Red, the colour of danger. Provoking strong, often opposing emotions such as love and anger, red warns us of a potential hazard, commonly used in stop signs and traffic lights. But it can also represent passion, love and metaphorical danger such as “red flags” in dating or being “in the red” financially.
And after nearly 20 years of working with family businesses, we’ve seen these metaphors grow from something small and seemingly insignificant to something far greater and at times devastating.
Whilst we talk a lot about red flags in relationships of all kinds, we wanted to create some awareness surrounding the red flags that we’ve noticed frequently show up in family-owned businesses.
- What are the red flags in a relationship?
- How can you identify them?
- How can you turn a red flag into a green one?
Here’s your guide to navigating common red flags in family-owned businesses.
LATENESS
You’ve been chatting for a few weeks and today’s the day. You arrange to meet at your favourite restaurant for a candle lit dinner.
You arrive 5 minutes early and take a few minutes to compose yourself before they arrive.
You pull up a seat at the bar and anxiously keep tabs on everyone who walks through the door. 5 mins, 10 minutes go by. Every second feels like a lifetime.
You check your phone for a missed call or message. Nothing. Your palms become sweaty, and you start to wonder if you have been stood up.
You order another drink and contemplate if you have got the date or time wrong. But then the door opens, and your date casually walks in almost 30 minutes late. No apology, no explanation, nothing.
First impressions count. Trains get delayed. Traffic jams happen, meetings run over, but without an explanation or apology when they finally do stroll through the door, they have zero respect for you or your precious time.
In family businesses, and really in life, we vote with how we manage our time. If something is a priority, we will be there and fully present. If it’s not, then our behaviour will demonstrate as much.
Being late to a family meeting, a board meeting or an owner’s council, etc without advanced notice or reason why, then you are showing disrespect towards the processes and structures put in place to ensure family harmony.
TRUST
They say that without trust, there is no relationship. Trust is arguably the biggest red flag of them all, but what does trust actually mean?
Trust is the belief in the reliability and truth of another person. It serves as a measure of the integrity and honesty of others.
We use this to identify who we can count on to show up when we need them the most. Trust can take years to build and seconds to destroy and can make or break relationships. But sometimes there is a way back when the trust is broken and below are some actions you can take to help to get you there.
- Build trust in concrete ways. Family members must promise only what they can deliver, based on their level of competence. This makes it easier to execute plans and achieve goals.
- Do the right thing first. Trust is built from the inside out and a company won’t be trusted by its customers if it’s not trusted by its employees, so be clear about what you stand for and deliver on what you say.
- Commit to your words. Words are only meaningful if they are backed up through actions. Commit to doing as you say and be known as a person whose words count.
- Seek outside support. This can provide an objective third perspective on the ongoings of a relationship. There are many different sources to draw upon and can prevent the small issues becoming big issues.
- Consistent communication. Be intentional about checking in with family members and do so regularly. This way both parties can openly discuss what areas may need improvement.
RESPECT
Respect is closely linked to esteem and can either boost or hinder it. Respect is critical to human happiness and is quite simple – it is the way in which you treat or think about something or someone. It means that you recognise that he or she is a valuable member of society and that they deserve to be treated well.
Respect is something that we all hope to give and receive – especially from our closest friends, family and colleagues. Yet sometimes a lack of respect can trickle in in subtle, small and seemingly insignificant ways. Left unaddressed it begins to chip away at the very foundation of our security.
There are countless ways someone can demonstrate disrespect and it can be difficult to spot the signs. Below are some of the most common ones that we have found to show up in family business relationships:
- Breaking promises
- Devaluing your ideas and opinions
- Belittling
- Mocking/humiliating
- Making decisions without you
Maintaining healthy and respectful relationships both in the office and at home is not only crucial for your overall well-being, but also for the longevity of the business.
Awareness is the first step to address feelings of disrespect, so pay attention to how someone leaves you feeling. If you are struggling to speak up, then consider engaging an outside and impartial voice to help guide you to a mutually respectful relationship.
NON-COMMUNICATIVE (OR COMMUNICATION)
Ever sent a text or an email and what you intended to say was not how the other person received it. Communication can be a grey area, but none more than when we communicate through a third party. Whether that be a human or technology, the room for interpretation is left wide open.
When we read a text message, we can feel a vibration and energy radiate from the words, and from there our minds can play havoc with what they meant. The same can be said when someone shares some information with you about another person. They are relaying their version of events and so the truth can be distorted along the way.
In all relationships, poor communication can lead to arguments, assumptions, mistrust, and separation. In the workplace, you have the additional pressure of finances. Combine a family and a workplace and you have a potential catalyst for a crisis, where employees and family members can end up feeling undervalued, unengaged and unmotivated.
