The Family Business Advisor



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The Family Business Advisor
April 2011 Issue


Who are you?
What do you believe?
What is it you want to do?

 

 

 

By JoAnne Norton, Ed.D.

 

The answers to the three questions in the headline above help us define ourselves as individuals, and they can also help us define our family businesses. These questions are crucial for leaders of family businesses to ask themselves, whether they are family members or non-family executives. These questions are at the very heart of Murray Bowen's Family Systems Theory.

 

Bowen, who was an accomplished psychiatrist and pioneer of family and systems therapy, believed that when we have a clear understanding of who we are, what we believe and what we want to do, we are better "defined"----that we are more "differentiated"----which is vital for both psychological and physical health. In our consulting work we find when all family owners agree what the family business is, understand what their shared beliefs are and what they want the family business to do, they are more successful emotionally and financially.

 

For well over a decade, I served as a non-family executive in a large, fourth-generation family business. I found Bowen's theory extremely instructive when dealing with the family owners as well as non-family leaders, and I continue to find the theory valuable when consulting with family businesses today. In addition, for the past seven years I have conducted research in this area and I have found those individuals who are what Bowen called "differentiated" make exceptionally successful family leaders.

 

In my first study I interviewed a dozen non-family CEOs of highly profitable family businesses who were successful with family owners and in their communities. All 12 of the non-family CEOs in this study had stories of times when they had to take a stand that was not popular with the family owners. By being very clear in their thinking they were able to communicate to family shareholders where they stood, what they believed and what they thought should be done.

 

Some of the non-family CEOs had specific anecdotes of how they were able to define themselves, and the boundaries of what they would or would not do. One explained: "There were two or three instances of where I just had to stand my ground and say, 'I don't care whether you want to do this or not; this is what we have to do, or you have to find somebody else to do it,' or I had to draw a line in the sand and say, 'This is it.'" The second-generation owners of this company appreciated this non-family CEO's candor, trusted his leadership and he served them successfully for over 20 years.

 

Another CEO was able to stand his ground by giving family shareholders what he called a "reality check." He put it the following way: "I had to go to the owners and try to explain to them what the business needed. They usually have their own set of rose-colored glasses on, and I try to get that rose coloring off so they can see the reality of what's going on."

 

As another example, a non-family CEO of a European family business helped the family owners understand his position by educating them. He said: "You own a $200-million business that has four divisions to it. I am standing my ground right now to tell you that one of the divisions must be shut down, because the time and the dollars it's going to take to fix it are not worth it." As the owners have a different paradigm----one that includes an emotional attachment to a legacy business----this was a hard sell, but it was important.  "I helped them understand that this division was bleeding to death and taking resources, talents and time from the other three divisions."

 

At the conclusion of my research with non-family leaders, I was convinced that successful non-family CEOs were able to take unpopular stands and that they were able to preserve a degree of autonomy in the face of pressures from the family owners. They were, in Bowen's term, "differentiated." This led me to wonder if effective family CEOs were also well differentiated.

 

In the next phase of my research I surveyed family leaders. The family CEOs whole-heartedly agreed that they had to be able to stand their ground with family members. One of the family CEOs commented: "You must always tell it like it is." Another said, "this is perhaps one of the most difficult aspects of running a family business." Knowing just how far to go gave one of the family CEOs a reason to pause. "While an honest appraisal of the company's situation is always appropriate," he said, "drawing a line in the sand is usually too challenging a position to take. Part of the CEO's competency has to be diplomacy." This is also a good illustration of the difference between a non-family CEO versus a family CEO. Where non-family CEOs can walk away from their jobs when family members choose to go a different direction in the business, family CEOs have a family relationship to be concerned about as well. For family leaders, using diplomacy and being differentiated can be a more complicated dance.

 

My research with family and non-family CEOs has convinced me that those who lead family businesses must be emotionally mature and well differentiated. The CEOs and the family owners should be able to clearly articulate who they are, what they believe and what they want to do. They need to have ample opportunities to communicate this information both formally and informally, in casual conversation as well as at family meetings and family retreats. Family members and family leaders also need to learn how to "stand their ground" and recognize how the comfort of the togetherness force can sabotage even the best efforts at differentiation. Families need to develop codes of conduct so they can learn how to handle inevitable conflict productively.

 

It is worth noting that Murray Bowen himself grew up in a family business that still exists to this day, and his early experiences must surely have shaped his thinking about families. When Bowen (1994) described how "ideal family treatment begins," he could just as well have substituted "Family Businesses will be successful"

 

". . . when one can find a family leader with the courage to define self, who is as invested in the welfare of the family as in self, who is neither angry nor dogmatic, whose energy goes to changing self rather than telling others what they should do, who can know and respect the multiple opinions of others, who can modify self in response to the strengths of the group, and who is not influenced by the irresponsible opinions of others . . . A family leader is beyond the popular notion of 'power.' A responsible family leader automatically generates mature leadership qualities in other family members who are to follow." (p. 243)*  

 

The significance of my research for families choosing either family or non-family CEOs is that they should find someone who is differentiated; someone who fits Bowen's description of a "family leader." The suggestion for leaders of a family business is that they need to continually work on defining their core selves, realizing that it is not easy but certainly worth the work. Finally, the implications for families who own businesses together are that they would be well-advised to present a united front to their non-family employees. Families, owners and non-family executives are most effective when they are working towards the same goals. A good place to start is by answering these questions yourself: Who are you? What do you believe? And what are you going to do?

 

*Bowen, M. (1994). Toward the differentiation of self in one's family of origin. "Family Therapy in Clinical Practice." Norvale, 461-465 NJ: Jason Aronson.



Meet the Author
JoAnne Norton

JoAnne Norton, Ed.D.

  


Dr. JoAnne Norton, a consultant with the Family Business Consulting Group, specializes in advising large, multi-generational family businesses. She works with families to improve communication, to develop the next generation of leaders, and to coach non-family executives.

A former non-family executive herself, JoAnne understands the unique challenges faced by executives who are not owners but are working in someone else's family business. For more than a decade, she was the vice president of shareholder relations for Freedom Communications, a family-owned media company, where she worked with the 65 family owners and served on the leadership teams of four different non-family CEOs. Few professionals share JoAnne's unique experience establishing a shareholder relations department dedicated to family governance, leadership training and coaching.

Continue Reading JoAnne's Biogrpahy

 

 

The Family Business Advisor Archive

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March 2011

Respecting 'Close Enough' in Family Business

 

February 2011

Family Commitment Yields Transition Success 

 

 

January 2011

Leading the Board: Qualities of an Effective Chair 

 

December 2010

Effects of the Current U.S. Regulatory Environment on Family Business 

 

November 2010

Building the Best Team Possible: Relationships Between Family and Non-Family Employees 

 

 

 
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