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University of Massachusetts Amherst

Family Business Center

Q&A With Tom Davidow

No notes, no outline, no handout-and no speech. Psychologist Tom Davidow, of Genus Resources, bravely threw the floor open to questions in the first minute of his presentation. The unusual format for the Family Business Center's March 8th gathering at Chez Joseph was a success; Davidow spent the next two hours giving a huge amount of information in response to the specific concerns of attenders.

Here are some of the highlights:

Q: Should a psychologist test the entire family in a family business?

A: There will only be change if the whole family is involved-all the stakeholders, those in and not in the business, spouses, extended family. Otherwise, if one person is ready to improve, family systems will resist the change.

Q: How do you stimulate that level of participation?

A: Discomfort and pain drives change. If a system isn't functioning well, everyone has a measure of discomfort. Relationships among family members are also affected by that stress. We create the safety to communicate in a problem solving instead of an accusatory way-and only come in if all family business members interview us together. It's all about neutrality. If the family members can gather, by definition, they agree there's a problem they'd like to solve, cooperatively. The entrance into the process is critical. All those people have to feel represented, informed, and have input. If they don't have any ownership of our being there, it won't work. The family has to commit to each other to make it successful.

Q: What if you can't get all the parties to the table?

A: Family businesses are very seductive, the lifestyle is addictive. If you allow yourself to forget you have choices, you'll live in an impossible situation. If you have to leave the business, you'll figure out how to be on the other side. I try to help create some language that will not threaten. You're standing side by side, looking at the future, instead of opposing each other. You are in control.

Q: How much time does it take to achieve progress?

A: You need time for people to internalize and reflect the change, to assimilate the behavior. That can take a minimum of 18 months. Change begins immediately. After 9 months, people feel pretty good! A lot of energy will shift from the family to the business-but if we left, it would all roll back; we stick around to see that you 'got it.' If you have 40 people involved, it might take 2 or 3 years of weekend retreats. You'd end up with structure, with places to disagree in a contained way, with resolution. Family businesses can create cultures that be healthy, constructive, and give you the competitive edge.

Q: Is there a cycle? Will I struggle with my brother every 7 years? Every 7 hours?

A: It's all in the context of the business. A credit manager and a sales manager should be arguing if they're doing their jobs. But if it's your brother, it goes all the way back to the bicycle, to dessert. What's difficult is the power and strength of the history and emotion. When you have two intuitive people with lots of experience, there's no framework to evaluate, to disagree. We introduce traditional business methodology-hold meetings around the P&L. the numbers can help establish criteria, develop external methods to defuse the dialog. It becomes, 'what quantitative criteria can we agree on?' instead of 'I'm right.'

Q: What causes a business to call you in?

A: If the business wants to go into the next generation-and 99% do. If they want to sell, they probably don't need us.

Q: If non-family long-term employees have a stake, how do you define family?

A: We assume the family owns and/or controls the business. You still have non-family people with huge financial and emotional investments; you can take advantage of that! We came to two brothers with no communication skills. The non-family manager gave us the whole history.

Q: You get called by the ones who get ulcers. What about the ones who give ulcers?

A: they're unhappy too. the trick is to articulate common ground, something beginning: 'would you like things to improve?' When they say yes, you have some buy-in-unless they're rooted in their own deep psychological problems (i.e., clinically schizophrenic). If you work with someone like that, either get some help or make some tough decisions.

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