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Navigating intricate relationships in family-owned businesses

Business discussions without pointing fingers at individuals are important for each one’s awareness to be raised and succession planning to take place

All gave some and some gave all. All wanted some, some wanted all and some nothing at all but the good of the family first. This is the desired state of the essence of a good culture in a family or family-owned business (FOB) in my view.

In the real world, it can be very different. There are wheels within wheels and the focus is a lot on what’s in it for me. What was not done for me or when I was ignored remains a bit too much in my heart. For survival and success, some will have to be overruled and ignored. The need is to treat in practice and spirit the power of the collective as most important.

Family-owned businesses, as opposed to others, possess a highly intricate network of relationships, extending beyond those of colleagues or supervisor-subordinate and moving into the realm of personal. They are, therefore, subject to a much wider range of influences stemming from such relations, making complexity an inevitable aspect of FOBs.

This complexity — which may be further amplified by elements such as rigid and redundant hierarchy structures (the eldest son is the successor by default), favouritism (favouring family members over others who may be more suited and capable), and gender bias — can cause personal grudges and opinions to seep into key business decisions, thus challenging their objectivity and practicality, with the snowball effect of hampering the business’ success and harmony.

At times decision-making by consensus ruins the power of consensus decision-making as it becomes a tool to justify not making the right decisions as not everyone understands the deep implications of not making hard decisions. People are comfortable with passing the buck, looking good and ensuring that their image is seen with more power and respect. To prevent such complexities from affecting the efficient operations of the business, one needs to approach them with an open, flexible mindset.

Most family-owned businesses have a history and culture behind them that often come into play during the decision-making process, for example — during succession planning. One needs to realise, however, that these cannot be rigidly followed and must be adapted to the changing/evolving environment and needs of the organisation and those involved.

Objectivity with compassion must be the guide of the decision-making process. Here comes the need for a family office with a culture of encouraging the need to be comfortable with the not-so-comfortable issues. For example, there was an issue with family members splurging money for borrowed lifestyles, such as on cars, clubs, etc. This was seen as a wrong thing by the matriarch and she raised the issue saying then all the ladies be also allowed to buy jewellery as and when they feel like it. The message went down clearly and it was agreed upon that personal stuff needs to be treated as a personal expense and personal finances are to be used.

The family office helped facilitate the discussion across the family. It’s a safe zone wherein currently the focus is to course correct the gender disparity and well-being of people not with bold statements in meetings but at the ground reality. It serves as an exchange/medium from where new ideas can be seeded or deseeded with clarity to not water wrong weeds that may disturb the family values. Younger needs to be given space for the changes that are needed and they are comfortable within the boundary of values.

The key is to tactfully deal with the complex relationship between the business associates. The decision-makers or advisers must look beyond superficial dynamics and scratch below the surface. Leadership hiring needs to be done not for culture fit but cultural adaptability as unless one accepts and gets accepted no change can take place. Encourage an environment where a healthy exchange of ideas, thoughts, and opinions can take place. Business discussions without pointing fingers at individuals are important for each one’s awareness to be raised and succession planning to take place. This sows the seeds for thinking deeper and touching those taboo points that are best discussed in advance; as an adviser, I would discuss them in advance and set the stage with each stakeholder and member.

When my siblings or other family members try to draw a circle to exclude me, I shall draw a larger circle to include them. Where they speak out for the privileges of a majority shareholder group, I shall shout for the rights of minorities to be protected in the extended family.

Naveen Khajanchi (EMC – Insead) is the CEO of a leadership Search firm and an executive coach based out of India.

When my siblings or other family members try to draw a circle to exclude me, I shall draw a larger circle to include them. Where they speak out for the privileges of a majority shareholder group, I shall shout for the rights of minorities to be protected in the extended family.

Naveen Khajanchi (EMC – Insead) is the CEO of a leadership Search firm and an Executive Coach based out of India.