Family limited partnerships formed by parents for their children will backfire if the siblings can’t work together.By Ellen Frankenberg
We all know that a hormone-laden teenager is developmentally different from a teething toddler. Yet we assume that once people cross into adulthood—artificially set at 21 for legal purposes—there are no further developmental differences that affect behavior. Not so. Experience, and considerable research, indicates that a 60-year-old is quite different, developmentally, from a 40-year-old, who is developmentally different from a 22-year-old. Like the public, business owners and their families are remarkably uninformed about this notion, which is too bad, since they can put it to great use.
Business families pay a high price for their developmental illiteracy. Sons and daughters are pushed into management and ownership roles before they are ready, setting them up to fail. Seniors needlessly delay retirement because they don’t construct alternative work lives that are more in tune with their developmental needs. Generational transitions are grossly mismanaged because the leaders can’t read the developmental writing on the wall—seniors who are tired of daily battles, juniors who are tired of waiting to take charge.
A clear understanding of the developmental phases of adulthood can help family members in business anticipate the inevitable changes in priorities and expectations they will face, in turn helping the family and the business evolve more naturally and effectively.
What, then, can owners do to begin to map out the powerful influences of development on themselves and their families? A good place to start is a basic demographic analysis of the family. Create a simple matrix on a plain sheet of paper: List down the left-hand side of the page the names of family members who own or will own stock, who work in the company, and their spouses, from the oldest at the top to the youngest. Across the top of the page, write the years from 2000 to 2010. In each box of this table, write each person’s age for each year, projecting forward. Once the table is constructed, study it and ask some questions: What issues are you and your family likely to be facing in the years ahead? How can you best prepare yourselves to face upcoming challenges and opportunities?
You don’t have to be a rocket scientist to figure out what lies ahead. Nonetheless, a basic understanding of the developmental issues associated with each life stage will help enormously in anticipating family members’ future needs.
For example, finding the optimal time for a family member to enter the business requires recognizing that young people in their late teens and 20s need to consolidate their identity by differentiating from their family and exploring the world around them. Keeping options open is important at this stage. Insisting—as too many business owners do—on getting a life-long commitment to the enterprise from a son or daughter at this stage is a major developmental blunder. Young adults’ reluctance to commit does not necessarily mean they don’t care for the business, or what you’ve done for them. It is simply that 20-year-olds first need to gather their own life experience, period.
So look at the age matrix. Then encourage these young people to explore, before enticing—or bribing—them with careers in the company. If the matrix shows that the senior generation must rely on nonfamily talent to take charge because the juniors might not be ready when the elders want to retire, so be it. Short-changing the natural ebb and flow of development is never a good thing.
Similarly, the matrix can help identify the times when the junior generation might be more or less open to being mentored. Typically, people in their late 20s or early 30s are more open to being mentored than people in their late 30s or 40s, who by that time are tired of being juniors and increasingly want to fly on their own. Just recently I was with a father who could not understand why his 40-year-old daughter, whom he had groomed for years, was no longer willing to spend as much time with him learning how to put together deals. What to her was the natural end of an apprenticeship process was, to him, a hurtful rejection. A little developmental literacy would have helped both interpret what was really going on.
Developmental thinking is also exceedingly useful when seniors begin to wrestle with the issues of retirement and letting go. The first thing people usually notice when projecting the age matrix forward is the dramatic effect that adding 5 to 10 years has on the senior generation. The exercise is often a rude awakening about how little time remains before a generational transition must occur.
As family members begin to understand the developmental forces acting upon them, they should also consider important distinctions between a person’s biological age, functional age, and social age. Functional age refers not to how old the person is but to how well he or she has retained mental and physical faculties. Social age refers to how old a person is relative to the institutional roles that he or she occupies.
While people age physically at slightly different rates, the change in functional and social age can vary much more. Yet society, and the business world in particular, hold certain implicit expectations about age and roles. Some of these are not arbitrary. Just as you might raise an eyebrow after boarding a plane and learning the pilot is in his 80s, executives, board members, and family shareholders may worry about having the company led by a person over 80, competent as he or she might still be. It is not entirely coincidental that people between ages 45 and 65 lead most institutions. A developmental perspective can help promote constructive conversations about a leader’s social age and the need to establish a retirement policy. This approach is less threatening because it frames the discussion in terms of demographic realities and organizational needs rather than questions of personal competence.
The influence of social age is also noticeable in a business leader’s interaction with the outside world. The wider the gap between a company’s leader and leaders of other institutions, the harder it is for him or her to connect with the social network that makes up a critical element of a business’s environment. This concern is not about personality, but deeper demographic forces at work.
A developmental perspective recognizes that change in family enterprises, and in the individuals who populate them, is punctuated by transitions and periods of relative stability (see “Developmental tasks at different ages,” page 68). The transitions, while often stressful and cumbersome, offer opportunities to explore new alternatives and course corrections essential for growth and maturity. The periods of stability test our capacity to deliver on the aspirations we have for the lives we want to lead.
Developmental theory is not a horoscope. It attempts to catalog fundamental tasks that human beings must work on as they progress through life. How these tasks are worked on varies with a person’s personality and life circumstances. A developmental perspective raises our awareness of the importance of timing and of readiness for change. It encourages a view of people as works in progress and fosters a sense of patience, tolerance, and forbearance that is essential for the effective functioning of any successful business family.
Ellen Frankenberg heads The Frankenberg Group in Cincinnati, which advises business families, and is the author of Your Family, Inc. (Haworth Press, 1999).