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Helping Family Businesses
Prosper Across Generations®

What Makes The Sibling Generation Different?

By Stephanie Brun de Pontet, Craig Aronoff, Drew Mendoza and John Ward

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Each generation of a family business is unique and faces its own special set of challenges. We believe, however, that the sibling team -- frequently the second generation -- faces some of the most difficult challenges of all. If you are a member of a sibling group, be prepared to spend enormous effort building and maintaining an effective team. The demands on your time and energy will be exceptional, and you will have to work very hard. However, the rewards will be great. What could be better than a harmonious, extended family, able to enjoy the financial returns of a prosperous business and able to pass that business along to a well-prepared next generation?

We generally find the sibling partnership stage to be more intense and volatile than any other. As a result of their growing up together, the level of intimacy and emotionality is higher among siblings than, for example, the cousin generation that follows. And because siblings carry into the business all those memories and opinions of each other that they have held since childhood, the possibility for harmful misunderstandings is strong.

Unlike cousins, siblings have probably grown up in a business founded by their parents. They tend to be very emotionally connected to the business, to their parents, and to each other. Hence, the intensity.

What also sets the siblings apart and can lead to volatility is that there are fewer of them than there are cousins at the cousin stage. Because each sibling may own substantial minority positions in the company, a family business can be threatened when one sibling is angry or disenchanted or unproductive and isn't functioning as part of the team. Buying that person's shares can wreck the capital structure or the strategic plans of the business.

Another characteristic of the sibling stage is that Mom and/or Dad are probably still alive, and they have an enormous influence on the team and on the business. They will exert forces that the siblings must learn to recognize, understand, be compassionate about, and cope with as a unit. Further, the siblings must develop the ability to communicate effectively and sensitively – again as a unit -- with their parents about business and family issues.

On the plus side, their intimacy and shared experiences provide siblings in a family business with great motivation to live with and benefit from their differences.

Nevertheless, the differences can be profound and it is crucial that brothers and sisters in a family business learn to tolerate and resolve them. Otherwise, differences and misunderstandings can become “historical” ones, painfully passed down through future generations.

Four Tasks

To assure the continued success of the business and the family, sibling partnerships have four distinct and vital tasks:

  1. Become an autonomous,independent team. This means independent of Mom and Dad. And while parents will talk about how much they want this to happen, unconsciously they may not want it to happen and may not let it happen. The tug of war in which the sibling group tests its autonomy and the parents assert their power is almost as natural as night and day.
  2. Take the initiative as successors. You can't just wait until the business is handed to you. Too often, the sibling generation waits for the parents to make the first move. The more the sibling generation takes responsibility for and control of developing themselves individually, developing themselves as a team, and seizing the initiative, the more likely it is that succession is going to happen in a timely and successful way. Yes, occasionally a patriarch will see sibling interaction as a plot or conspiracy to get rid of him, but that doesn't happen often. So, while taking the initiative may be somewhat risky, our experience suggests that the benefits outweigh the risks.
  3. Put structure and strategies into place that will help the business grow significantly. You have grown up in a family that probably had a good standard of living. But the business needed to support only one set of parents and children. Now, each of you wants your own family to live at least as well as your parents and their family did. For that to happen, the business has to grow sufficiently to support all siblings and their families.
  4. Position the next generation for success. Your job is not done until the stage is properly set for handing off the business to your own children. This means putting into place policies, procedures, and structure that will support the success of the next generation of family business owners and leaders. A generation of cousins may not be able to do its job until the generation just before it finishes its job.

Reprinted from Siblings and the Family Business: Making it Work for Business, the Family, and the Future

Reprinted from Making Sibling Teams Work: The Next Generation. Copyright, Family Enterprise Publishers, Marietta GA.

 

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