At the start of a new academic year, let me first extend a warm welcome to everyone! The Chair of Family Business team is back, with our batteries fully charged and ready to continue offering you new insights and ideas to boost your firm’s performance.
For my first article of 2023-24, I would like to go back in time to early summer, when I attended the annual IFERA (International Family Enterprise Research Association) Conference. Held at Jagiellonian University in Kraków, Poland, the event examined the paradoxes and ambiguities in family-firm research.
This article will shine a spotlight on one of the many themes explored: the essential but often overlooked importance of effective communication in entrepreneurial families.
Family firms and the Möbius strip
The IFERA conference kicked off with Prof. Arist von Schipple, who compared the intrinsic complexities in family and organizational dynamics to an endless-loop Möbius strip.
Formed by joining the ends of a paper strip with a half-twist, these “non-orientable surfaces” make it difficult to consistently distinguish clockwise from counterclockwise – in other words, to know whether you’re coming or going.
When it comes to communication flows in family firms, the metaphor is clear: an actor’s perceptions, perspectives and inferred meanings can vary dramatically depending on which side they assume they are facing. Is the message coming from the sphere of family, firm or shareholder?
Easy in theory, hard in practice
On a theoretical level, we all recognize that each domain has its own ground rules, yet the diverse demands embedded in family and business systems make it challenging to navigate these ambiguities in practice.
As Prof. Thomas Zellweger aptly observes, behaviors deemed acceptable in one domain might be categorically rejected in another:
As the three systems (family, business and ownership) are present in parallel, people struggle to recognize which behavior is appropriate in certain situations. This problem is intensified […] because the family business system does not automatically provide information on which system the actor finds him-/herself in.
In the following section, I’ll offer seven insights on how family business leaders can enhance communication in their firms and attain this delicate yet decisive balancing act.
7 ways to enhance communication in family firms
1 – Clearly delineating company roles
Stress, tension and friction can surface when personal and professional lines become blurry, which is why strong boundaries and clearly defined roles are key. By delineating these circles, family-business members are better able to focus on the business and contribute to its growth by specializing in areas where they excel.
2 – Building trust and transparency
As Prof. Jeroen Neckebrouck notes in Forbes, trust is central to stability in an environment laden with both emotional and financial investments. In a context of open dialogue and psychological safety, family members can freely voice their opinions and concerns, reinforcing trust and the long-term success of both the family and the firm.
3 – Reinforcing decision-making and governance systems
Decision-making in a family-run venture is often colored by personal relationships and emotional attachments. Effective governance values what each family member brings to the table, with clear communication serving as a conduit for shared decision-making.
4 – Enhancing conflict resolution
Conflict is inevitable in any human system, and especially in family-owned firms. Since collaboration drives innovation, sometimes it’s better to “agree to disagree.” Differences of opinion can boost the firm’s performance when properly channeled, and when their root causes are successfully uncovered and addressed.
5 – Ensuring smooth successions
The long-term viability of a family-run firm is largely determined on its capacity to ensure a smooth transition of leadership from one generation to the next. Open communication about future directions, the involvement of younger members and well-defined retirement plans can facilitate this process.
6 – Encouraging innovation through knowledge sharing
Healthy workplace dynamics promote a natural exchange of ideas, leading to a fertile terrain for innovation and creativity. For family firms, the ability to harness intergenerational expertise by merging the experience of older members with fresh perspectives of younger ones can be a unique source of inspiration.
7- Facilitating work-life balance
In the world of family firms, striking a work-life balance is like walking a tightrope. When discussing the need for clear boundaries and fluid communication, organizational psychologist Adam Grant put it this way: “Data: leaders are nine times more likely to be criticized for under-communicating than over-communicating. Those who say too little come across as unclear and uncaring. When you’re tired of your message, it’s just starting to land.”
For owners and executives navigating the complicated dynamics of a family-run enterprise, the message is clear: neglect communication at your own peril.
In future posts, we’ll focus more on effective communication at the owner, family council, management and governance levels, as well as the intersection of external communications and social impact.