Global

Details

  • Service: Enterprise, Family business
  • Type: Business and industry issue
  • Date: 5/15/2012

Reducing conflict and enhancing decision making in the family business 

Reducing Conflict
It seems surprising in the age of Oprah and Springer, where people spill the intimate details of their lives on national television to find that communication is still a major impediment to harmony and balance for many business families … Whatever the reason, that cliché, ‘a failure to communicate’, is probably the biggest stumbling block family businesses face.” – All in the family inc

Why is communication one of the biggest stumbling blocks in family business? Surely families should communicate better, not worse, than their non-family counterparts? It’s a risk factor that the family business owner has complete control over, and yet it’s seldom properly managed.


Family businesses are often very complex; spanning generations, branches, continents … and that’s just the family themselves! Add into that the complexity of the interlocking nature of the business and the family, then it’s hardly surprising that communication is a challenge. 


The importance of communication strategies

There are a number of established communication strategies to help businesses effectively manage their family component, and those family businesses who have applied these strategies tend to dominate their markets and continue over many generations.


Without a communication strategy in place though, there’s a risk that decisions are made in isolation, thereby creating conflict that can challenge personal and business relationships, and even the survival of the business. The importance of effective communication among family members can be even more significant when transitioning the business to the next generation. Succession in itself is a major risk factor, without further compounding the problem.


The key to effective communication strategy is structure, guidelines, and regularity; where everyone involved actually feels involved. One way to achieve this is through family business meetings and family councils. Forums like these keep family members up-to-date and involved in the decision making process.


The purpose of family business meetings

Family business meetings provide family members, who are active in the business, with a dedicated communication forum to discuss family issues that can impact the business, and vice versa.


These meetings aren’t intended to replace regular business/management meetings, or meetings of the board of directors, even if they involve the same people, because the discussion usually revolves around management and ownership issues. It’s a chance for family members to hear each others’ views and opinions, especially those of the current owners.


Once family business meetings have addressed family and business issues amongst those active in the business, the logical next step is council meetings involving the extended family.


The purpose of family council meetings

These provide a communication forum for the whole family; immediate and extended (including spouses, in-laws, children, grandparents, and grandchildren), whether they’re active in the business or not. It’s an opportunity for everyone to learn more about the family business and have their say on business issues that impact the family, and vice versa.


What makes these meetings effective is keeping family members informed of the ‘big picture’. It’s not a decision making forum for day-to-day business or management and ownership issues. It’s a space for providing information and receiving feedback on specific issues of interest to all family members.


In terms of risk management strategies, effective communication is essential. Developing agreed-upon guiding principles and abiding by them can help mitigate this risk factor. And once everyone has a better understanding of what is expected of them, they can make informed decisions about their individual and collective roles in the future management and ownership of the business.


Christophe Bernard

Christophe Bernard
I am a KPMG partner based in the French firm’s Paris office, responsible for encouraging the growth of our firms’ middle markets practice across Europe, Middle East and Africa, a majority of that market comprises of family businesses.
 

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