Building Emotional Equity
Dan Simpson’s family real estate business was operating smoothly. He took great pride in the fact that his four adult children were part of his company.
Son Chad managed a division in Texas. Dan Simpson (not his real name) was happy with his son’s leadership.
Children Eric and Jackie worked in the South Carolina home office. Eric was eager to take over his father’s leadership. Jackie was more patient and accommodated her father’s wishes.
Daughter Sally worked on special projects for the business from her home in Colorado. Although geographically removed from where the business operated, she was an active owner and regularly communicated with her siblings about business issues and concerns.
Dan realized he needed a succession plan that would continue the real estate company’s success and maintain family harmony. The need was practical and straightforward. But human feelings complicated things. What started as a business decision to plan for the future soon uncovered issues that involved how people felt about each other and their places in the company.
Dan’s four adult children were worried that his mental acuity was weakening. Their father, now in his early 70s, didn’t show the drive, determination and zest for the business that had been his hallmark. He was not as cognitively sharp. They knew he was sleeping a lot and worried he might be depressed.
To complicate matters, 10 years ago Dan had married a woman from South America he met online and they had a 5-year-old son, Antonio. Maria was 30 years Dan’s junior and spoke little English. She kept to herself and spent most of her time raising their son.
Dan’s adult children were concerned that if Dan didn’t update his will, Maria and the young child could end up owning the business. Family feelings interlaced with business issues.
Given these circumstances, what would you do? A family business planning meeting was held, which gave the adult children a platform to encourage Dan to meet with his attorneys to update his will. At first, he was reluctant, but eventually recognized his adult children’s concerns. He met with his attorney and updated his estate plan to provide for Maria and their son, Antonio. At the same time, he gifted his real estate business to his four adult children. So far, so good.
But he made other changes, too. He chose daughter Jackie to succeed him and manage the primary business in South Carolina. This upset Eric so much that he left the business. His siblings bought him out, but the division was raw and deep.
The three siblings decided that Chad would keep running the Texas subsidiary and report to Jackie in the home office. They also agreed that Sally would continue doing special projects and also report to her sister. The business elements were beginning to fall into place. But the family members needed more inputs to maintain a balance among them and avoid further hurt feelings.
To accomplish this, they activated a board of directors. This was a major act to move the company forward. Although Eric was no longer participating, business advisors worked with Dan, Jackie, Chad and Sally to develop a document that permitted only two members of the family to sit on the board, with Dan as chairman. They also recognized the importance of selecting three outside advisory members, who were chosen based on their ability to add value to the business. Family harmony was developed and enhanced by each member’s commitment to building the emotional equity of their group.
To support the emotional equity, the family strengthened their communication skills. They restarted neglected family rituals such as Friday-night family dinners. They learned ways to listen to each other, support each other and worked together to resolve issues. This helped mend family wounds. Eric slowly began to forgive his dad. Reluctant to participate at first, he started to join in family gatherings last year. Sally continued her close communication with the family and participated in special occasions.
Because the succession planning process included ways to build the family’s emotional equity, both the family as well as the business benefited. For example, Dan’s adult children took positive steps to include Maria in family activities. They are consciously working to draw her in and help her feel that she is a part of the family.
The family is reaching a new level of love and trust. On the business side, the real estate company has never been more successful.
Tom Hubler (email@example.com) is president of Hubler for Business Families, a family business consulting firm.