Emotions and negotiating in a family business

In the United States, approximately 90% of businesses are family owned, employing 60% of the work force. In addition, 30% of S&P 500 companies are family firms. Clearly, family businesses provide a strong source of economic growth and wealth in our nation. However, the majority of family firms don't survive past the second generation. More often than not, this is related to differences in priorities and perspective, along with a lack of communication between family members.

An article about negotiating in the December issue of the Harvard Business Journal, “Control the Negotiation Before it Begins,” got me thinking about how the typical strategies used in corporate America aren't always going to be appropriate in family businesses. This article, and many others on the same topic, suggests that most negotiation experts focus on strategy and tactics. However, research shows we can regulate emotions such as anxiety, anger, excitement and disappointment during the process to help achieve a better outcome. As a family business adviser, I thought this seems especially relevant for family businesses.

This is clearly demonstrated in the case of a family business that I consulted with recently. There were four adult siblings in the family; two working in the business and two who were not. The parents felt that in the spirit of “fairness” all their children should have equal ownership of the company. Initially, when the parents passed away, the company was profitable and there were seemingly no major issues in the family. However, when there was a downturn in the economy, the “non-working” siblings wanted more accountability for how the company was being run. The two working in the business resented the interference from their siblings.

This family had a long and complicated history of not communicating openly and honestly with each other. Unfortunately, this situation resulted in a tremendous amount of anger and hurt feelings amongst the siblings, which turned into lengthy and expensive legal negotiations to resolve the conflicts. The outcome was that one of the brothers bought out the rest of the family. However, sadly, there was irrevocable damage to their personal relationships.

Anxiety and anger are the two emotions most difficult to control, and their affect is magnified in family business scenarios such as when parents are negotiating with children or siblings are negotiating with each other. To create a win-win scenario and ensure personal relationships aren't indelibly damaged, it's important to find ways to work through emotions to reach a consensus that pleases everyone.

One way to do this is by using four key behaviors often associated with having difficult conversations:

1.) Be intentional. Identify your ideal outcome prior to the start of the negotiation.

2.) Clarify the issues. Be objective in describing behavior and providing data rather than attacking the other person.

3.) Listen non-defensively. Hear the other person's perspective and adjust your emotions to fit theirs.

4.) Take the high road. Acknowledge the other person's feelings and perspective, even if you don't agree with it.

Another way to prepare to overcome emotions during negotiations is to answer a series of questions before the conversation begins. The Top 12 Questions for Change, taken from “The Question Thinking Workbook” by Maralee G. Adams, include:

What do I want?

What are my choices?

What assumptions am I making?

How else can I think about this?

What is the other person thinking, feeling, needing and wanting?

How can I turn this into a win-win?

These two strategies are applicable for any negotiation, but when it comes to dealing with a family business, employing cognitive behavioral strategies is even more critical. For example, you must be clear about your values; if having Christmas dinner with the whole family is important to you, you want to take care not to burn bridges during business-related negotiations.

Money is at the root of most negotiations in any business. However, in a family business it is never just about the money, but rather what the money means. With respect to dealing with family members, it's a good idea to remove as much emotion as possible from this hot-button issue, considering if it's worth destroying the family over “just money.” In my experience as a family business adviser, I've found when family members' values are aligned and everyone's perspective is taken into account during negotiations, the end result can be a stronger bond and a more focused business.