By Jonathan Creaghan, BA and Holly Simmons, FEA

Family Business is a unique business model that presents real challenges and opportunities to growth and success. One of the obvious reasons? It includes family members. Families are dynamic and complex, filled with history, fraught with emotion, where misunderstandings happen, while loyalty and love are entangled into how family members perceive their worth. Add to this financial wealth and a business that has been nurtured over perhaps generations creates conditions ripe for protection, mistrust, and control.

Yet there is ample proof that families have found a way to exist and thrive together, be productive, and celebrate their history and legacy. What have they done to succeed?

Over the course of thirty years, hundreds of owner-operator family businesses have been observed and assisted. As a result, Four Stages of family behavior have been identified. Using our work in identifying the Four Stages of a Team[1] almost universal behaviors are exhibited by all generations of a family business. What behaviors limit family success, which ones create positive outcomes?

This reading provides insights on why families interact the way they do, what stage of behavior the family is exhibiting, and by referencing the next stage, what the future can look like. It was written for all members of a family who may or may not be participating in the business.

STAGE 1

Parents Know Best

The dynamic at Stage 1 is limited to the senior members (owners) dictating, managing outcomes, giving frequent opinions, and generally controlling the family expectations. Little true discussion occurs because of an undercurrent of tension that nobody acknowledges or talks about, creating ongoing emotionally charged interactions. The next generation can be old enough to create their own identity which can clash with the values and expectations of the parents.

  • No formal family or business meetings, discussions occur ad-hoc as issues arise
  • Past family history dictates present thinking and behavior by both parties
  • Parents have difficulty seeing and treating next generation as adults
  • Next generation feel stifled and may suffer from feelings of “not being good enough”
  • Conversations are focused on what is wrong
  • Only owner knows future direction and financial situation of the company
  • Parent(s) dictate issues and agenda for discussion
  • Next generation can have a profound sense of obligation to stay in the business but may want to leave
  • Next generation uses silence to preserve harmony, with their head down to just get through the day
  • Patriarch feels frustrated by next generation
  • Matriarch often manages the emotional disharmony in the family based on silos that can create alliances
  • Patriarch is extra tough on next generation for expectation
  • Tension and heated arguments between siblings common
  • Parents show love by trying to protect children and give a lot of advice
  • Siblings measure parental love through perception of being treated equally and fairly
  • Can be perceived favoritism by parents

STAGE 2

Family Begins to Communicate

At Stage 2 there is a recognition that the family is not working well together, attempts are made to fix this dynamic, but often stall. Informal family meetings occur at this stage yet do not always build momentum. History, a lack of structure, and not having an objective third-party intervention, will get in the way of succeeding. Though talk of ownership by the next generation can happen at Stage 1, it is more likely to occur at Stage 2.

  • There is a motivation to improve as a family but don’t know how
  • Owner(s) knows things need to improve but thinks it’s the next generation that needs to change
  • Informal family business meetings revolve around short to mid-term business issues
  • Non-business family members typically not included in discussions
  • Issues bubble up to surface but are rarely dealt with in a satisfactory way for either party
  • Past still greatly influences the present, might be lots of arguing or lots of polite conflict avoidance
  • Progress to unify the family is slow and rocky
  • Owner(s) impatient for change but can unknowingly sabotage efforts as they struggle to let go
  • Next generation begins to rely on their own thinking and make decisions, but may still not be fully listened to
  • Family fairness and equality begin to be discussed
  • Informal or even unspoken succession path within business followed for next generation
  • Next generation will experience different positions in business to find fit and interest
  • Acknowledgment that an outside assistance would be helpful
  • Family advisors are brought into assist family with specific pain point
  • Family begins to come together to discuss and resolve issues, sometimes a messy process

STAGE 3

Family Comes Together

Stage 3 is the formation of the family as a productive unit with a common vision and goals. Family members have the capability to talk to each other and capacity to focus time on listening to each other. As productive communication further develops, a new appreciation between family members begins to occur. The result is a further increase in trust and respect.

  • Formal and consistent family meetings begin, with non-family members included
  • Business focused discussions occur with input from everyone
  • More information on business is shared by owners
  • Structure to meetings is created that allows everyone to have a voice and to participate
  • Family Meetings held regularly either yearly, quarterly, etc.
  • Family begins the work to define their shared vision and values
  • Meeting topics raise everyone’s understanding of current issues and opportunities
  • Owner(s) get clear on their next role, create space for next generation to take on more
  • Next generation gets autonomy in the business, decision-making capabilities increase
  • Communication is clear, direct and open, optimism about the future emerges
  • Finances shared amongst all parties
  • Business leadership succession becomes clear with buy-in from the whole family
  • Roadmap of both business and ownership succession gets defined and followed
  • Formal ownership transition likely to begin
  • Family has multiple advisors who assist with variety of issues, though their various expertise may not be fully coordinated
  • Next generation continuously developed and trusted
  • Long term future begins to be discussed
  • Leadership of family meetings and family events is shared amongst members

STAGE 4

Legacy & Stewardship is Created

Stage 4 is the formation of a solid multi-generational pathway for the business, and more importantly the family. It is a complex structure that purposefully allows all members access to communication and an understanding of how each member can thrive regardless of place on the family tree or in the business.

  • Younger new generations included in family meetings
  • A board of directors (or advisory council) for the business is created
  • Family councils can be formed to deal with multiple arms of the family as the family expands
  • Established and rigorous processes for education of next generation with agreement for participation
  • Future of family and business is defined and planned for
  • Non-business family members are active participants
  • Family moves from being identified by the business to being identified as a family
  • Strategic plan for family created
  • More advanced finances shared
  • Methods for clear communication established
  • All parties listened to
  • Legacy of family mapped out and transition successful through generations
  • Philanthropy part of family identity and lead by family members

Bibliography

Creaghan, Jonathan. GROW! Following a pathway to Leading a High Performing Company. London Ontario (2020)

Creaghan, Jonathan. Leadership Stages Behavioural Assessment. London Ontario (2017)

Creaghan, Jonathan. The Stages of Leadership. London Ontario (2008)

Creaghan, Jonathan. What is Forward Leadership? London Ontario (2017)

THE AUTHOR

Jonathan Creaghan, BA. Cert. N.L.P.

Jonathan Creaghan has been working with family enterprises for 30 years, helping them create long lasting legacies by improving the Human Side of the Business. He is the President of J.D. Creaghan Group Inc, a business advisory and co-founder and President of TotalLeader® Solutions Inc. a company that provides leadership content to coaches, advisors, and consultants.  He and his business partner (spouse) Joanne Creaghan are Laureates of the Manning Innovation Award for their Leadership Stages™ Assessment. He has written several books including Thinking Differently® about Succession www.jdcgroup.ca and www.totalleadersolutions.com

Jonathan would like to thank Holly Simmons FEA for her insights and additional thoughts on business families and feedback on this reading.

CO-AUTHOR

Holly Simmons, FEA

Holly Simmons is a professional business coach, facilitator, and trainer working with growth minded multi-generational business families. Over her 25 year career, Holly has worked in numerous sectors including manufacturing, industrial services, construction, technology, distribution, and luxury goods & services. Her extensive background in marketing brings a unique understanding of how people think, make decisions, and move to action. Holly Simmons is a Family Enterprise Advisor (FEA™), a Licensed Associate of TotalLeader® Solutions, is an independent Certified Coach, Teacher and Speaker with Maxwell Leadership, and is a Maxwell DISC Certified Consultant. www.golden-lasso.com

[1] Creaghan, Jonathan. GROW! Following a pathway to Leading a High Performing Company London Ontario, (2020), 7-14