Trust and Relationships in Family Business
25th March 2020
I caught up with Susanne Bansgrove, founder of Liquid Gold, a family business advisory firm. Susanne is also the founder and organiser of the 'Women in Family Business Conference' (available world-wide online in July 2020), a 3rd generation member of her own family business and a long-standing member of Family Business Australia.
We were discussing how good business comes from good families, which requires healthy individuals. As Susanne pointed out, if one individual is starting to make a lot of noise due to experiencing discomfort or hurt, the system can start to come undone.
Our conversation quickly moved onto the importance of building a foundation of trust before you can create the right structure for the future of your family firm. The message is clear, work on the relationships first.
I wanted to find out a bit more about how Susanne’s view of family business, relationships and governance, which I have captured in our brief interview below.
How can families build or strengthen their relationships if they don’t exist in a strong enough form already?
From experience, I find there are two types of families in business.
Families who are in open conflict, so they can’t communicate well and struggle to connect. The others are harmonious, loving families who are too afraid of upsetting the family unit. This makes it hard to talk about what really matters and to make difficult decisions. Families can be too close or too far apart.
All teams can work on improving their communication. This is something most large organisations constantly do, and families in business should do the same.
The best way is supporting each individual to find their voice with help from someone who isn’t emotionally attached. Without each person having a voice and being comfortable sharing their perspective respectfully, it can be difficult for families to make the best decisions for the collective.
I often hear people say, ‘the kids are still young, do we really need to do this now?’ What’s your answer to that?
The sooner you make sharing perspectives the norm, the better it is and the less issues arise when the kids get older. This includes talking about the business, finance finance, education, making decisions and talking about what individuals think and feel.
Everybody in the family, both parents and kids alike, needs to learn how to communicate better. This is about creating practices that will help the family succeed in the long run and creating a foundation that is going to be necessary when adversity hits the family or the business.
When the time comes for families to start building their family governance structures, what should they keep in mind?
There are no quick fixes. It is going to be a long, imperfect journey, but it can be a positive journey too. It is beneficial to have experienced advisors who can assist along the way.
Quick fixes tend not to work because most families will revert to old behaviours. Just a bit of structure or some documents will not necessarily create behavioural change. A change journey is a long-term one, which requires ongoing communication.
Families should also be prepared to invest time and effort, and bring in their commitment to communicate, assess and tweak things as they go.
Change of behaviour or even change of how decisions are being made requires good and frequent communication and the ability for individuals who are part of the change journey to openly share their emotions. This is not something most individuals within a family business are used to, so it takes time, practice and support to move through this.
When you create systems change, it impacts the individuals in it. I think we have a tendency to look at groups and the collective in family firms. Could you say a bit more about the role and importance of the individual?
Often we look at Family Governance, or collective change first. However, it is important not to forget that we are dealing with human beings first and foremost, and the individual is key. The collective will only ever be as successful or sustainable as the ‘weakest link’.
If we do not assist the individuals to articulate their own values and recognise their own needs, there is a chance that they will feel trapped in a system they feel they can’t add value to.
But if I get to define my values, purpose, what I am good at and how I would like to contribute to the firm, then my ability to contribute to the collective will be enhanced.
In turn, a collective that can make good decisions for all the individuals provides a framework that enables them to be comfortable, explore who they are, what they stand for, and express this. It’s a virtuous circle really – the collective provides the transparency and safety for me to work on myself, which in turn allows me to show up and help to provide measured input to make the collective better.
In order to illustrate how important it is for the individuals in your family to be free to find their voice and their own value and purpose, I invite you to imagine an alternative version of the 3-circle model, with the three circles being individual, family and business.
If the individuals are not given a chance to find purpose and define their values and the contribution they want to make, then they are unsure of their belonging to the collective or the value they can add, creating a fight, flight, or freeze response. This will start showing up as individuals not being able to communicate effectively any longer and the circle turning ‘toxic’.
Given the interconnectivity of the three circles, the model illustrates clearly the spill-over effect into the family and eventually into the business as well. But, as outlined above, strengthen the individual and you strengthen the whole system too.
There’s a reason for the word family in family business and that’s because of the importance of the family/human element. Let’s not forget that this human element is what makes family business what it is and start enhancing relationships and communication, rather than just focusing on transactions and structures.