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Philippines

Elephant in the room

Elephant in the room

PROF. ENRIQUE SORIANO

ONE of the most common causes of family tension that I have learned in my years as a family business coach is that every family-owning business has what is commonly referred to as an “elephant in the room.” Wikipedia defines that phrase as an “English-language metaphorical idiom that means that there is an obvious problem or risk that no one wants to discuss, or a condition that people do not want to talk about.” For the sake of discussion, the word “elephant” suggests that the problem is so big and heavy that no one wants to confront it.

This problem must have been caused by a past event, and an article in Business Harmonizer makes a good case definition of an elephant in the room when it said “the natural mingling of personal and business interactions and decision-making in a family-owned business adds emotional complexity to every stage of the family-business life cycle. The communication and relationship dynamics between family members who are also co-workers or co-owners can result in unconscious or unspoken, often highly charged, emotional undercurrents that lead to conflict-provoking behaviors.”

Personally, this has been a challenge in coaching family businesses in Asia. Every family member finds merit in pursuing governance as a way toward attaining family unity, but when it’s time to press them to talk about forbidden issues, they become uncomfortable and prefer to share the issues individually and in complete confidence. And by virtue of the elephant’s size, it takes up so much energy, time and productivity. The phrase “in the room” implies that the issue is so large that no one couldn’t help but notice it. And since it is in the middle of the room, it means family members have deliberately walked around it and, worse, pretended it is not there, rather than deal with it. Many family-owned businesses struggle with these issues, yet rarely address them openly. Even next-generation leaders are left in the dark.

Is it because of the emotional nature of these issues that few people are only willing to raise them in whispers? The consequences of ignoring them are huge. They can produce serious impediments to growth and change over time, eventually undermining even the best laid-out business plans and a family’s hopes for enduring family harmony.

The elephants

The term refers to a question, problem or controversial issue that is obvious, but ignored by family members, primarily because it causes embarrassment and may “rock the boat.” The latter means stirring up trouble where none is welcome, disrupting things, promoting disharmony, upsetting family members and causing disagreement.

There are qualitative truths that business leaders must understand about elephants in the room and ignoring them does not make them go away. In fact, once they find a home, they tend to stay for good. And if I may add, baby elephants tend to get bigger over time. Just like all issues, the problem starts small and grows into something weighty.

I have listed some of the top “elephants” that must be addressed immediately, because setting them aside can cause disruption and will throw the family business off course, creating unnecessary frayed nerves and strained relationships:
– A black sheep family member
– Family member(s) delibe­rately excluded
– Family member(s) refusing to join the business
– In-law issue causing strained relationships
– Sibling rivalry that has affected the business
– Growing sense of entitlement of family members
– Patriarch refusing to hand over power to the next generation
– Unclear and confusing ownership structure
– Conflict of interest and self-dealing among family members
– No succession plan in place
– No estate planning.

Having an elephant in the room is demotivating to the family and the business, as well as to non-family members, especially the professionals who will not hesitate to abandon ship when these issues are wantonly ignored. When they are not dealt with immediately, the leader can be perceived as weak, ineffective, biased and lacking in leadership skills. The consequences of ignoring “elephants” is extremely risky. Procrastinating and having a do-nothing attitude among family members should never be an option. And family members must realize the importance of dealing with these elephants with the help of experienced family business advisors before it’s too late.

Prof. Enrique Soriano 3rd is an author; World Bank/IFC governance consultant; senior advisor of Post and Powell Singapore; and executive director of the Wong + Bernstein Family Advisory Group, a research and consulting firm in Asia that serves family businesses and family foundations. He was the chairman of the marketing cluster at the Ateneo Graduate School of Business in Manila, and is currently a visiting senior fellow of the IPMI International School in Jakarta.

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