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Effective Communication Drives Family Business Success

Avoid misunderstandings and build trust with these four steps

Back Article Oct 6, 2022 By Peter Johnson

Peter Johnson is the director of the Westgate Center for Leadership and the Institute for Family Business in the Eberhardt School of Business at the University of the Pacific.

Family-owned or -controlled businesses account for over 80 percent of all businesses in the U.S. More than half of all jobs created in the U.S. come from family firms. Yet roughly 70 percent of family businesses won’t make it to the next generation. The biggest challenges these businesses face are rarely addressed.  Even many of the top business schools fail to cover these topics when educating their students. In fact, the No. 1 problem in family business is also the same problem every other organization faces: poor communication.

I have had the pleasure of working with many family businesses over the past 25 years. Watching siblings working together, teaching each other and building on a legacy that their parents or grandparents started is a wonderful thing. On the other hand, I’ve observed painful experiences, such as serving as an expert witness as a son defended himself from a lawsuit brought on by his father. In that case, I watched a father and son who had worked together to build a very successful business tear down not only the business, but the relationships of everyone in the family. I’ve even seen parents keeping grandparents away from their grandchildren as a tool of punishment. 

Virtually every challenge could be eliminated or greatly reduced through better communication and addressing problems when they are small. To help ensure that your family business has a healthy and happy future, you need to communicate effectively, which requires respect, honesty and using the right channel to communicate. 

The recipe for effective communication

1. Show respect, listen in earnest

This story is part of our October 2022 Family Business print issue. To subscribe, click here.

Having clear and open communication can be scary, difficult and messy. Address challenges head on. It may be difficult at the time, but in the end, it will make life better for everyone involved. Always begin communication with respect: respect for the person, their time and their role in the problem. The best way to show respect is to really listen to the other person, not for rebuttal, but to understand their point of view. Someone who doesn’t feel respected will shut down and tune out. Conversation over. 

2. Be honest, no sugarcoating

Second, as leaders we need to be honest about the situation. Often we don’t want to hurt someone’s feelings, especially a loved one. So we ignore issues or sugarcoat them and hope they get better. They won’t. They will fester and eventually you will resent your family member for not knowing what you didn’t tell them. Be respectful while being honest. 

3. Work together on a solution

What specifically is the problem or challenge? Create opportunities to solve the problem together. Oftentimes the problems or feelings shared are symptoms rather than root causes. Be prepared to ask follow-up questions for clarification. Follow-up shows respect for their opinion and that you really want to address and correct the problem.

4. Consider your mode of communication

Lastly, the mode of communication matters. When we are communicating with others, we take in a variety of information for insight into the other person’s feelings, perceptions and values. People tend to believe the main input channel is through the words we use. According to UCLA professor Albert Mehrabian, a researcher of body language, this only accounts for roughly 7 percent of the communication. The remaining 93 percent is made up of body language and tone, which are truer to the message being conveyed. 

Often people prefer to have difficult conversations through an email or text when a face-to-face interaction would be more productive. But if you do go with a digital mode, consider how you can add context. I have never been a big fan of emojis but have learned that with my sense of humor it is often beneficial to include a smiling face to confirm to the reader I am kidding or having fun if something can be read with two different meanings. When and how you communicate helps ensure your message is correctly understood. 

If we are going to build successful family businesses, we need to make sure we are steering communication in the right direction by being respectful, honest and appropriate in our delivery method. The families I have seen over the years that couldn’t effectively communicate always misread the situation based on their lack of respect and trust in one another. As we near the final quarter of 2022, what difficult conversations can you steer in the right direction? Which ones have you been putting off? 

Peter Johnson is the director of the Westgate Center for Leadership and the Institute for Family Business in the Eberhardt School of Business at the University of the Pacific. He welcomes your feedback at peterjohnson@pacific.edu.

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