But it doesn’t have to be like this and with a little foresight, can be prevented. The key is ‘active listening’ and to be fully present, so that you really tune into what the other person is saying. When there is a discrepancy between what is said and what is heard, then expectations are not met, and resentment sets in.
ASSUMPTIONS
“It’s always been this way, so why does it need changing?”
“There’s no point even suggesting that it will fall on deaf ears.”
“I wouldn’t trust anyone around here – everyone gossips.”
Assumption is closely linked to miscommunication because we end up making decisions based on opinion rather than fact. Assumptions based on our past experiences; mean we can tarnish everyone with the same brush. We ‘fill in the gaps’ about why someone may behave in a certain way, without seeking clarification first. For an assumption to be correct, it must be played out in action, otherwise it is nothing more than hearsay.
Assumptions made in family business causes conflict and tension. Instead replace limited thinking with positive intent. Base your decisions on fact, not opinion, gossip or hearsay.
Take the time to ask for clarification, lead with compassion, activate self-reflection and become curious as to whether it is your own narrative interfering.
BOUNDARIES
It’s important to first begin with what a boundary is and why we need them.
A boundary is defined as “the point where something ends and something else begins.”
Often confused with rules – a boundary is not the same. Rules are restrictions you put on another. Boundaries are the restrictions you place on yourself. Both boundaries and rules can be useful at different times, but there is a third contender that we encourage families to engage in – ‘agreements’ which are defined as an understanding between two parties or more.
There are boundaries all around us all the time. You most likely have one around your property in the form of a fence. The purpose is to offer protection, privacy and security. Some boundaries are tangible, and others aren’t, such as those in the context of relationships, but the aim is the same – to keep you safe.
Personal boundaries are best described as the lines we draw for ourselves in terms of how comfortable we feel around others, and show up as physical, verbal or in our personal space.
Boundaries in family businesses can be complex for many reasons, but mostly because the line between what role you are playing is blurred. You might be the founder and a father. You might be a daughter and a manager. You might be a son and the CEO. Distinguishing who is showing up in the office and who is showing up at the dinner table must be clearly defined and communicated. When do you end being the founder, manager, CEO and begin being the father, son, daughter?
Poor boundaries can mean that you often put other people’s needs and expectations at the expense of your own, and inevitably lead to people’s expectations and demands increasing.
We have learnt that a simple reframe can help with clarity and a collective desire for the greater good of the business and family.
- Define your roles and responsibilities at the office and at home.
- First it begins with listening and understanding what someone’s needs and wants are and what is the best communication channel for them to let you know.
- Next, you need to establish the parameters of the boundary and what it looks like in action. We like to think of making an agreement that makes clear what you agree to be responsible for and what you expect of others. Define what you will tolerate at the office and at home and what behaviours you will accept?
- Then, communicate your boundaries with your family and colleagues and then ask for them to be communicated back to you, so you know that they have been heard and understood.
- Next step is to come to an ‘agreement’ that is harmonious and in accordance with each other’s opinion or feelings. Make sure the agreement is communicated in alignment with the chosen communication channel.
- Follow through on your part and decide on the consequences if the other party breaks the agreement.
Don’t get caught in the trap of your Sunday lunch turning into brainstorm sessions or where post-dinner drinks with your co-workers and boss (who is also your dad) happen in the kitchen of your home.
RIVALRY
You share the same parents, the same genes and you’ve many memories together. But just because you are siblings, doesn’t mean you always share the same values or outlook on life. Every family regardless of status, race, gender, ethnicity or culture can suffer with unspoken and often stigmatised issues of rivalry. Typically shadowed by jealousy and envy (which are not the same) rivalry can create an irreparable rift in the family.
Most founders start a business with the intention of one day passing it on to their children. Unfortunately, the transition doesn’t always go smoothly. Fights and competition among siblings is one of the most common roadblocks to longevity of a family-owned business and is why the vast majority of family businesses don’t make it to the third generation.
We have identified two main causes of rivalry. The first stems from childhood, when parent’s display preference to one child over another, either consciously or unconsciously. It creates a space where siblings compete for attention, love and affection and become so intense that they can’t work together.
The other cause is a misalignment of business goals, obligations, remuneration or where one feels more empowered than the other. It may be that one sibling is consistently late to meetings which may or may not stem from personal issues outside of the office.
The two causes require different solutions. The first which is centred around emotional rivalry, the second is centred around strategy rivalry. While emotion-based rivalry is really about the child and the parent, strategy-based rivalry is really about the siblings.
make sure you first define the real underlying problem: Is the core of the rivalry emotional or strategic? Then take the proper course of action consistent with the real issues.
