Family businesses are good at many things. Add up all their proven strengths like longevity, patient capital, and stakeholder values, and what will appear is one of the most durable and viable business structures of the 21st century. But there are also weaknesses and pitfalls like poor internal communication. In this article, we will reflect on some common communications problems and how technology can help solve them.
Often poor communication is rooted in the growth process of the family business. Invariably established by one founder, many family businesses start with no board of directors. No boards often mean communication between family members connected to the business is weak, to begin with. Things might improve as the company transfers to the second or third generation. As the company becomes bigger and more complicated, a board is usually set up. But that doesn’t necessarily solve the problem of poor communication. In fact, it can exasperate the communication problem.
Questions often arise over the nature of the board and how it communicates with its members, other shareholders, and non-family senior managers connected to the business. Also, as businesses get larger and the family gets bigger, not all family owners work for the business. More complicated structures often lead to problems like lack of transparency that can lead to a poor understanding of the business among the smaller shareholders.
Better Communication – bridging the gap
Inevitably, as the business gets bigger, questions will arise like: “how do you bridge the communication gap between people who have an active role in the business and the people who sit on the board, or don’t sit on the board but are still shareholders? How do you bridge the gap between external family members like spouses, or future shareholders?”
Of course, most family-controlled private companies tend to be publicly discreet. The idea of “the hidden champions” is something most of them aspire to. But lying low publicly doesn’t mean internal communications should be less active. In fact, as they grow family businesses need to communicate much better in order to sustain and grow their success.
At Trusted Family, we often find that many family businesses have just one shareholder meeting a year on which the information of an entire family depends. When you are close to the chairman, or key family members who are active in the business you will get to hear what’s happening, otherwise, you won’t. This is far from an optimal situation.
Informal levels of communication, like letting only some family shareholders know about the company’s plans, can lead to misunderstandings. These misunderstandings can ultimately disrupt the smooth running of the business or even lead to conflict.
Bringing Technology into the mix
Trusted Family’s purpose-built family platform helps many families enable smoother communication in order to avoid misunderstandings that can be costly for the business. The platform helps chief executives, chairman, shareholders to better communicate.
After all, productive communication is easier than believed. It can be no more than a half a page of text, telling shareholders the highlight of the business quarter or the opening of a new store, for instance. The content doesn’t take much time to create and with this little bit of effort, shareholders can no longer assume they weren’t well informed. They can’t say: “I don’t know about that, because you didn’t communicate that issue earlier with me.”
So many times in family businesses, no one complains if things go well, but if things are a bit more difficult, then complaints have a habit of re-emerging. Often the reason isn’t so much that the business is going through a rough patch, but more than it wasn’t communicated well to other shareholders.
Communication can be conducted through emails. However, they offer a relatively unreliable way of communicating. There is no proof of delivery, or whether someone has read the email. Besides from that, there are common security concerns and commercial data uses by many large email providers.
Using the Trusted Family’s platform, family members can tell exactly who’s opened internal emails, when they did it, and what they’ve downloaded from the email. The platform enables you to have much more control, within a safe and encrypted environment whilst retaining full ownership of data.
The technology also enables users to have a more formal way of communicating. Everything is archived- so if you want to see why this acquisition was made five years ago, you can find the information.
Most family businesses tend to underestimate shareholder relations and communications. Of course, they might not need the same level of internal and shareholder communication procedures as a listed business, but most could do with improvement in this area.
Trusted Family offers an optimal way of solving the problem of communication through a tried, tested and trusted internal internet platform and mobile app.
Trusted Family’s platform is now used by over 4000 family business and family office members and advisors every month in over 25 countries.
For more information and to schedule a 15 min demo, contact Trusted Family at firstname.lastname@example.org
Here is a 2-min video of the Trusted Family platform: www.trustedfamily.net/trusted-family-platform-video-2018