Understanding the business family | Part II
In this second part of the interview with Joe Astrachan, we focus on what behaviors to avoid, and on some general rules of bringing up children in a way that they are prepared to be responsible owners, productive members of society, and ‘good’ family members.
Claudia Binz Astrachan: You’ve already talked about the importance of communication, so that is clearly something that families should focus on if they strive to develop and maintain healthy family relations. Very generally speaking, what are some behaviors that you observe that are detrimental to family harmony and business success?
Joseph Astrachan: Broadly speaking, the things that should be avoided are things that destroy trust. To this end, I have a little saying, “Generosity builds trust and stinginess, or miserliness destroys it.” By generosity I mean of information, time, spirit, as well as financially. So, the less you share information and the less you communicate, the less trust there will be in the family and one thing about trust is that you need it most when times are the toughest. Another way of thinking about this is that any selfish and self-protective behavior can be detrimental to harmony and business success. By the way, the antidote to selfishness is lots of communication, involvement in decisions, and having shared goals.
CAB: You often tell families to avoid triangulation. Can you explain what you mean by triangulation, and why families should and what they can do to avoid it?
JA: Triangulation is one of the many family dynamics that families should know about. Before discussing it, let say that a few of my favorite family dynamics authors are Murray Bowen, Salvador Minuchin, Henry Cloud, Carl Whitaker, John Bowlby, Ivan Boszormenyi-Nagy, and John Gottman. One of these authors, Murray Bowen, coined the term triangulation. He said that relationships are unstable without looping in a third person and the reason behind this is that when we have complaints about our partner, rather than threaten the relationship by airing our complaints directly with that person, we can go to a third person and “unload” our problems, anger, anxiety and fears with them. This can often lead to feeling a little bit guilty and of course a natural response to feeling guilty is to then be nicer to the person you think you have wronged. This cycle continues until we begin to feel anger and resentment that our nice behavior is not being reciprocated, the relationship becomes unstable again. The cycle repeats and we go and find someone to complain to—and understand that a complaint can be as sublime as to merely leave the house and avoid contact, which our friends or other family will correctly interpret. Triangulation may also involve the third party intervening in the relationship. For example, we have two sons in a family business, son one does something that upsets son two. Son two then runs to his mother and complains. Mother then goes back to son one, who explains what happened. Mother returns to son two and calms him by reassuring him and saying, “everything will be fine.” In this process, sons one and two begin to become increasingly distant and their mother moves into the middle of their relationship. As a side note, this is one of the reasons why family businesses and families can break apart when parents pass away, which is specifically because the children have no significant direct relationship or ways to handle their differences without their parent who had intervened to stabilize the relationship. Once gone, the source of stability is gone, and the children will typically argue and fight to the point of a calamitous breakup.
CAB: One topic that keeps popping up when we talk to families about family dynamics is the issue of raising children. Can you talk about how to raise children to be less susceptible to the downsides of family business?
JA: There are four pieces to this answer. The first and most important is developing self-esteem. It should seem obvious as to why self-esteem is important, but many people don’t understand that self-esteem is essential to being a good communicator. Without self-esteem, we become overly concerned with what other people are thinking and feeling and because of this, we lose our ability and desire to be honest—that is we try to manage emotions rather than becoming accurate and efficient communicators. Having self-esteem also allows us to accept and learn from failure, and I’ll talk more about that in a minute, and having self-esteem also allows us to engage in the relationally important process of asking for forgiveness as well as being able to forgive others. Self-esteem is developed very early in life and it comes from having the ability to correctly predict what will happen. When you can predict what will happen, like the first-born child receiving positive attention in the example I mentioned earlier, the young child’s brain is bathed in chemicals that reduce anxiety and instill calm. But the question remains, how can you help your child predict the world around them? The answer is consistent behavior– that is that parents individually, and even better, together, need to respond to the child’s actions in a consistent manner. If your child does something that is bad and also is cute at the same time, don’t smile and laugh one time and get angry another time. Choose one and be consistent. When your child learns that he or she can act and get a response that is consistent, they then develop a sense of control that is central to feelings of self-esteem. And indeed, they are in some ways in control, they know they can get a response to a behavior.
