Organisations are no longer built on force, but on trust.” Peter Drucker, Management thinker.

Likewise families, especially families-in-business. Seemingly strong, even the most outwardly organised and long-serving families can founder on the rocks of a deficit in trust. Over what appears at first read to be a short period (in comparison to longevity in ownership) relationships deteriorate, common ground disappears and agreements falter. On inspection and (usually) assessment after significant change, the underlying cause can be traced to a deficit of trust within the family.

Just as private or family ownership is the differentiating factor for family business, that of sustained trust is key if families’ are to maintain cohesion and workable relationships over time. As benefits of long-term ownership accrue, re-enforce and strengthen so too the perpetual laying down of trust among and within a group of family members. The benefits of family ownership are at times difficult to articulate but you know it when ownership ceases; so too with family trust. Both hidden and important, once trust evaporates or ‘breaks down’ all else (usually not good) follows.

The elements of ‘high’ trust are worth mentioning, if for no other reason than to note and laud them if they are there: to do as you say, consistency of public and private behaviour, frequent engagement with family, depth in discussion, faith in family individuals, being protective of the reputation of other members of your family. The definition of trust is also useful: a firm belief in the reliability, truth, or ability of someone or something. Acceptance of the truth of a statement without evidence or investigation.

How does one assess levels of trust in your own family-in-business? Perhaps more importantly, what are the signs trust is building or eroding over time?  To paraphrase the author, Henry James, it is not where we are that matters but in which direction we are headed.

As a Successor, the ‘trust trajectory’ within your family is of prime importance as you engage and shape involvement with family or business. The trick – or difficulty – is to be alert and receptive to those signs where trust is low and to assess the direction trust is moving in your family over time.

Another Acronym: T.R.U.S.T.

To assess levels of trust within your family, I suggest observation and consideration of the following five elements, arranged within the acronym T.R.U.S.T.:

  • Timely preparation of successors for ownership and leadership;
  • Relevant purpose for family and individuals;
  • Usefulness of family involvement;
  • Short agreements to cover family vision, values and policies;
  • Truth, to other family members both publicly and in private.

My thesis is that higher levels of each of the above taken together indicate a higher level of trust by, within and for family members.

Timely Preparation

As antecedent to levels (or not) of family involvement, look to activity for and around preparation of family members not only as shareholders but as possible leaders and entrepreneurs. A sure barometer and leading indicator as to trust in a family is attention, time and resource dedicated to the preparation of family members as owners and leaders.

If such preparation is almost nil or is wholly confined to ‘ownership education’, the trust barometer is already low. Should this omission extend to a lack of family testing for entrepreneurial skills, risks or willingness to commit then the glass is falling – fast.

Relevant Purpose

Family values are the most evident and ready way in which families’ identify and name that which makes them different and (hopefully) better. Values are those examples and beliefs which guide behaviour, in how you as family relate to each-other, the business and the world around you. All well and good. But, what if ‘values’ drift to prescribed behaviour or are a total substitute for any deliberation on family purpose? Or if there is a comparative absence of discussion as to how and why family association or ‘purpose’ is benefitted by continued ownership? If these are the case, values become the stick, with no carrot to match (or to follow).

And what does this say of trust? To be clear, codified values are important to clarify in words what has got the family (and by inference the family business), to where it is now.

However, in the absence of a signpost as to family purpose or a nod towards development or the realisation of individual purpose alongside that of ownership, values as a standalone virtue begin to pale. In the absence of any upside for the interested and (potentially) engaged individual, values soon appear prescribed and aggressive. Do this, say that, think other…or else: all indicative of a low trust family. In the absence of any mitigating action the progression will be only one way.

Values – if followed – enable a foundation of trust, they alone do not sustain it.

Useful Family Involvement

A priority and attention for and to leadership by family members, is a sure indication of a high level of trust within a family. Such attention will translate to positive and productive involvement in family governance, company oversight or career roles. Contribution is both valued and encouraged. Activity, numbers engaged and discussion are all indicative of a high level of trust between family members which translates to respect, motivation and recognition.

