Recognizing the Importance of Relationships to Succession
By Loyd Rawls
Anyone who has ever been a witness to these pitiful consequences of a family turning on itself will verify that it is ugly. With heirs having the expected burdens of management transition, estate taxes and banking pressures, they can rarely bear the additional emotional burden of intra-family conflict. Relationship friction in a family business is a spiritual handicap that can zap away both the profitability and the ability to carry the business to the next generation.
Recognizing the importance of relationships to the overall process of passing a business to the next generation is a critical aspect of business succession planning. Ideally, an elevated awareness of the importance of relationships to succession sets into action practices that build relationships, and therein increases the strength of the organization and the probability of succession. In cases where the dye is already cast, this same awareness can potentially identify problems and highlight methods through which problems can be resolved.
From a succession perspective, a good relationship is one that facilitates a harmonious synergistic working environment. The existing mixed emotions are not the major issues of family business succession. These feelings certainly come into play in determining the limits of productivity through teamwork; however, if the family members involved can successfully carry on the business and work together, their feelings about each other are not the foremost concern. The pivotal issue is whether the family members can work together for a common goal. Personal feelings become important when these feelings overpower the intention of working together.
Case History: The Rebellious Son
An auto dealer asked me to help with succession planning for two of his three sons who were active in his three dealerships. After getting involved, I learned about his third and oldest son who had come to work in the family business on the ground floor as a used car salesman after serving in the Vietnam War. This dealer was notably a very dedicated Catholic. On more than one occasion, he had personal conferences with the Pope.
While working nights, his oldest son developed a relationship with a young woman who was providing custodial services for the dealership. The son soon fell in love with the young lady who had a child by a previous marriage. The son went to his father to tell him of the relationship and his intention of marrying her. The father told his son it was wrong to marry a divorced woman, and he would not recognize the marriage. The son thought long and hard about his feelings for his fiancée and the demands of his father. The son had very strong ties to his family, but also was head over heals in love.
After several gut-wrenching weeks of indecision, the son told his dad to shove it, quit his job and married this very nice, attractive, hard-working woman. He then took a job across town with a competitive dealer. As I began dialogue with Dad, his rebellious son had grown in his career, having bought three dealerships in a nearby community. More importantly, the spouse of the rebellious son had never been in his home and, as would be expected, his grandchildren seldom visited.
The dad was really stressed that he did not have a relationship with his son or grandchildren. As we were discussing the history of this relationship, Dad hit me with the big question, "How do I get my son and grandchildren back?" I asked, "What are you accomplishing by not recognizing your son's marriage?" He explained that he was abiding by his Catholic beliefs. I further asked, "Are you abiding by your beliefs or are you trying to force your beliefs on your son?" He did not like that question and discontinued the discussion regarding his son. I did not press the issue either, continuing to work on succession dynamics for his other two sons who were in the business.
About a month later, I received a call from Dad, and to my shock, he said that our prior conversation about his estranged son had been weighing heavily on his mind. He then admitted that the honest answer was that he was trying to force his beliefs on his son. We then discussed the issue and compared his current distressing circumstances to the "potential results" of allowing his son to live out of his own beliefs and having the relationship with him, his wife and his grandchildren. I specifically told him that, if he wanted his son back, he would have to embrace his daughter-in-law. The dad said he would think about it.
I would like to tell you this evaluation of his motives, options and the potential results of the options motivated him to run to his son and daughter-in-law and reunite in harmony and bliss. As bizarre as it may seem, that is not what happened. As much as Dad wanted his son back, he just could not accept this previously married young lady as his daughter-in-law. He chose a mind set and attitude that precluded the improvement of their relationship.
A choice can establish the foundation upon which great relationship developments can occur. However, after establishing the foundation, there must be more than just a choice to support the ongoing bond of a relationship between two individuals. There must be mutually gratifying communication that holds the relationship together. Unlike choice, communication is a two-party event which influences the attitudes and conclusions of both participants in a relationship.
Loyd H. Rawls, CLU, ChFC, MSFS, of The Rawls Company in Orlando, Fla. has specialized in family estate and succession planning for closely held family owned businesses since 1973. lrawls@dealeronline.com
