How Can Mediation Help Business Owners and Their Family Deal with Adversity?
First and Foremost, we at Mediation Path Silicon Valley hope that you and your family are well and staying safe. Sadly, the COVID 19 pandemic is, to all of us, a reminder of our own mortality and that of the ones we love. As a result, it emphasizes the necessity to have an estate plan in place for the orderly distribution of our assets. If you are an entrepreneur, protecting your business resources for the future is key for yourself and your family.
Surprisingly, lots of business owners who devoted a considerable amount of time to develop their mission statement, business strategy and a plan to implement them, fail to realize that, like in any other situations where negotiation will be conducted with an adverse party, when it comes to the future of their business ,in a challenging situation, their family members will not act differently than their providers, sub-contractors, clients etc.. They will fight to be right. In other words, although they are relatives, they will most likely be fragmented into a group of independent, self-interested/self-centered individuals. This is particularly true when some members of the family work for the family business and other don’t.
Therefore, if you own your business, do not wait until adversity knock at your door. We at MPSV encourages relatives not to procrastinate and to come together to create now a roadmap for the future. In these situations, we usually rely on a five-step analysis to allow the family members to become a cohesive force with the same aim: protecting the family business instead of losing it all in a family feud.
Below, is a quick overview of the 5 different subject matters we focus on as mediators to carry out a healthy family dynamic for the future, namely: family education, communication, values, group decision making and healthy family governance.
1. Family Education – We believe that the parents should share with the younger generation(s) what estate planning has been done. Is there a revocable living trust in place? Where are the legal documents kept? How would the children access the documents? If there is a trust for instance, based on our experience, we have noticed that it may be helpful for the parents to schedule an appointment with the estate planning attorney who previously prepared the documents so that the attorney can explain the documents to the children and answer any questions that they may have. If there are tensions following the conversation with the attorney, we can help you and your children overcome any latent disputes.
2. Family Communication – As mediators, we know that each person has their own unique style of communicating. Many family disputes start with miscommunication which leads to conflict. Our role, as mediators is to re-establish communication channels that were eroded by resentment. To do so, in addition to the traditional mediation and negotiation techniques used by most mediation organizations, we at Mediation Path incorporate principles of design and adventurous thinking as taught at Stanford University, interest-based conciliation, graphic recording techniques and other cutting-edge problem-solving processes. The use of this pro-active and innovative approach to conflict resolution allow us to reach a consensus where there is no winner or loser. Our mediation process is meant to allow the parties to design their own resolution to their dispute resulting in a solution that can benefit everyone.
3. Family Values - Many times the parents have worked very hard to create the wealth that will be passed on to the younger generation. We are of the opinion that the parents should share with the younger generation what the accumulation of wealth has meant to them and how they would like the younger generation to manage the money they will receive including the shares of the family business. As an example, in one of our recent family meetings, a mother exclaimed to her children, “And, I don’t want you to buy expensive cars with the money you inherit.” Having the children understand why she did not want them to buy expensive cars lead her to share an entire part of her life that her kids were not aware of. Sometimes, even things that may be interpreted as trivial will open the communication channels in unexpected ways and allow to get a better understanding of one personality by sharing repressed memories.
4. Group decision making - If you do not already have an estate plan in place, we can help you and your family discuss the main provisions that should be included in such document: whether or not you want to remain in your home for as long as you are physically able to live there; what the youngers should do with their financial interest in the family business, a mediation clause to limit the recourse to a court trial between the heirs etc. As mediators, we know for a fact that the major benefits of this pre-discussion process are as follows: it give the opportunity to both the parents and their children to work together, the parents stay in charge of the decisions made not the kids, the heirs will learn to work together for the benefit of their parents and not for their personal interest. By doing so you are setting the groundwork for the children if additional issues should arise in the future.
5. Building the Home Team – Based on our experience, it is important to start with small issues and develop a foundation of communication and trust. Then when more difficult decisions need to be dealt with the “family team” will already have a methodology of dealing with uneasy topics. For instance, the family might start making decisions like: who is going to host Thanksgiving this year? when and where is our next family meeting going to take place? Later the family can move on to more challenging issues, such as: is the business going to be sold? Who is going to inherit the family business?
As a conclusion, in many cases the first time that the children come together to make financial decisions are when they are settling their parents’ estate. The children are usually in different stages of grief and loss and may not be thinking or communicating clearly. This is where problems start. Families who have used one or several elements of the five-steps analysis describe above, before a stressful event occurs, reported that the “Home Team”, was better able to work together and to manage the family wealth long into the future.