Business

The risk of WFH for family offices and why it worsens the principal/agent conflict

More than two years after Covid lockdown, most family offices are used to dispersed, or hybrid, working. But does this approach put them at risk?

As it stands, meetings are often conducted via Zoom, or an equivalent. Reports are submitted, and analysed, digitally. Screen-based relationships have become established. Gossip by the coffee station has ebbed.

It (isolation) impacts the family system. The isolated person may act and react in ways that are harmful. For instance, blocking decisions and paralysing the system or exhibiting behaviours that risk its reputation.

We couldn’t have gotten through the pandemic any other way. But David Rock, director of the NeuroLeadership Institute, is worried about its impact on behaviour.

“Virtual connections can create bonds among teams which may never meet in person. But more and more, we’re seeing these attempts go awry or avoided entirely.”

He explains we are starting to miss social interactions, which generate neurochemicals, like oxytocin: “These help strengthen social bonds and create motivation to continue building trust and collaboration, providing a physiological reward for everyone involved.”

I know one charity which has operated quite happily for thirty years, due to a close relationship between the principal and his head of administration.

During lockdown, their relationship began to splinter as screens replaced face-to-face discussion.  

The principal became more forthright in his views and the administrator questioned his decisions less frequently. The principal’s wife became more influential.

The administrator felt less valued and started to withdraw from new initiatives. He became increasingly isolated. The charity has not collapsed but it’s finding it harder to maintain the morale of its volunteers, forced to deal with the principal direct. 

Dominik von Eyern, founder of Family Hippocampus, advises family offices on achieving a lasting sense of identity. He says feelings of isolation can be damaging to an organisation:  “It impacts the family system. The isolated person may act and react in ways that are harmful. For instance, blocking decisions and paralysing the system or exhibiting behaviours that risk its reputation.”

Rock confirms that isolation can make individuals feel threatened and capable of misunderstanding the intention of third parties. 

It’s worth adding that principals can also suffer due to a lack of face-to-face contact from their team members. In a recent blog, Dennis Joffe, research fellow at BanyanGlobal, pointed to problems with self-esteem, sometimes called imposter syndrome, which is more frequent than you might expect. They often relate to individuals who inherit money, rather than making it. 

The office can be the right forum to deal with all these problems. According to Rock: “Social connections provide a sense of belonging that can reduce feelings of threat, allowing us to remain positive when situations aren’t ideal.” 

In contrast, Zoom meetings tend to be one-sided and dominated by the individual doing a presentation to a group of mainly disengaged attendees. 

In contrast, team members might use an office to rally around colleagues unfairly victimised. A principal unsure of a decision can benefit from a chance conversation with a team member, which would never happen online. Gossip plays a bigger role than you might think putting the world to rights and reinforcing relationships.

According to the How Institute for Society, 44% of workers feel less connected to their colleagues since the start of the pandemic. Women and team members under 30 have been badly hit.

But hybrid working is here to stay. Rock suggest that co-workers – and principals – should empathise with each other by appreciating each other’s feelings, arguments and behaviour. 

According to How, 90% of workers feel more loyal to managers who are flexible and willing to share updates in their thinking and viewpoints.  

Everything depends on families knowing they could have a problem. A return to the office, at least part of the time, might help them find their way forward.

As Rock says: “Sometimes what’s preventing us from hearing the signals of others is the noise created by our own thoughts.”

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