Advising entrepreneurial clients is rarely easy work for planners, especially when it comes to dealing with warring members of a family owned business.
Mark Weber, a chartered financial consultant who has worked with many planners and hundreds of their business owner clients, says his firm keeps three industrial organizational psychologists on staff to deal with the thorniest cases.
“When a business owner wants to pass a business along to family members, often there is an awful lot of emotion involved,” says Weber, of the SilverStone Group in Omaha, Neb.
In one case, Weber instructed the parents and all four siblings in a Midwest agricultural business to meet separately with one of his firm’s psychologists. The meetings would not turn out to be short ones.
The problem, in this instance, was the founder-father who wanted to dictate terms and believed one son was best fit to run the organization. The industrial psychologist set about interviewing all the family members separately, including the spouse’s of each child. The psychologist also administered extensive skills tests to every family member who worked at the company to determine which skills they each possessed, as opposed to those skills each claimed for themselves.
“When the tests got done we found out that the daughter is really good with numbers and has great people skills,” Weber recalls, “and the son doesn’t have those skills but, as the older son, he thinks he should be in charge no matter what.”
In the final analysis, the psychologist concluded the family members positions were so intractable and dysfunctional that he recommended that the family simply sell the company and call it quits. That’s exactly what the family ended up doing.
“That’s not the type of result you want to have in business succession planning,” Weber says, “but for the family it probably worked out for the best.”
Bringing in an industrial psychologist can be a risky move, Weber adds, and it only works with the strong endorsement of the patriarch or matriarch or CEO.
“No matter how you couch it, it’s intimidating,” says Weber, who has done this for small companies and for very large corporations.
In this case, of the family with the agricultural business, he says, each child took their cut of the sale of the family firm and set out to establish new careers.
This article originally appeared on Financial Planning's Web site.
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