For Families Common Cases

In order to protect client identities, I have created fictional scenarios that are very much like the situations my clients face—and ask me for help to resolve. I hope they give you some idea of the kinds of conflicts where I may best assist you.

Case One: The second generation’s push for change

Jane is the founder and CEO of a well-established manufacturing business with partnerships with five different distribution outlets. Jane’s nephew, Larry, the son of her brother and sister-in-law, has been in the business for some time. Jane’s sister-in-law is in the business as well. Larry is pushing for more innovation in the product line, but the family isn’t sure the changes are necessary. With that push-back, Larry has decided, with the backing of his parents, to start a competitive company.

My Assessment

The family is now divided and in conflict. The disagreement with the nephew, who is still working in the business, and the resulting family dynamics, are now intruding on the work of the business. People are taking strong positions and family relationships are in jeopardy.

My Solution

The family needs to realize that Larry’s actions were born from failing to agree on how to move forward together. After lengthy discussion and multiple coaching sessions, the family agreed that Larry should develop the other company. The two organizations would have a strong working partnership to benefit from economies of scale. Larry’s company was established with funding and assistance in staff and management training by the family firm. In return, Jane held a 1/3 minority share position in the new firm. Larry sits on Jane’s board while Jane sits on Larry’s.

Case Two: Leadership Crisis

An active entrepreneur at 75, George has a thriving service business with offices in four cities. Three family members are active in the business. Harry is his eldest son, Robert, the middle child, and Isabel, his daughter.

George has always had reservations about Robert’s competence in the business. Mary, Robert’s wife, feels he should be asking for more money, a better position, and demanding more respect for his contributions. Isabel’s husband, Rory, is a lawyer, and has been pushing for a transition in ownership. He feels that Harry and Isabel would be better at running the company and make it more profitable.

While George has been considering relinquishing control, he is unsure about what he will do to occupy his time afterwards. George needs a three-way bypass, which could happen in the next few months. The whole of the family is becoming stressed by the uncertainty introduced by this surgery.

My Assessment

The family is forming cliques and having discussions that result in circular conversations. These always have a victim, a villain, and a hero where the roles are endlessly exchanged. The uncertainty about George’s role is creating anxiety. There is a lot of gossip and speculation going on throughout the business. All of this is beginning to impede work planning in the office, and productivity.

My Solution

First, we brought the family together in order to effectively separate the family issues from the business issues. We worked towards creating an agreement around what was best for the business, and simultaneously created some concise goals for the family. Next, we established clear mandates for each family member by determining who was responsible for what in both the family and the business. To facilitate future decision-making, we established a Family Council, which gave everyone a voice. This eliminated the unproductive “outside the room” conversations, triangles and gossip. It became clear after a year that George actually was not happy in the company and wanted to pursue a teaching degree, which we helped him transition into. This move not only made George happier, it removed much of the uncertainty and anxiety in the family.

Case Three: Sibling Squabbling

Stephen, 65 and Gloria, 60 are the owners of a number of real estate offices and development properties. They worked together to build this business and have four children: Kevin, 35; Lucy, 26; Sarah, 23; and Cynthia, 21. Only Kevin is in the business. He has made significant contributions to the success of both the real estate businesses and the agencies. He has foregone the salary he would have received at other enterprises believing that his father and mother will compensate him in terms of controlling assets in their wills.

Stephen and Gloria are considering selling the offices and just managing the real estate assets. This is very stressful for Kevin as he is counting on this position being a lifetime career. The children want to know how the assets will be divided and what is going to happen.

My Assessment

An issue of assets, i.e. money and equal shares, is beginning to create stress between family members. There are some very harsh words being exchanged and positions taken that need to be defused.

My Solution

To alleviate conflict and improve communication, we first established a Family Council for family discussions, together with a separate discussion process for those actually in the business. As Kevin is most invested in the real-estate businesses, it was agreed that he could purchase the real-estate business on very favorable terms with accommodation for his significant contributions to the businesses. The father and mother met with all the adult children to explain the logic of their decision: it was fair for all, and it allowed Kevin to serve as manager of the real-estate assets. Kevin, in turn, was overseen by a Board of Advisors which included the parents, the sisters, and their accountant and lawyer. The real-estate holding were valued and, in discussions with the parents’ advisers, estate freezes were developed for the real-estate assets together with a provision for any sibling to be bought out upon notice. Dividend ratios were to be determined in consultation with the Board of Advisors and the parents. Once the parents were both deceased, the dividend amounts were to be decided each year based on a ratio of disposable income.