Family Succession and the Art of Communication
Family Succession and the Art of Communication
?This is the 2nd article in a series of four where I do a deep dive in the Four Pillars of Family Succession. The Four Pillars are:
?·??????Build a strong business first.
·??????Communication
·??????Fair comes before equal
·??????Understanding the difference between ownership and control
Refer to our website for a paper I wrote on the subject 2015:
The first article discussed the importance of building a strong business.
?The second pillar is communication, which must be at the heart of any plan, and is very closely linked to being fair. The purpose of communication is to flesh out the underlying needs of the entire family, and to also get an understanding of what fair looks like for the family. In this article I want to specifically talk about communication and will discuss fairness in a follow up article.
?When I am helping a family with their Succession Plan, one of the first questions I ask everyone is “what is your definition of success, with regards to succession?” There are a variety of answers, however, every family I have worked with has said part of success includes the family remaining as a family. They want to avoid unresolvable conflict. The sooner everyone starts talking about this, the greater the probability unresolvable conflict can avoided.
?To be successful, there needs to be a strong understanding of:
?·??????what everyone wants to achieve in their own personal life,
·??????what everyone wants the family to achieve as a family unit and
·??????what they would like the Business (Family Farm) to achieve.
To uncover all of this, there is a process to follow, and the better this is done, the greater the probability of getting the best possible outcome. To do it fully it involves talking to everyone and their partners individually and then bringing the family together to discuss and hopefully agreeing to a vision for the family and the business. No small task. At the start, we do not know what that outcome will be, and it is this fear of the unknown that prevents many families from talking about such a difficult and emotional subject. Some families can do this very well on their own, but a significant number either can’t or would prefer to include an independent facilitator.
?Lack of communication creates a vacuum of knowledge and understanding. It is a scientific fact that a vacuum will not stay empty for long. If a vacuum cannot be filled with facts, it will be filled with assumptions masquerading as fact, and perception then becomes reality.
?If the decision makers do not consult with the family, conflict can occur in one of three ways:
?·??????The decision makers assume they know what the family’s thoughts or needs are and put in place a plan that does not meet them.
?·??????If there is no communication, the family will make their own assumptions of what is happening and will react accordingly. Their assumptions may be quite wrong and therefore their resulting behaviours can become inappropriate.
?·??????Thirdly, if a plan is disclosed, but with no explanation of the reasons behind it, family may misinterpret the intent.
?But let’s go back a step.
?The sooner the communication starts the better. Children are never too young to be schooled in the “way of the family”. So, whilst you cannot set goals for your children, you can mould their values. A strong family influence will help mould values that reflect the family’s values. The better this is done, the lower the probability of having a few black sheep running round the back paddock. The younger the children, the less formal the communication should be, and as they mature the communication should become more formal and structured.
?It should definitely start to get more structured when a family member is starting to think about returning back to the farm. Somebody puts their hand up to come home, and the moment they arrive, you have started down a road to which there needs to be a clear exit or destination. For many families there has been little or no communication regarding succession and this is the biggest source of potential conflict.
?For example, if I am the likely successor, who has spent the last 5 years helping run and building the business, and I have no knowledge of what Mum, Dad and my siblings are thinking, and vice versa, we will all fill our heads with our own thoughts of what others may be thinking. The danger is this will lead to misunderstanding, suspicion, jealousy and ultimately conflict. If this goes on unchecked the situation will become untenable.
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?Communication can be difficult, there is no doubt about that. Most businesses will have some financial constraints particularly if the business is small and the family is large. Difficult conversations handled well and at the appropriate time can build respect and understanding. Difficult conversations that don’t happen only add fuel to an eventual fire.
?Most advisors have dealt with families in this situation. Conflict has arisen, most probably through poor communication. By the time the advisor arrives on the scene all that remains is for the advisor to shut the stable door because the “horse of reason” has long since bolted and can be seen disappearing over the horizon. Shut the door, he won’t be back.
?Once perceptions become entrenched, they turn into reality and can be incredibly difficult to turn around.
