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How Boundaries, Borders Work in Family Businesses

As we watch Russia and the Ukraine in a deadly struggle over territory, it brings to mind other kinds of issues of demarcation. Family businesses always struggle with the balance between family and business. If borders are firmer than boundaries, let’s see if we might differentiate between the two where family enterprise is involved.

Borders
When borders are crossed by alien forces, challenging the sovereignty of a nation, war is a likely outcome. There are some parallels in family firms. When someone crosses over some line (often imaginary), a battle will likely ensue between the parties. Borders are strong and dare not be crossed unless you are willing to suffer the consequences. In the balance of a family business, the borders are similar to those you might find in a good novel: love, hate, greed and jealousy. Crossing some line in any of those emotional realms would be akin to non-military attack.

Families are built on love, but not always the same love. Supposedly sibling rivalry begins with the birth of a second child because the fight for parental love begins (and some say never ends). If this border isn’t strongly maintained by the parents, it is likely to erupt into a war. How parents handle the intricate dissemination of love to their children over the course of a lifetime will prove critical to how those siblings get along. Furthermore, how children are treated, mentored, compensated and promoted can be seen as a demonstration of parental love. Perhaps, even which children are “invited” to join the business can be seen as an act of parental love. Navigating these borders can be tricky!

Love between siblings, or more extended family, can also be a border. Once we get to a third generation (G3), and the company ownership is now in the hand of groups of cousins, is the reality that one must be loyal to their siblings over cousins? If that line is crossed, siding with a cousin over a sibling, is that a declaration of war?

Hate is another border. It’s one we hope to never experience because it is ugly and hurtful. If you cross the hate border…well, let’s just say bad things happen and they often lead the evening news. Is hate the flip side of love? Is the so-called love/hate relationship a border crossing? When love turns sour, is it then hate? How would hate play out in a family business? A strong enough hatred between key players in the business will probably lead to either one leaving, or the business becoming the victim. Both the outcome of war!

Greed is taking what isn’t yours or what you aren’t entitled to. Usually greed’s playing field is money, but not always. We can get greedy about things, or power. Power greed can be every bit as much of a border as money. That’s why good governance in a family firm is so critical – it should prevent power grabs. When someone passes that imaginary line of being too greedy, war will break out.

Jealously is more underhanded. Most everyone claims to have no jealously, but we all do. “Dad always loved you more and that’s why he gave you the presidency,” is a strong battle cry filled with jealousy (founded or not) and cloaked in the love issue. “I wish I was as good as you at….,” is another jealous mantra usually questioning the dissemination of genes, education and opportunity.

Crossing borders leads to war. Winning a war leads to control. In the family business setting, crossing a border and winning a war can become very lonely as the family will suffer. Obviously, war should be avoided at all risk. Finding ways to maintain healthy realistic borders might be found in good boundaries.

Boundaries
Going back to our example of countries, let’s look at the relationship of borders to boundaries. Exactly what is a demilitarized zone? Or a UN sanctioned election? Or a no-fly zone? Aren’t they all some attempt to maintain borders by establishing boundaries?

Good fences make good neighbors. Fences aren’t borders they are boundaries. Transparency and open communication is the key to good boundaries. Transparency is allowing everything to be seen, and open communication is answering the journalistic questions of who, what, when, where and why. The communication needs to have a home – like management, board and family meetings. There has to be a place for all voices to be heard.

UN sanctioned and monitored elections allow the vote to be transparent to the world and the outcome to be endorsed. Demilitarized zones and no-fly zones are ways to open communications by diffusing tensions. Likewise, in the family business setting, open board meetings, compensation policies, financial reviews can be ways to diffuse tensions. Good policies are good boundaries. Performance reviews with established metrics are good boundaries. Hiring and promotion practices supported by written policies are good boundaries.

In summary, if good boundaries are established and maintained, then the typical borders that cause family business war – love, hate, greed and jealousy – will remain good reading in novels and not be the basis for real life soap operas.

Richard Segal

Rick Segal is the principal at Segal Consulting. He holds an Advanced Certificate in Family Business Advising with a Fellows status from the Family Firm Institute. Rick is the founder of the Family Business Council and its affiliated study group. Reach Rick at [email protected] or by visiting www.segalconsulting.biz