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Can We Talk? The Importance of Effective Communication in the Family Business

Can We Talk? The Importance of Effective Communication in the Family Business

“The single biggest problem in communication is the illusion that it has taken place.”
– George Bernard Shaw –

Research shows that 90% of all businesses in the United States are family owned and employ over 60% of the workforce. That is an impressive statistic! But sadly, most of these family owned businesses will not survive past the second generation of leadership and one reason, sometimes the #1 reason, is the lack of effective communication.

Being able to effectively communicate is a life skill every person should have. Open and honest communication is crucial in relationships of every type, be it family, work, or social.  Good communication lays the foundation of all trust-based relationships and partnerships.

But we all struggle with finding the right words at times, or coming across in a way that is not necessarily how we intended. In a family business, when you must be able to communicate effectively as a manager, owner, and family member (sometimes all at once), it is easy to be misinterpreted which can lead to major issues within the family and the business. Add in the fact that most family owned businesses also have multi-generations involved, the manner in which the intended communication is delivered and received by all parties is vastly different due solely to the age gap and the generational differences that go along with that.

When you consider all the moving parts that make up a successful family business, good communication is at the top of my list as the most important element to make sure things operate smoothly. I think it’s safe to say that every article I’ve read on running a successful business has good communication near the top, if not at the top.

Many years ago I was brought into a situation as their family business consultant where the patriarch owner of the family business shared the financials of the business strictly on a “need to know basis.” In his opinion there weren’t many times family members or key employees (or even his spouse) actually needed to know the company finanacials! He even worked with two banks and two accountants just to make sure “no one saw the whole picture.” He was known to say “Just do your jobs, I’ll worry about the money.” Needless to say when he fell severely ill and had to be away from the business for an extended period of time it took months of unraveling to get to the bottom of the situation and get the family members and key employees back on track moving forward with a strategic plan. The good news is that once everyone understood “the whole picture” the younger family members were empowered to make decisions, financial performance improved, and there was less stress.

The task of operating a family-owned company is often complicated by emotional rivalries involving a father/mother and son/daughter, siblings, or other relatives who hold positions in the company, or at the very least derive income from it. When you look at the typical problems that plague family businesses, such as lack of trust or personality conflicts, poor communication is at the core. From major strategic decisions, challenges from the competition, to financial performance (or lack thereof), it is important to keep the family business members connected and informed in a timely manner.

I work with clients in Minneapolis/St. Paul and surrounding communities in Minnesota. Here are some tips to keep the family on the same page:

  1. Whether you hold weekly formal meetings (you should) or just routine structured conversations, keep them focused and clear. This will lead to efficiency, better planning, and more organized management down the road.
  2. Keep emotions out of the workplace. This can be a difficult task to practice, but very important for each team member to ensure their emotions are kept in check. It’s human nature for the emotions and passion to sometimes get out of control, but if left unchecked it will lead to disaster. Stay focused, be open to others’ suggestions, and keep your eye on the end goal. If necessary, bring in a 3rd party, such as a family business consultant, to mediate. It’s a lot cheaper than a family feud, or heaven forbid, a costly legal battle.
  3. Take notes and hold family members accountable for their assigned tasks. Treating family members differently than average employees will lead to two bad outcomes: resentment by the average employees and entitlement by the family members.
  4. Keep your eye on the prize. In my experience, family members all want the same thing “A great business AND a wonderful Thanksgiving.” As family business employees, each family member needs to know what the common goal is for the company and constantly be working together to achieve that goal. Strategizing together, working hard as a team to accomplish next steps along the way and respecting each other as relatives and employees is difficult but critical to success.

Building a company culture of open and honest communication takes dedication and a great deal of effort over an extended period of time. But trust me, as a family business consultant in the Minneapolis/St. Paul, Minnesota area who has witnessed the demise of some companies over the lack of effective communication,  it is worth the effort. Whatever role you play in the company, set a good example, and begin to communicate effectively with your family – this will not only improve the dynamics of your family-owned business today but will result in fewer problem for future generations of family members.

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About the Author

Eric Gustafson delivers results. Over the past two decades, Eric has quietly become a go-to authority for helping owners to elevate their small businesses in the Twin Cities… Read full bio >

2 comments

  1. Jeff Hagen
    April 18, 2016 at 6:05 pm - Reply

    Eric, your consulting is so important in these difficult, but so valuable discussions.

    • Eric Gustafson
      April 22, 2016 at 9:57 pm - Reply

      Thank you Jeff!

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