?You don’t necessarily need an advisor or independent to be part of the communication process. However, the later the start the greater the value an independent can add. They will help remove the fear of starting and can filter and manage any unrealistic viewpoints. As I say to my clients:
??“if you ignore it long enough it will not go away.”
So, if there is a fear of starting, this can be overcome by simply asking for help. Pick up the phone and ring your most trusted advisor. They may not be the best person to help but they should be able to refer you to someone who can.
?What is Communication?
My good friend Mr Google provides the following as an explanation:
?“Communication is?the act of giving, receiving, and sharing information -- in?other words, talking or writing, and listening or reading. Good communicators listen carefully, speak or write clearly, and respect different opinions.”
The four key words in that explanation are “giving,” “receiving”, “sharing” and “respect”.
We have two ears and one mouth. A good communicator uses them in that proportion. In other words, listen twice as much as you speak.
A good communicator and/or leader doesn’t just tell people what is happening. They listen to what people have to say, take on other view points and base their judgements on what they have heard. They don’t necessarily have to take on board everything they have heard, but they need to at least hear it.
Furthermore, and most importantly, not only do the family need to be heard but they need to know they have been heard.
Stephen Covey, an American educator, author and businessman developed what he calls “The 7 Habits of Highly Effective People”. Habit number 5 is “Seek first to understand, then to be understood.” That is the art of a good communicator. How do you seek to understand? You ask questions and you listen to the answers. Listening is an understated skill. We learn to speak, read, and write at an early age, but we only ever get told to listen, that is, we are not taught to listen, we are told.
Asking questions, listening and learning from the answers and then weighing up your response is not a weakness. “No one is going to tell me what to do!” Asking questions and listening and learning from the answers is in fact a massive strength. However, you also need to demonstrate you have heard and understand. Therefore, you need to be an empathic listener. That means you listen, repeat back your understanding of what you have heard and ask if you have understood it correctly.
For example,
“Yes, I hear and understand your point of view. My understanding is, you believe that one of your siblings is going to be treated more favourably than the others and you believe that is unfair. Have I got that right? - Ok. - However, what I want you to understand is this family would not be in the fortunate position it is in if your Grandparents had not treated me favourably 40 years ago and including you we have all benefited from that. This has been our home, yours included, and it is important to me it is retained, as you have also said yourself. To achieve that we cannot treat everyone equally. You will be helped, but in a different way, and we need to work together to make sure it is fair to you and everyone else. Do you understand?”
I realise this example is a bit scripted or contrived. Difficult conversations seldom pan out exactly as we would like. However, my point is, this example is better than simply saying “It’s my decision to make, I’ve made it and I don’t want to talk about it.”
The eventual outcome of the conversation in the above example will depend on the attitude of the person receiving it, and as discussed attitudes need to be moulded from an early age. Difficult conversations are not easy, and some are better at it than others, but shying away from sometimes difficult conversations will only make matters worse. You need to talk about issues and outcomes before they become difficult, and attitudes become entrenched.
I know some families shy away from discussing succession for fear of uncovering something they don’t want to face up to. Afterall, the discussion invariably ends up leading to discussing sharing significant wealth with those we love most dearly, and if there is not enough wealth to share equally, it needs to be shared fairly. That is difficult.
Not discussing it is not going to solve the issue. As I said above, if you ignore it long enough it will not go away. If conflict does arise through a process of communication, then it was always going to arise eventually, regardless of whether you discuss it or not. At least if conflict does arise during discussions, you have the opportunity to resolve it before something is said and/or done that is later regretted.
Communicating and discussing family succession is a bit like planting a tree. The best time to start communicating was 20 – 30 years ago. The next best time to start is now.
Peter Flannery
Farm Plan Ltd
Peter Flannery is a Southland and Otago based Agribusiness Consultant, specialising in Business Planning, Financial Management and Family Succession.?
Head of Rural Business Management at ASB
2 年Love the quote about the “horse of reason”!