How Family Business Advisors Can Help Communicate Difficult Topics

Posting by Geoffrey D. Brown, CPA

Family business leaders have many responsibilities and roles. These often cross lines between business matters and personal family concerns, and therefore cover more topics of a sensitive nature than just one or the other. This is more than one person could or should typically handle, especially when that person is responsible for the overall business. That’s where family business advisors – typically a mix of professionals including a certified public accountant, an attorney, a banker, an insurance agent and perhaps a stockbroker – come in. These experts in their fields, and in family businesses, are intended to help the family business owner with planning and decision-making, but also in the communications of these activities: to the employees and stakeholders alike. When an issue is difficult to discuss, it is often because there has been no planning for it, fear about discussing it, and possibly a complete avoidance of the topic altogether in lieu of a resolution.

General attributes of family business advisors that aid in communications. A very good CPA can perform many activities; a good CPA with additional “soft skills” in communications and knowledge of typical issues family businesses face can serve as a primary business advisor. The ability to convey in layman’s terms particular financial situations and other difficult-to-understand circumstances can aid the family business owner in discussing these issues with the firm’s employees in an objective and clear manner. In fact, any family business advisor should be an expert in the clear communication of complex matters, and should have a natural objectivity by virtue of not being part of the family or of the business.

Advisors also lend credibility to the message being said, as an employee’s confidence in the business owner’s knowledge of, for instance, employment law would not be as high as it would for an actual attorney. Finally, these experts in their respective specialties also serve as family business advisory members due to their experience with many other family businesses in similar situations. They have familiarity with the family business without undue influence upon them by the family itself.

Communication instead of avoidance for difficult topics. No one wants to be the bearer of bad news, and sometimes even potentially good news, if it could be interpreted in a negative way. There are many issues that would be uncomfortable to discuss in a family business no matter what the circumstances. For instance, communicating to employees that one of them has committed fraud could very possibly affect morale and trust among workers. But even communicating that the firm is taking preventative steps to prevent fraud in the first place can be tricky – some employees may feel that the owner doesn’t trust them or is favoring family over non-family employees. A CPA could more clearly explain what fraud is, how to put proper accounting procedures in place, actions all employees (including management and family members) should take, and how an anonymous tip line to report suspicious activities could function. By having this outsider give a general overview of the activities rather than an owner focusing on perhaps one suspicious situation, the recipients of the information are less likely to take it personally, and therefore would be more open to focus on the preventative suggestions.

For a legion of reasons, family businesses often don’t put a succession plan into place, and leave to chance how the business will fare at the perhaps unexpected death, illness or disability of the owner. If not already an advisor to the firm, the newly hired family business advisor should have experience in handling the communications of the death or illness of the leader to employees, vendors, clients and the community. Better still, if this advisor was on hand from the start, he/she could open up the subject of succession earlier, navigating through the fears and inexperience of the owner to help management start the discussion which could then lead to planning. Family feuds, poor financial performance, leadership transition to a non-family member, employee compensation and other sensitive subjects could be handled by family business advisors to make the best of communicating difficult news.

Getting to “yes” with consensus. Family business advisors assist in the requisite planning necessary for family businesses and setting up some of the tools involved, such as creating a board of directors or a family council. Knowing what needs to be discussed in advance, and knowing there will be a fair way to do so, gives stakeholders a sense of being heard and considered. A typical approach in guiding family meetings, for example, could be to: discuss with individual stakeholders their goals, point of view and possible challenges; bring all parties together with ground rules clearly set and monitored by the family business advisor; and facilitate the communication of the results of the process so that everyone understands how the issues were decided. A more formal “playing by the rules” environment and being watched by an objective outsider can eliminate the tendency to become emotional or to make a disagreement personal.

No one person can serve as an expert in all matters. The collective experience, wisdom and collaboration of an advisor and family business that communicate openly and regularly with internal and external stakeholders has a greater likelihood of communicating difficult issues with tact and purpose, and even possibly preventing some of the troubling topics from becoming necessary in the first place. Learning from advisory members’ objectivity, careful planning, and the ability to speak both the language of business and the language of family dynamics can guide the family business owner to better communications in all circumstances.

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