Active consultation – beyond the confirmation of narrow decision rights – builds trust in the ability to lead. Once less reliance is placed on family ability and usefulness, engagement levels, trust and eventually relationships all suffer.

As a Successor look to clarity of purpose around family involvement, evidence of well-managed, well-structured development and – as the surest metric of all – the numbers actively involved and committed. If these numbers are small, it is a sure sign that family trust is low.

Short Agreements

Family agreement – usually codified and written down – is a necessary requirement for a baseline level of trust. To reach agreement families must engage, negotiate and agree.  Chances are you already have such agreements in place such as a constitution, charter or (if the lawyers have been busy) a shareholders’ agreement. All well and good – tacit evidence of a willingness to engage, anticipate and compromise.

However, look a little closer and such agreements can also signal levels of trust within the family. Easiest to assess is agreement length and language – as a rule of thumb the longer the agreement and more convoluted the language (clauses, sub-clauses) the lower the underlying level of trust. Longer agreements exist to direct, control, pre-empt and (oftentimes) confuse. The implication beneath is that certain members/generations/branches cannot be trusted to behave, deliberate or decide in a responsible or adult manner in the future.

An ability and willingness to maintain reasoned dissent is critical to achieving and holding high-trust levels. A need to anticipate each and every possible issue and to ‘thoughtfully’ provide guideance and policy is counter to an environment of considered deliberation, listening and trust between individuals and branches.

Truth, both Public and Private

Trust in any family is most visibly measured in levels of engagement for and with other family members. Engagement measured for frequency, duration and the depth of conversation and the re-enforcement of common values when together. Engagement may not always be active, but in a situation of high trust, the possibility is ever present. The writer, Stephen M.R. Covey in the ‘Speed of Trust’, speaks of ‘engaged trust’; that which is based on the principles of empowerment, reciprocity and a belief that people can themselves be trusted.

As a Successor, a sure way to litmus test trust levels, is listen to family speak about other family members when they are not present. Do they speak on deliberations and individuals participating in family meetings, such as Councils’ or Supervisory Boards?. If family members speak openly of others in a less than positive way or  about private conversations associated with closed meetings, trust will all but have evaporated.

Trust and the Successor

As a Successor, it pays to be alert and mindful to levels of trust within your family. Indeed, it would seem to be more productive to speak on ‘trust levels’ instead of those for ‘conflict’, as the essential variable in need of sensible tracking by any Family Council. To assess trust levels within your family, I recommend a moment alone to evaluate where your family lies against the five indicators I have outlined above. Of course, this can never be absolutely scientific, but a considered evaluation over time with timely conversations with other family members you respect, will pay in the long-run.

Succession has many moving parts, can be opaque and (by definition) never ends. To move forward with clarity and purpose, an honest assessment as to the level of trust in your family and what you are doing (or needs to be done) to raise the barometer, is core to the long-term effectiveness of the family as owners. Your ‘whole truth’, if you like. Likewise, for you as a Successor, better to confront honest and timely dialogue on trust now, rather than side-stepping latent conflict (trust’s surly nemesis) later. Once trust evaporates, it can never be regained without significant pain – and yes – conflict.

References

Stephen M.R. Covey. (2006) The Speed of Trust: the One thing that Changes Everything.  Simon and Schuster

Biography

2-298x300 Family Trust, Conflict and the Whole Truth.

Philip is a leadership coach and mentor for family business successors. He previously held positions as manager, Head of the Family Council and non-executive Family Director within his family business, over a 25 year period. He founded and ran FBN Ireland (www.fbnireland.ie), a network to support families-in-business transition effectively from one generation to the next. He is currently writing a book on successor talent development within business owning families.

Philip can add value to families-in-business in the following ways:

  • As Coach or Mentor to family business successors;
  • Advisor on Successor performance and Family Talent development;
  • Facilitator for learning of family business management, ownership and leadership development.

For additional information please see his website www.philipmackeown.ie or his profile on LinkedIn https://www.linkedin.com/in/philipmackeown/  He can be contacted on email at philip@philipmackeown.ie  .