The Un-Touchable Topics

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Many business owners commonly withhold information from their adult children, management and employees. In fact, it seems that over the years I have heard more about the male owner’s sex life than about his personal or business financial life. Sometimes one could conclude that these non-communicative and non-sharing owners must be running their enterprises on the illegal edge, in the black versus the gray area; or maybe their operations are deeply in debt or make huge sums of cash, and they don’t want others to know about it. On the other hand, some owners simply don’t trust people with private information and believe that concealing it makes them more powerful and mighty.

Topics typically not discussed with top family managers are many. Here is a sampling:

Money tops the list of un-touchable topics. This kingpin subject encompasses the areas of parent and business net worth, amount of financial security needed for parents’ retirement, compensation levels for family and relatives working in the business, perks, benefits and how we arrive at those levels, what is a share of stock worth and who can own them, and what rewards are typical for an owner. Estate Planning includes such documents as wills, trusts, insurance, etc. Most parents we know are of the belief that heirs are not to find out what their “death planning” documents say before they are dead. To reveal such information is not part of the family tradition, and if an adult child was armed with the secret wishes of a will/trust, they may never work again. Additionally, most family members do not want to discuss death and dying, period. Family Conflict and the reason for such disharmony are often swept under the rug with the hopes it will go away with time. Unfortunately, it is normal for the problem to fester, grow, and become a severe situation that begs for outside professionals to address. Which relatives can join the business? How do we determine who can join the family business, under what circumstances and preparation, titles, authority, and what if it doesn’t work out and the person is asked to leave? Choosing the Next Leadership Model and who will be President. How is the next president of the company chosen, trained and evaluated and by whom? Even though many other topics can make this list, we will end with the unspoken issue of One Family Members’ Responsibility to Another in the event of poor health, divorce, hard times or legal problems.

Undermining Your Goals

For the business owner who conceals information from the adult managers/employees of his/her operation, he is truly undermining his own goals if he/she wants to pass the company to the heirs. Keeping secrets sends the message to the key family members that you do not trust them. How can the active children learn the business without access to full information about the company, budgeting, cost control, and a full understanding of the financial situation? How would an active or non-active child be able to make life time career plans if they are not allowed to understand the value of the business and what to expect in terms of a financial return over time? If a son or daughter were to lose motivation or their drive to work because they have found out the firm is a real “money machine,” then it is better to find out early than wait until they have control and possibly lose the entire operation.

It certainly depends upon the maturity level of your children regarding how and when you will communicate to them, but as soon as it is determined they can handle money and private information, sharing company matters with them serves to make them feel part of the team. Please remember that the example you give your children will likely be the same manner and process with which they will handle your grandchildren.

The Communication Forum & Process

For those business owners who struggle with the idea of sharing extremely private information with their adult children, feel depressed at the thought of beginning to plan for their own succession or, as some see it, their own funerals, and those who become angry and depressed as they work with the succession processes that is all about sharing information, we suggest the following steps to ease the way:

1. Hold one-on-one counseling sessions with advisers who will allow owners to work their way through these difficult emotional issues.
   
   
2. Talk with other respected business owners who have already gone through successful succession of their firms. Creating such a support system can be helpful.
   
   
3. Seek advisers who are familiar with organizing a family meeting, one that will allow the owner to share his/her feelings about the challenge of “letting go.”
   
   
4. With the advent of family meetings and the cooperation of family members, create the tradition of change within the family’s business and the family itself. By creating rituals dealing with transitions of the family to mark passages of time and maturity, everyone will learn to honor the past and plan for the future.
   
5. Once family meetings are organized and developed, make them a ritual or a yearly event that is designed to recognize personal growth, business success, celebrate special events or goal achievements, make major decisions that affect all family members, and to anticipate and direct major organizational change and transitions.

We do not believe it is healthy for senior generation members to suffer through an extremely emotional process without support, patience and understanding from members of the next generation. The suggestions above are tried and true processes that have worked in the past to help others through various transitions and they can work for you as well.

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Mike Henning, is the founder of the Henning Family Business Center established in 1985, a management and consulting firm specializing in business growth, change and future leadership headquartered in Effingham, Illinois.

He is the author of the Family Firm Advisor newsletter, now in its sixteenth year of publication. For more information about receiving one free copy of our newsletter or about our consulting services, please write to Henning Family Business Center, 1006 N. Pembroke Ct., Effingham, IL 62401; call -- 217-342-3728; fax -- 217-342-3728; e-mail -- hfbc@mikehenning.com. Visit us at our web site -- www.mikehenning.com

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