Avoiding and Resolving Conflict

in the Family Business

Henry Hutcheson

President

Confidential Family Business USA

➢ Consultants to Family and Privately-Held Businesses

➢ Objective: Preserve Wealth and Maintain Family Harmony

➢ Background in Psychology, Business, Family Business(Olan Mills)

➢ Family Business Correspondent➢ Author: Dirty Little Secrets of Family Business➢ Adjunct Professor Campbell University

Confidential Family Business USA

• Founding• Door to Door• Studios/Demographics• Telemarketing

• Family Business• 1st to 2nd

• 2nd consolidate• 3rd (Hutcheson)

• New 3rd

Confidential Family Business USA

Available through:Hudson BooksellersBarnes & Noble.comAmazon.com

Publisher: Greenleaf

Available: March 22, 2016

Good Newsor

Bad News?

“He and four siblings

are locked in legal battle

with their father.”

Pablo Alvarez of Vega Siliciawinery.

July 20, 2014 (Ian Mount)

Vega Sicilia’s wine is triumphant, but its ruling clan’s bickering has been leaving a sour taste.

THE RIFT— a family dynasty fights

over the future of Luray Caverns

By Ken Otterbourg March 14, 2013

Worth about $20 million, it is a family business run by a family that can’t get along.

They’ve been in U.S.

District Court in

Harrisonburg, where the

three youngest siblings

sued two of their older

sisters

Inside An $8 Billion Family Feud: Who Poisoned The Orkin Fortune?

Today RPC boasts a market cap hovering above $4.6 billion.

Kids suing Father and

Uncle

One lawyer has already

made $1 million

Forbes 9/29/2014 @ 6:00AM

Dad Son

Conflict

Family Business USA

Mom

Dad Son

Triangulation

Mom

Dad Son

Triangulation

Resolution

An attitude or behavior that you are deserving of respect and privilege beyond your skills, knowledge and experience, because of who you know or what you have, not what you have accomplished.

Can be considered dangerous as will have unfounded or overconfidence, be reluctant to hear good outside input, and will have trouble being accepted by those who earned their way.

MAKE THEM EARN IT (but don’t overdo it either)

Entitlement

Confidential Family Business USA

Diddy Buys Son $360,000 Maybach for 16th Birthday

Talk about a sweet 16.

For his 16th birthday, Diddy gave his son Justin Dior Combs a brand-new silver Maybach (price tag: $360,000).

"I'm just ecstatic right now," Justin told UsMagazine.com at his party, which will be featured on an upcoming episode of MTV's My Super Sweet 16. "Words can't even describe how I feel. I'm so blessed and thankful for all of this.“

Diddy said his son's elaborate bash is in stark contrast to how he celebrated his 16th birthday back in the day.

"I don't think I even had a party!" Diddy told Us. "I think I had a cake -- and that was it!"

But Diddy said he was happy to open his wallet for Justin.

Diddy told Us he's so happy how his son "has grown and matured ... how well-behaved he is; how respectful of a kid he is. It just makes me proud.“

Us Weekly, January 25, 2010

Financial

Uncontrolled spending/Trust Fund babies

Intellectual

Lack of ambition

Identity wrapped up in money

Emotional

Lack of Self-Esteem

Dependence/Entitlement/Guilt

Unintended Consequences of Wealth on children

Richard Morris, Jayne Pearl

Handle hearing “no”

Differentiate between wants and needs

Tolerate delayed gratification

Make Tradeoffs

Develop a healthy skepticism

Five Financial ValuesMake sure your children learn to:

Richard Morris, Jayne Pearl

Warren Buffet

“…children should be given enough money to do anything they want,

….but not so much money that they can do nothing.”

❖ Create Your Own Family “Code of Conduct”

Family BusinessBest Practices

Confidential Family Business USA

❖ Be on time

❖ Not globalize issues - i.e. you always, you never

❖ Not engage in personal attacks

❖ Not scream, yell, shout pound, point.

❖ Not make threats to each other.

❖ Recognize personal and business boundaries

❖ Show honor and respect for each other

❖ Actively participate in discussions

❖ Practice the “Golden Rule”

❖ Speak only for yourself and not bring others in as support for your ideas or agenda

❖ Turn OFF cell phones

❖ Practice active listening, not interrupt, hold our retorts until the other person has finished

❖ Be brief and to the point

❖ Be honest, forthright, candid

❖ Focus on problem, issue or behavior, not individual

We Agree to:

Code Of Conduct - Sample

Confidential Family Business USA

Generations are always different

What Current Generation needs to know about Next Generation

– Constant need to have a meaningful life

- to accomplish something on their own

- You must give them opportunities, even if they fail

- No they cant just be happy with the money and the title

- They know more about technology

- know more about a lot of things

Next gen to know about current

- They built this thing, no its not perfect, but they deserve respect

- You will get your chance

- Stepping back will be hard, don’t push too hard

- Don’t push too hard on new ideas and technology

Agree with each other that you are different

Generational Conflict

Confidential Family Business USA

Same Generation StrategiesSiblings, Cousins, In-laws

1. Put Childhood in the Past

2. Define Roles and Responsibilities

3. Establish Communication system

4. Don’t let disagreements fester

5. Agree $ and Benefits inside and out

6. Understand each other’s goals

7. Incorporate some fun

Family Business USA

Dedicated to Improving Communication

Family BusinessBest Practices

Confidential Family Business USA

Family Business USA

If I heard you correctly, you said

…………………

Is that Correct?

If Yes, then great, move on

If No, clarify using active listening

Active Listening

Confidential Family Business USA

❖ Policies And Systems – i.e. Financial, Handbook, Ethics, Vacation, etc.

❖ Agreements – Up To Date Shareholder, Buy/Sell, Family Employment policy, Written Succession

❖ Board – Independent Advisors

❖ Regular Family Business Meetings

❖ Disciplined Approach

Governance - Communication

Confidential Family Business USA

Confidential Family Business USA

Questions?

Thank You!!!!!