By Tom Hubler, Executive Consultant
When businesses talk about equity and value, they talk almost exclusively in financial terms such as how much the company is worth in dollars. This makes perfect sense given the purpose of a business is to make money to grow and sustain itself, its owners and employees.
With family businesses, however, there’s another form of equity that must be worked on equally if not more than the financial version—the emotional health and strength of the family. Tending to this consistently is a must for the family business to grow and flourish. We call this process “building emotional equity,” and while some parts of it are common sense, other parts may not be quite so intuitive.
Strengthening Your Family Is Just Good Business
Few people would say they don’t want to maintain strong relationships with their relatives, and plenty of business families talk (rightfully so) about how to ensure they keep a strong family life outside of the business. Just think about how many families have a “no shop talk at the dinner table” rule so there is time intentionally left for just maintaining these relationships.
However, building emotional equity isn’t just about setting aside work talk (which is something even non-business families often do); it’s about accepting as a business family that strengthening family bonds is an integral part of strengthening the business as a whole. Building the shareholder legacy of family harmony is a gift to the future, and not only for the family. Research indicates that it shows up in the profits of the business. At your next family meeting, include a discussion of the ways to strengthen your family’s emotional equity. I know you will not regret it.
How to Build Emotional Equity within Your Family Business
Like most strengthening practices, the key to building emotional equity is intentionality. Identifying and naming the desire to build emotional equity in your family is an important first step but hopes and wishes alone are rarely enough to make meaningful change.
Another common pitfall is assuming that the business will inherently bring everyone together. It makes sense on the surface—you’re all in business together and all (presumably) have some level of passion for or interest in the work you do, so why wouldn’t your work dynamics strengthen the family? But as important as this can be for your business, building real, lasting, intergenerational emotional equity requires focusing on the family as a unit that exists independent of the business. This is why we’ve seen business families find great success when they set aside time to spend together outside of work, especially by including extended family who may not all live in the same household.
The importance of family meetings is well known, and these are a great time to build emotional equity: rather than having a meeting be all serious discussion, split that time up between important family meeting topics and fun family activities, or even integrate family meetings and family vacations in a way that allows for fun, stress-free bonding and constructive dialogue.
Alternatively, not all activities need to be divorced from business to build emotional equity. We’ve seen families put together family business retreats, where kids, older generations, and extended family are offered unique and memorable activities to bond with each other, while adults immediately involved in the business can meet to discuss necessary business topics. If you’re imagining a typical business retreat combined with a family reunion, you’re not far off! As with everything else, intentionality here is the major component: these activities within the retreat should be planned to encourage this emotional equity building, rather than everyone left purely to their own devices.
It can be difficult to pay attention to building emotional equity in your business family when it’s so easy for everyone to get bogged down in the daily stressors of keeping a business running smoothly. For more advice on building equity in both your business and your family, pick up The Soul of the Family Business by yours truly. Through personal anecdotes, real-world case studies, useful tools and frameworks, and more, I provide an in-depth look at the challenges faced, strategies employed, and successes achieved by all sorts of family businesses. And of course, if you’re ready to take the next steps, you can always contact us here at Platinum Group.
Tom Hubler is a nationally renowned expert on family business issues and author of The Soul of Family Business: A practical guide to family business success and a loving family.