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updated: 7/13/2018 10:41 AM

Family vs. business: Formal family meetings best

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  • LEO MISDOM

    LEO MISDOM

 

Corporate America wouldn't think of holding an important business meeting on Thanksgiving, Independence Day or any other major holiday, but for many family-owned and run businesses, gathering around the family table over a holiday substitutes for a formal business meeting. Indeed, separating the business from the family is often very difficult to do. Family business ownership means that family members share the same economic conditions and business stresses and are tied more closely than families who do not work for the same company. Family histories and emotional struggles find their way into these holiday family business meetings.

There are a lot of problems with this style of business meeting. Holidays can be stressful times just on their own and trying to discuss important business issues only adds to the stress. In addition, generally there is insufficient time to thoroughly review what the business needs to discuss. Everyone is busy during the holidays and people's attention may be preoccupied and going in different directions.

Outside of the holidays, I see many family businesses only meeting when there is a family business crisis or major life change. Often, many of the issues leading up to these family crises could have been avoided with better communication and regular business meetings.

Another bad habit of family members within a family business is when family communicate one-on-one instead of as a group. For example, the father may tell one child some information, but not to the others, which creates feelings of exclusion and accusations of favoritism or special treatment that can lead to conflict.

I suggest three alternatives for my family-owned business clients:

• Conduct regular scheduled meetings: Families should plan and schedule meetings from two hours to a half day on a regular basis. During these meetings, the family should address both day-to-day business issues and challenges as well as long-term planning. For example, if the senior generation is planning on exiting the business and has a formal exit plan in place for their succession, the family should review the terms of the exit plan with the senior generation.

• Hold off-site business retreats: In addition to the regular meetings mentioned above, I suggest the family members in the business and the family members with ownership interests who may or may not be working inside the business, hold a business retreat once or twice a year. Besides covering short and long-term business, they can include educational sessions, team-building exercises, and other developmental activities. Retreats are usually held over a weekend at a resort or other off-site facility. Whether spouses and children are invited is a decision for each business -- as long as the business functions are not disrupted by their attendance.

• Consider using an outside facilitator: Over my many years serving family-owned businesses, I have often been pulled into a family conflict as a "neutral party." Having an outsider present can lower the emotions and help keep the family on point in solving the crisis. For example, if the family is dealing with some difficult or sensitive issues, a facilitator can help raise problems a family member may be reluctant to bring up, push the family to address sensitive or difficult issues, and help depersonalize the process.

Communication is vital to the success of a family-owned and run business. Families who commit to regular business meetings and annual retreats will find that their investment of time and money will pay off in improved communications, a more businesslike approach to solving challenges and less stress on the family relationships that together translate into more stability for the business and the family. So, stop talking about the business on holidays and enjoy spending the holiday with your family.

• Leo Misdom, CPA is a principal in the accounting firm of Dugan & Lopatka, CPAs in Wheaton.