Sibling partnerships - business

Nation's Business, Jan, 1992 by John L. Ward, Craig E. Aronoff

"After many years in business together, my brother and I finally realized that all we ever talked about was business," reflected a central Michigan auto-parts manufacturer. "We had long stopped doing other things together and taking a genuine interest in each other's personal life."

Then the business began to unravel. He and his brother began to disagree more and more about business issues, and as they did, they began to avoid each other. "Eventually," he said, "we were only able to have icy discussions on functional topics."

More than ever, family-business success and survival depend on good sibling relationships. About 50 percent of the owners of family firms in the United States expect that in the next generation, their businesses will be jointly owned and managed by two or more of their children.

Family partnerships can have great power. Many fathers have told their sons that "if you boys stick together, you can lick the word." But sticking together is easier said than done. Many family-business experts believe that shared family ownership almost inevitably fails.

Equal partnerships are fragile business structures. Ego, stress, disagreement, or perceived unequal effort can undermine the human relationships that sustain a business. We believe, however, that relationships among family-business partners most often fail from neglect.

Because they grew up together--in the same home, of the same parents--brothers and sisters often reason that their relationships with one another are secure. They take their bonds for granted. Like all other relationships, however, sibling relationships need continuous care and attention.

One family business we know is run by four brothers. Their father founded the business and retired without designating a successor: "You guys figure it out," he said. Such an attitude sometimes paves the way to disaster, but in this case, Dad's confidence was well placed. Before the brothers decided who would be president, they developed four principles to guide their relationships and deliberations. These principles helped the brothers to define their responsibilities and have produced an 18-year partnership that has been productive, profitable, and satisfying.

Here are the principles:

* Give each other plenty of space at work.

* Spend lots of time together away from work.

* Regardless of title, each is an equal owner--major decisions require consensus.

* Focus on what's best for the business.

Other sibling partnerships can benefit by following these guidelines. Let's look at each in greater detail:

Space. One set of brothers we know faced constant conflict at work. "I make a decision, and then Jack contradicts me," said one. "The reply: "Well, you do the same thing to me." Each felt responsible for all aspects of the $20 million business. After clear lines of authority and responsibility were established and respected, conflict diminished significantly.

The successful sibling managers we know have a division of labor. One is "Mr. Outside," and the other is "Mr. Inside." Or each runs a different division or store, or each operates out of separate locations.

Just as important, they don't crowd each other's decision making. One sister says it this way: "We don't tread on each other's ego sanctuaries. We know where the other wants to feel expert and contribute; we respect that."

Time. Spending time together away from work deepens a relationship. Many sibling partners meet together once a week at a coffee shop and talk about family, sports, politics, and the like. Others share a regular common interest, such as golf or season tickets to the symphony or football games. These interactions take the edge off business differences.

Consensus. Most sibling partners we know have consciously decided to be equal partners. In decision making, they recognize that unless each partner agrees, it will be a problem.

They also agree to equal pay and perks. They reason that with equal ownership positions, any differences in pay, even if objectively determined, are trivial.

What's Best For The Business. The most important point of agreement is, of course, that the good of the business comes first. This enables siblings to better distinguish what is self-serving from what is best for all. Sibling partnerships work better if they set concrete business objectives and if they review their strategies and results with an outside board of directors.

Siblings in business together face several sensitive issues. What if one has a gripe? How do you evaluate each other's performance? What about the spouses' opinions? Successful partners suggest the following:

* Talk gripes out privately. Let your partners know how an issue makes you feel. We recommend "air-it-out" retreats once or twice a year to review relationships. Most important, don't complain to a third party.

* Speak positively of each other when talking to your spouses, and don't use them as outlets for complaints. Husbands and wives, unfortunately, hear gripes the most. After they have heard nothing but negatives, it's no wonder they begin to judge their spouses' partners harshly.