Family firms that span generations have at least one built-in advantage: people who grow up living and breathing a business may one day step into management roles with a depth of knowledge, commitment, and perspective that is tough to come by any other way.
But this does not mean leading a family business is conflict-free. In fact, according to Brooke Vuckovic, an adjunct lecturer of leadership coaching and co-academic director of the Leading Family Enterprises executive education program at the Kellogg School, the potential for stress and drama can be magnified.
“All leaders deal with conflict, but it’s a different order of conflict when it’s between you and your mother, father, or brother-in-law,” Vuckovic says. “Given the history, complexity, and intimacy of family ties, typical business conflict becomes more fraught.”
With this in mind, it is especially important—for both current leaders and their successors—to foster social and emotional intelligence in themselves and across their organizations. Social–emotional intelligence usually refers to four key competencies: self-awareness, self-management, social awareness, and relationship management.
“Because they cannot compartmentalize work, family, and personal relationships, there’s a unique and heightened emotional agility that’s required of family-enterprise leaders,” Vuckovic says. “Focusing on these competencies can help leaders build the emotional agility their roles demand.”
Learn more about Kellogg’s Leading Family Enterprises executive education program here.
Self-Awareness: Get Beyond the Plaque on the Wall
“One of the advantages of a family business is that successors have a lived experience of the business well before they play a significant role,” Vuckovic says. “It’s been inculcated in them, and they pick up a nuanced understanding.”
But successors also face the pressure of living up to expectations or being compared with preceding generations. “In a family business, when you look around, that’s not just a plaque on the wall—that’s your grandfather,” Vuckovic says. “And it isn’t always easy living with the sense that a family legacy is at stake.”
The key to navigating these pressures is self-awareness. New family leaders must first identify their strengths and interests and figure out how to use these assets to contribute to the enterprise. Whether or not their leadership style differs from that of the previous generation—in terms of charisma, for example—it is important for them to emphasize that the company’s core values—and its culture—will remain stable. For instance, a family leader might call on “a long, venerable history of innovation” as she pushes for expansion into new territory. This makes room for her vision, while linking her plans firmly to the company—and family—history.
Family leaders must also build self-awareness based on the perceptions of others. This means having open and honest conversations about performance. “Family members are notoriously not given the feedback they need,” Vuckovic says. Sometimes, even if there are robust performance appraisal systems in place, family members are exempted from them, which can lead to negative perceptions.
In this case, using a simple 360-assessment instrument can be very effective.
“The trick with feedback is not just to seek it, but to receive it graciously and respond to it,” Vuckovic says. “Family leaders, in particular, must make it safe for others to give them feedback. Receiving feedback with a neutral party in an environment where they feel safe, is critical.” This allows family leaders to take perspective and decide how best to adapt.
Self-Management: Map Out the Landmines
“In a family business, there are more emotional landmines,” Vuckovic says. “It helps to create a map of situations where your roles as family member, shareholder, and operating leader may collide—one that alerts you of the areas to tread carefully and to set your intentions in advance.”
The potential for conflict within a family business makes it important for leaders to learn to recognize, plan for, and deescalate their own negative emotions. Specifically, leaders should master their own “triggers” and “signs.”
“Triggers” are the people, scenarios, and topics that have the potential to set us off. Triggers can range from the aunt who publically second guesses you at family gatherings to the cousin who rarely shows up for work, to the handful of topics such as dividends, family employment policy, or board composition, that reliably get a rise out of you in discussions with other managers or family members.
“Signs” are the physical manifestations of negative emotions, such as anger, frustration, or disappointment.
“Does your jaw clench? Your face flush? Do you collapse into a defeated posture? The more aware you are of these signs, the more likely you are to catch yourself before you react in a way that you won’t be proud of,” says Vuckovic. Recognizing these signs in yourself allows you to take the time and space needed to respond—rather than react—to the situation at hand.
“It isn’t always easy living with the sense that a family legacy is at stake.”
Of course, this is sound advice for a leader of any business. But there is a tendency in family businesses to forget about the importance of nonverbal cues. While we may be cautious about raising our voice when dealing with nonfamily members, “sometimes, those guards are lowered and people get sloppy when it comes to dealing with relatives,” Vuckovic says. She advises family business leaders to remember the importance of a productive tone, positive body language, and basic processes, like having an agenda.
“You want to be on your game, especially if you are treading on difficult territory,” she says. “People face stressful situations with much more grace when they have stated the goals of the meeting clearly and can rely on a set agenda to guide them. It is so simple, and yet so frequently overlooked when you are sitting down with your sisters and brothers.”
Social Awareness and Relationship Management: The Importance of Empathy
“A big part of social and emotional intelligence is being able to manage relationships based on an understanding of others’ emotions,” Vuckovic says. “For leaders of family enterprises, empathy is crucial—yet it is often underrated.”
In a family enterprise, where the stakeholders fall into three interconnected circles—the ownership, the operating business, and the family itself—understanding the perspective of each stakeholder is especially challenging. For example, a highly experienced in-law might be upset that he was overlooked for the CEO position. Or a new generation of leaders might be at odds with the previous generation, who are invested in certain traditions or ways of conducting business.
“You need to be able to step back and assess these issues objectively,” Vuckovic says. “Rather than being locked in the dance, you take a view from the balcony to see what the steps and patterns are—and how you may be contributing to missteps.”
There are other very straightforward habits family leaders can form to strengthen their empathy. They can use open-ended probes (for example, “Tell me more about that” or “Help me understand”) to ensure that they understand the person’s point of view completely.
Perhaps most important, Vuckovic says, is taking time to consider the other person’s motivations and to assume positive intent. “Ask yourself: Why might a rational, decent, reasonable person behave in this way? What story might they be telling about me? How might their intention be different than their impact?”
Though it may be a challenge, fostering social-emotional intelligence pays off in the long run for the family and for the business. “The good news is this: family leaders have the opportunity to shape the emotional and social environment of their children,” Vuckovic says. “In these cases, you’re not just raising your kids; you have an opportunity to impact the potential leaders or owners of your company. Once you know emotional intelligence is important, you can encourage it all along.”