Being a good leader is whole ‘nother ballgame in family business

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There’s no one-size-fits-all recipe for leadership, and that goes double in the complex world of multigenerational family business. Family leaders need to wear multiple hats, and their advisors need to emphasize some skills and strategies more than others, say leadership coaches.

David Bentall has gained experience both in his family’s large construction business and now as a family enterprise leadership coach and founder of Next Step Advisors in Vancouver.

To begin with, says Bentall, leaders in family enterprises and those in conventional businesses derive their power in different ways. A non-family executive gains influence through knowledge, experience and achievement, he says, while members of a multigenerational family, by the second and third generations, have gained power by inheritance.

A client once asked him how he could earn his inheritance, but inheritance is a gift, says Bentall. “You can become worthy of a gift, but you can’t earn it.”

Bentall says coaching second- and third-generation leaders is best done by helping them understand and experience the real world of performance management – setting goals, being accountable for them and developing a continuous improvement mindset.

Hard-hitting, regular performance appraisals can be a help, he suggests.

Family members should be encouraged to develop an apprenticeship mindset, says Bentall. “The wisest families I know require members of the next generation to work outside the business for many years,” he says. When they return, they feel competent and are seen as competent by the rest of the family and the business employees, he says.

Bentall adds that family office advisors must respect the multigenerational family owners and complex family dynamics.

He says one of his family’s best mentors understood the importance of managing the overlap between family and the family business. “He didn’t try to manage our family, but he also didn’t try to make us not a family business.”

It’s inappropriate to come into a company you don’t own and start telling everyone what to do, he says. But advisors can demonstrate leadership by deploying emotional intelligence. “I think leading includes … asking, mentoring, consulting, advising, educating, inspiring, encouraging, showing, being curious and even listening.”

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Craig Dowden, executive coach and author of A Time to Lead: Mastering Your Self . . . So You Can Master Your World, says the nature of the enterprise determines which skills are most required for leadership.

“Emotional intelligence – awareness of our own emotions and the emotions of others – is absolutely vital within a family-owned enterprise,” he says.

Some conventional leadership tools aren’t available in a family business. “What if someone is underperforming and not delivering the results we need?” Dowden asks. “What if someone is creating a hostile work environment and treating people disrespectfully?”

In a private business the miscreant would be shown the door, but that’s not always an option in a family business. “The skills of negotiation, listening and empathy are absolutely vital, as well as assertiveness. We must have honest conversations,” Dowden says.

“If we try to minimize or ignore, it just creates more and more difficulty down the line. It really elevates and maximizes the need to have adult conversations … so we can sort our way through these things.”

It helps if the family has worked through a plan to deal with business conflicts before they arise, he says. Being clear and transparent about which role a leader is deploying — leader of the family or leader of the business — is crucial, Dowden says.

Sometimes those two roles are held by one family member, but as the generations advance, the leader of the family may no longer be the leader of the business. As the company develops, for instance, mom and dad have to change from decision makers to coaches, he says.

Leadership in a family office environment can require an inquiry-based orientation, Dowden advises. “You’re asking a lot of questions and clarification questions and open-ended questions so you can get to the heart of an issue.”

The added complexity of having to deal with the multigenerational family and possibly teams of outside consultants also requires that family office leaders define what success looks like for all stakeholders. The leader has to lay out the skills, qualities, timelines and deliverables for all parties involved.

Empathy is required, he says.

“I think the true essence of empathy is understanding what all of the different players are saying, being able to masterfully integrate that into a strategy or decision, and then be equally skilled in communicating that with everybody.”

Monica Clare, a management consultant based in Tillsonburg, Ont., says she coaches families on how they can recognize a business topic, a family topic and a shareholder topic and deal with each one appropriately.

“That way, a family member may recognize something at the dinner table and say: ‘That’s business — let’s put a pin in that and discuss it later.’”

Roles need to be well-defined, and leadership roles might depend on the person’s place in the family.

“If it’s the first generation, usually the head of the family is head of the business, but when you get into the next generation, if they are in the operations end and the first generation has retired … that’s usually when the conflicts start because the first generation hasn’t let go of the business.”

The children may not have the courage or diplomatic skills to say there’s confusion between the parent-child, business manager and shareholder relationship, she says.

Family office leaders and advisors must deploy listening skills and compassion to effectively lead in such an environment, says Clare. And they should inspire compassion in the business family leaders as well.

“Consensus building means being able to listen really well … taking that information in and finding a perspective that resonates with everyone.”

Diplomacy is also required, Clare adds, of advisors who may be called on to communicate potentially unpleasant information.

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