Whilst stories of bad blood amongst siblings feed the demands of popular culture, we have helped many siblings work together successfully through collaboration, instead of competition.
CONTROL
Control in family businesses often shows up where the senior generation holds on to the business, whilst the younger generation is anxious to take over the controls. So, why is it so hard for founders/leaders to let go?
The very idea of relinquishing control can be a difficult thing for founders to accept. After all, it is often their hard work and attention to detail that brought the business to success in the first place. The feeling is similar to being a parent whose son or daughter leaves home for the first time. The parent is full of fear, but at the same time knows that they have to let them go and find their own way.
When founders hoard control over everything, they create a damaging and toxic environment. Family members and employees feel like their wings are clipped. They don’t feel trusted to think or act independently. Founders become bottlenecks in the growth of the company, creating a culture of frustration and intimidation.
Controlling behaviour is a common characteristic of founders but is not always easy to recognise. It takes courage and self-awareness to recognise that a reluctance to let go can damage the company’s long-term success and survival.
The simple truth commonly forgotten amongst the spreadsheets and financials is that a company’s growth relies on its people first and foremost. The importance of making others feel safe, trusted and respected to be creative and take risks is what moves the business forward.
We have witnessed the collapse of many businesses when the founder struggles or refuses to change and adopt a new mindset that works in conjunction with the natural evolution of the organisation. Instead of preparing and planning adequately for a new leader to take the organisation to the next level, the founder hangs on.
If you are struggling to let go of the reins, you might need help to make changes slowly by relinquishing control bit by bit. Succession doesn’t have to be hard, and founders don’t have to constrain or undermine the organization that they sacrificed blood, sweat and tears to build. The ultimate success of the organisation is for the founder to set them up to be self-sufficient in their absence.
INCONSISTENT
“Sometimes they text me every five minutes, the next they go AWOL for days.”
“I never know which version I am going to get. Some days they are incredibly attentive, then without warning, they turn cold.”
“I feel like I am walking on eggshells all the time.”
“They say one thing, but then do the complete opposite.”
If you have ever experienced any of the above, then you will likely have felt what it is like to be in a relationship with someone who demonstrates inconsistent behaviours.
In business it can sound something like this.
“We hear something different every day. Different expectations and directions leave us feeling confused.
“If they don’t know what they are doing, how are we meant to know?”
“We end up getting it wrong, but we don’t actually know what is right?”
“The goalposts change all the time.”
“They talk about trust but don’t trust us to do our job.”
“It’s one rule for them and another for me.”
As a founder or leader in a business, being consistent in your attitudes, behaviours and actions sends a unified message. People look to you as a role model and will match you.
Even a little inconsistency can go a long way. Turning up late to a meeting just once in a month is inconsistent. Offering to take on more work when you haven’t been able to fulfil your existing commitments also demonstrates inconsistency; what might look like willingness, can also look as though you are not able to deliver what you promised.
Erratic behaviour at home and at work creates high levels of physiological stress in relationships – No one can be consistent ALL of the time, but consistency builds trust and there isn’t one thing that makes that happen, but rather it’s shown through repeated patterns and behaviour. It’s not the big things you do but rather an accumulation or what you do every day.
ENTITLED
“How do I deal with my spoiled kids?”
“What can I do now that they already are so entitled?”
“My kids think the world owes them a living”.
The above are very common realities in family businesses and are clear signs of an entitled person. Feeling like they deserve something that hasn’t been earned, entitlement can tear families apart.
We all struggle with entitlement. For Example, you are on a flight, and they run out of your favourite breakfast option. You become irritated with the flight attendant – after all, you are a frequent flyer.
Entitlement never just appears; it is bred through a lifetime of enablement and through an inability to clearly separate family from work. As a parent you love your children, but that doesn’t automatically mean that they should be given a seat on the board or an unlimited bank account.
it’s easy to point the finger at the person who is behaving entitled, but this rarely solves the problem, because the problem often begins with you. Look at what you (as a parent) may have done to contribute to this current state of entitlement or what may have been your role in the current situation.
There are a couple of actions that contribute to the development of an entitled child:
- The parent’s general inability to say “No” to their child’s request. This starts at a young age and escalates as the children gets older.
- The parents are trying to make up for lost time or their feelings of guilt about having money (just as my father did). They try to buy their children’s love.
Finally, entitlement is not just a next generation phenomenon – the founder/senior generation is just as capable of acting/behaving with a sense of entitlement and is often demonstrating to the next generation the exact traits you dislike in them.
Red flags are merely warning signs and can be helpful tools to keep you safe and to guide your decision-making. Family businesses who are willing to acknowledge them and not run from them, are the ones who not only survive past the third generation but thrive.