Nothing Is As Miserable As Family Business Litigation

Every business has its own unique culture, and family businesses are no different. What is different about many family businesses though, is the difficulty they have in holding employee/owner family members accountable for their roles in the business. With the lack of accountability comes a lack of consequences when family members fail to deliver for the team. The team becomes uninspired and unproductive.

Family businesses that do not value accountability in their culture become dysfunctional and exhausting both for the family and business staff. The end result could be not just broken families, but litigation. Nothing is as miserable as litigation between family members, and most of the time, this can be avoided simply with a culture of accountability. It is simple, but not neccessarily easy. Here are some ideas on how to make the accountability conversation in family businesses easier:

  • Identify Roles & Responsibilities
    Make sure everyone in the family knows who serves in what role, then document it.  Assume nothing. Documenting vision, goals, policy, procedures and incentives with all the family members paying attention will make later conversations about consequences and accountability much easier.
     
  • Share The Vision
    Vision Statements provide clarity between where the business is going and how the family proposes to get it there. The family supports the business, and the business supports the family.  How does this look? The Vision Statement provides the context used to measure results against, and it can be linked to a purpose greater than any one family member.  The existence of a Greater Purpose makes it easier to mete out consequences to family members that don’t contribute enough to the overall good.
  • Make It A Choice
    Accountability has the power to change behavior if the contributions are voluntary. If results don’t measure up, a default excuse sounds something like, “I didn’t want to do be a part of this stupid business anyway!” The motivation to take ownership and the willingness to accept consequences for poor results is drawn from the knowledge that we have chosen to contribute.
     
  • Agree On Values
    Documented values support accountability and make it easier for humility without losing face. Values provide guidelines that can be referred to for family member interaction with one another and with the business.

Legal counsel is important for two reasons. One is to make sure you are complying with the law as a normal function of business. The other is to manage litigation. Even when you have the best attorneys on the planet, litigation between family members is not a good experience.

– Peter Muzinich
Reicker, Pfau, Pyle & McRoy

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