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Family business questions from readers answered Add to ...

Vin G. Tsui, a founder and managing partner of Business Lawgix LLP: The answer is patience, education and communication, but not necessarily in that order. These three things are the foundation of successful change management in a family business.

Taking a business to the “next level” is seldom a product of minor changes. The level of change being contemplated is not likely to happen overnight. Your plans will need to account for the degree of acceptance by those who have spent their whole life getting the business to its current state. People tend to prefer maintaining the status quo. So make sure you have a lot of patience and take solace in incremental changes over time.

To get buy-in for the changes you wish to implement, you also need to educate. Lack of understanding breeds distrust and fear. You need to ensure that those affected by the changes understand the need, nature and value of the impending changes. No one is suggesting that you lecture everyone on the value of innovation. But you need to build dialogue through various forums to gain acceptance for the planned changes. You need to establish strategic alliances and identify champions for changes that you aim to implement.

All of this requires effective communication. This deceivingly simple concept is often difficult to implement in practice. In a family business effective communication is at the same time marred and assisted by the family history that the participants share. Communication involves more than just words.

Personal biases, predispositions, context, gestures, body language, tone, history, and mood have the effect of modifying a simple communication. Because effective communication is at minimum a dyadic relationship, there are at least two interpretations to each element. Consequently, a phrase like “I don’t care” can impart a multitude of meanings. I have learned that depending on the context, such a phrase can actually mean, “I care a great deal” (I thank my wife for that lesson).

The essence of communication is not what is said, but the message that is perceived. Effective communication requires that the recipient receive the content and meaning of the message as intended. The following are some keys to effective communication:

▪ Ensure that the communication is timely, consistent and meaningful.

▪ Tailor your message to your audience.

▪ Make your message clear and compelling.

▪ Think about your message before communicating it.

In crafting your communication (whether verbal or written), ask yourself these questions: How will someone in the position and condition of the recipient (with similar experiences, tendencies and biases) receive the message that you are trying to convey? When is the right time and where is the right place to deliver the message? Are you the right messenger? Does the message need to be delivered at all?

Sometimes, it is more effective to present recipients with sufficient information to allow them to discover the intended message. In other cases, the best way to deliver critical messages is through an independent third party, such as a trusted adviser of the recipient. Every situation, and to a certain extent every person, is different and there isn’t a one size fits all solution. Finally, do the best that you can to separate personal history from business imperatives.

Question from Eileen Hennemann: What would be a key component in each of the four experts' services that would convince a founder to establish a succession plan, as well as pursue this exercise now - not later - when retirement is near?

Murray Gottheil: Founders care about their families, their employees and their legacy. Protecting all of these interests requires giving thought to a number of issues. These include maximizing the value of the business, preparing family members to take on responsibility for the business, establishing conditions under which family members and the business will be able to thrive without the founder in charge, taking steps to ensure that key employees who are not family members will remain loyal, and taking responsibility for not allowing sibling rivalry or other family issues to jeopardize the financial well-being of everyone involved.

Since founders do care about all of these things, one would think it would be difficult to imagine why a founder would have to be convinced to establish a succession plan. However, founders are also human – some are afraid to contemplate what they will do when they are no longer running their own businesses, or to think about their own demise, and these fears prevent them from addressing business succession.

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