Many family businesses fail because of distrust and miscommunication. In this article, we’ll look at why open communication is vital to the success of a family business.

Families often assume that, because they are a family, they communicate effectively. They spend more time with each other and know each other better than people in a "normal" business. Therefore, they must communicate openly and effectively, right? Well… not really.

In fact, communication issues are likely to arise more in family businesses because of the relationships between family members.

Let's see why communication is so necessary to making sure a family business succeeds.

Problems with Lack of Communication

One day, Winville was out on a run with his friends, including Julie. At his recent birthday celebration), Julie had talked about how her family business operated. Winville wanted to learn more about their dynamic.

Julie's family had a formal forum where family members could communicate with each other. Winville had a different experience with his family (see this backstory) 

Years prior, health issues had forced his father to retire from leading the family real estate development business. Winville hadn’t wanted to take over, but he'd had no choice because he had to protect the most important family asset.

He doesn't regret his choice because the business has evolved. However, he realized that his reticence to take over was because he and his father hadn’t communicated well. Julie explained how her father and grandfather had set out guidelines and rules regarding how the family should operate and communicate. Winville realized it would have really helped if his father had done something similar. Throughout his life, he'd rarely been comfortable enough to talk to his father about the business. His father didn't listen or value his input.

Julie explained that while communication involved the practical aspect of exchanging information, it also included an emotional component. How people feel about the presence or absence of good communication is just as important as exchanging information.

That's when Winville realized the psychological effects of the lack of communication had made him reticent to take over the company. Winville didn’t want to make the same mistakes with his own family. So, he considered the key principles of effective communication.

Don’t Make Decisions in a Vacuum

Winville realized that an over-arching principle of effectively communicating in a family was that no one should make decisions in a vacuum.

Just because you are close with people doesn’t mean you know what they're thinking. Making assumptions about how they would react to and/or think of a certain problem or situation is a mistake.

Not only could you be off in your assumptions, but you’ll also make them feel you don’t value their input. That’s what happened to Winville, and it was something he wanted to avoid doing to his family at all costs.

Listening Is as Vital as Talking

Julie also brought up an interesting issue: what to do if conflict arose between family members. After some discussion, Winville added another principle to his list.

Communication was just as much about talking as it was about listening. Paying attention to what other people think and feel is essential. In fact, it can often be more important to listen than to talk.

Don’t Take Everyone’s Words at Face Value

Another important principle was to take into account the method of communication. Julie gave an example of a family member who had two young adult sons, Bill and John.

The family member in question felt that encouraging the two to compete for a promotion would bring out the best in both of them. Unfortunately, any form of conflict will end poorly when it’s encouraged.

Bill was more innovative and independent than John, who was a follower by nature. Bill wanted to try new things, whereas John agreed with their father to avoid conflict.  

The problem was that their father seemed to have a bias towards John. Where he gave John positive reinforcement, he was sarcastic with and even demeaned Bill. Eventually, John got the promotion, even though Bill would have done a much better job.

After being put down for so long and seeing the promotion go to his brother, Bill left the family business. The move wasn’t good for the family or the business.

People communicate differently. Therefore, it's important to pay attention to what people say, but also to what their body language tells you. Someone might say one thing, but mean something else, which you can only tell from their body language. So, "listening" to someone’s body language is as important as listening to their words.

Encourage People to Communicate

Another concern Winville had was what if someone didn’t want to communicate? You’d assume that everyone wants an opportunity to express their opinion, but sometimes that isn't the case.

Julie explained that her approach was to try to always allow others to share their opinions first. So, she'd present a problem and ask for everyone’s ideas on how to deal with it.

She avoided presenting her own solution to give others a chance to share theirs. She also did her best not to dismiss a solution out of hand, even if she didn't think it was viable. This was an effective approach, especially with new family members who might feel left out.

She also explained that listening wasn't enough. You also have to implement a viable idea and then recognize the person who suggested it.
Julie would often take it a step further. If the person was qualified, she’d allow them to either lead or at least be part of implementing their idea.

This approach encouraged everyone to speak their mind because people appreciate being acknowledged for their contributions. We all like to feel special, and this is one brilliant way of achieving that in a family business setting.

Communication Best Practices

At the end of his discussion with Julie, Winville came up with what he would try to implement as his family's communication best practices:

• Actively listen
• Communicate clearly and directly
• Be open and honest
• Try to understand and validate other people's viewpoints and contributions
• Communicate frequently
• Be positive
• Show affection and appreciation

Communicating effectively in a family business is critical. It's even more important than any other business because we're more likely to make assumptions about people we are close to than about strangers. Therefore, instituting clear rules and guidelines about communicating is an essential step to building a strong family business that will last generations.