The second thing is to teach them things that are essential to being good owners – this includes a whole range of behaviors and skills that they should learn as they grow up. The first among these is delayed gratification which means helping them develop the understanding and ability to wait for good things. Research shows this to essential to lifetime happiness and success. This should be taught by age three and can be done as simply as saying, “if you eat one healthy thing you can have two of your favorite things later.” This also helps develop the sense of control I just mentioned. Next, we need to teach children about exchange, trade and money. By the time they are 8 or 9 we can teach them about lending, investing and what business means. This can include making investments in listed companies, using their products, maybe visiting their locations, and developing pride in what they own. Ages 10 to 15 we can educate them as to the importance of the separation of ownership and management and what is meant by boundaries. From ages 18 to 25 we can help them become, as Murray Bowen coined it, emotionally differentiated, which can be considered a version of maturity. During that time, we should also help them understand the three statements of financial condition, which are the Profit and Loss statement, Balance Sheet, and the Statement of Cash Flows. We should also help them learn the DuPont model of ROE, the basics of EVA, and the capital asset pricing model as well as its short comings.
The third element that can help your children become good owners is understanding the importance of failure, learning from failure, and learning the importance of asking for help and advice. The simplest way to do this, and there are of course many more things you can do as well, is to decide, for every age of your child’s life, how big of a failure you’ll allow them to make, and by how big a failure, I mean how long they will suffer from the failure or mistake. For example, as an infant you may step in when the child might do something that would cause them to suffer or feel badly for 3 minutes or more, at age 5 you might let them make a mistake that causes them suffer for 10 or 15 minutes, by age 8 you might let them make a mistake that causes them to suffer for half a day, and so on, until they hit adulthood, which in this framework is defined as the age at which you would allow them to make a mistake that causes them lifelong consequences—you would not warn them or step in and try to influence them ahead of time. People who take this approach generally report that their children come to realize that it is better to come for advice and ask for help so that they will avert failure. Through this process, your child will also develop the ability to learn from failure and will want to learn from failure.
The fourth piece to this puzzle of how to raise kids to be good owners is to raise them to work together. The first step to this is to stress to your children that their first job is not to be happy, it’s not to make their parents happy, but it is to take care of each other. Consistent with this idea are the purported words of the founder of the Rothschild banking family, Mayer Amschel Rothschild, to his children, “One of the most important rules is that none of my children should succeed if that success means the failure of another of my children.” This beautifully captures the idea that if you want your children to be able to own together, to make decisions together, and to put the success of the whole ahead of personal success, which is essential for family business success, that you must explicitly and implicitly tell them that the success of the whole and their working together is a high priority. Along with emphasizing joint effort and care, encouraging your children to practice making decisions together is also important. For example, when they are young you can instruct them to decide where you might go to have a nice dinner and that if they can’t reach an uncoerced and joint agreement they will stay home while parents enjoy a quiet dinner alone. Later, they can decide on places to vacations, and yet later, stocks to invest in and so on until they have enough practice that they can make joint decisions about the family business. Likewise, if they can work together, and have practice at making decisions, they will have naturally learned the importance of asking for and giving forgiveness as this is an essential ingredient in long-term healthy relationships.
CAB: There’s one thing you often mention during your speeches that I really like, and that seems to resonate really well with different audiences – about the necessity of teaching your children how to swim. Can you explain what you mean by that?
JA: It came to me because I was so surprised by people believing that if they just hide their wealth and business from their children that their children would grow up well. The line is, “Think about teaching your children about money and wealth like you would teaching your children how to swim and water safety if you lived by the ocean. You have a moral obligation to teach your children to swim so that they do not get into trouble or drown. Similarly, with wealth and position, you have a moral obligation to teach your children about dealing with wealth and societal obligation, lest they get into trouble or cause trouble for others. You have made the decision to raise them near a possible source of danger and nothing other than teaching them how to act safely will protect them from such danger.”
CAB: If you could only give a family one piece of advice, what would it be?
JA: Don’t be misled by the idea that your family is fragile. Families are much stronger than we usually give them credit for, and this means that you can promote candor and open and honest communication on a range of topics, both comfortable and uncomfortable. Waiting for a conversation is never a good thing.
This interview has previously been published on blog.hslu.ch/familienunternehmen and www.familybusiness.org.
