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It’s All Relative — And Sometimes That’s the Problem

The Washington Post

by Amy Joyce
The Washington Post, Business
July 5, 1998

Family Run Businesses are Seeking Out Mediators to Help Separate Personal and Professional Issues

Have a problem with a boss? All you have to do is set up a meeting and hash it out, or–worst case scenario–get the resume together and start looking for a job. Easily solved, right? Not when the boss is your mom.

“When conflicts arise in a family business, they are inherently more complex” than in non-family business, said David Gage, founder and head of the Washington-based company BMC Associates. His company aims to help families resolve conflicts so they can still happily eat Thanksgiving dinner together. “The ones who run the company also have to go home and be with each other at night,” he said.

Rita Bloom, president of Creative Parties Ltd. Of Bethesda, knows that all too well. Until about a year ago, her two daughters helped her run her 30-year-old business which includes a retail store and an event management division that primarily plans weddings and parties.

After both daughters became full-time employees, Bloom started realizing that more time was being spent ironing out their own difficulties than running the business. She also realized that she and her daughters could not solve the problems on their own, so they sought help from BMC Associates.

Through mediation, Bloom said, she found out that one of her daughters had different goals than Bloom and her other daughter. “Part of my judgment was that even if we smoothed it over [without a mediator], when I left, they would not be able to reconcile it between the two of them,” she said.

A year has passed since the family’s mediation sessions and one daughter remains with Creative Parties. The other daughter left and started a photography business with her husband. “They are building a very nice business. Now she is happy,” Bloom said. And because her daughter’s photography business does wedding portraits, the two companies often work together.Conflicts among family business partners can have hidden sources

More than 80 percent of all business enterprises in the United States are family owned, according to Family Firm Institute, an international organization that offers professional assistance and information to family businesses. Nearly 35 percent of Fortune 500 companies are family firms. But, nearly 70 percent of all family firms fail before reaching the second generation.

Being in family business “has enormous benefits,” said Kathy Wiseman, founder and president of Washington-based Working Systems, a consulting firm specializing business and the human side of the workplace. “Families have enormous resources.”

Members of a family business often get to do things at a much earlier stage than if they were in a non-family business, Wiseman said. There are “many opportunities for people who are younger and have less experience. I have seen younger family members do things that would have taken years to do in a non-family business,” she said.

Gage, a clinical psychologist, works with 20 to 30 businesses per year and said families will come either because they have difficulties or want to avoid conflicts in the future.

In mediation session, Gage and another mediator sit down with the family to discuss why it is there. He then interviews everybody individually. They then try to come up with a family contract. “We are always helping them work toward written agreements that deal with both their relationships and business issues, like roles and authority.” The agreements must always be consensual, he said.

One of the first questions Gage tries to help his clients answer is whether the family relationship and business would be better off if the family members worked separate. “We’ve never worked with a family that wanted to risk their relationships just to work together,” he said.

If the clients realize that working together is not an option anymore, Gage will try to help them decide how a member of the family can leave in a positive way. “It’s so crucial that the family relationships be healthy if people are going to work together in business,” Gage said.

Family business consultant Colette Hoover said founders of family businesses are often “successful to start with, but what they’re not good at is teaching the next generation” how to run the business successfully. “It takes an outside person to point these things out,” she said.

LSi Lifesystems Inc. Resource for Family Business Management, based near Chicago, offers consulting and mediation services to family-run businesses and is owned by Hoover and her husband, both psychologists.

Hoover often sees family members having difficulty confronting one another. “It’s easy for them to get into a false agreement because they don’t want their objections to rattle family bonds. They need to learn how to disagree, to bring up differences,” she said.

“I was born and raised in a family business,” Hoover said. “I knew it was difficult.” But instead of shying away from the chance to work with a loved one, Hoover turned it into a great opportunity. She said she and her husband always wanted to work together and focus on family business, and they turn their experiences into lessons for their clients. “We have to learn how to negotiate.”