinate role in the business.
Shared leadership arrangement: The company is led as a team. Shares are divided equally and so is managerial authority. Salaries and bonuses are divided equally. Each sibling has equal decision-making authority. In most cases, the employees do not easily understand this structure. In addition, when a tough decision is required, there may be disagreement among the siblings, which will cause conflict. Subordinates may opinion shop among the siblings in order to gain support for an initiative. Again this can become a source of conflict if roles and authority are not clearly defined.
The siblings need to have a shared vision of what they want to achieve together. That begins with their personal vision. Each sibling must be clear about what the future for themselves and their family looks like. In addition, they must believe that a sibling partnership is the best way to get there. In some cases, family members may feel trapped due to a feeling of duty and loyalty to others in the family. A shared vision permits the family members to pursue three things: business prosperity, family harmony and personal well being.
The siblings must share a dream. They must be willing to face a common future. They need to be in agreement on the company’s goals and mission. They and their families must be willing to share success and failures. For a partnership or shared leadership arrangement to work, there must be evidence of a strong commitment to collaboration. Each sibling needs to be willing to accept the job and responsibilities for which they are best suited. Historical differences and disputes need to be set aside and the siblings need to be open to give each other a voice in major decisions. There must be an even distribution of complementary skills and talents. Procedures need to be installed to manage conflict that will arise from their business relationships. If there is an impasse, there must be a way to break the tie, whether it is from within or with the assistance of an outside third party.
It is imperative that the siblings present a united front to the employees when a decision is reached. They must commit to never fight or disagree in front of their employees or in public. Employees, customers and strategic partners may perceive the disagreement as a difference in priorities between the owners. This behavior opens the door for politics and employees shopping among the management for support for their decisions.
It’s time the elephant be asked to leave the room and the sibling partners demonstrate a strong commitment to the common goals of the business. If this does not happen, the business is doomed and the employees are left without a leader and a defined roadmap for the business.
