Tag: other

by Kathy J. Marshack

as published in the Summer 2002 issue of Family Business Magazine

Margo was dumbfounded. She never would have believed her son Brett could humiliate her this way. She just discovered that Brett was having an affair with one of their employees, while his unsuspecting wife was at home caring for their two children. She knew that Brett was having trouble at home but she thought with the marriage counseling that things were back in order.

Of course Glen, Brett’s father had “indulged” in a few flings when he was younger, but Margo was sure Brett knew nothing of this. Brett’s actions created a tremendous weight of responsibility for Margo as the matriarch of the family and as co-owner with her husband Glen of the family/business. How was she to handle this problem? Who should know about it? Who already knew?

Glen started the sheet-metal manufacturing plant in his garage 30 years ago when he decided to escape from the monotony of working for unenlightened employers. Using his engineering degree, he had an idea to build better fittings for trucks, such as cargo boxes. His ideas appealed to independent truckers and eventually spread to larger trucking companies. Margo helped with the business while it was based at home. She handled administrative details like office organization, billing and bookkeeping. As the business – and the children- grew, Margo stepped back. Glen moved the operation to warehouse space and hired more professional and technical employees. Thirty years later, Glen’s company has become a national business with three manufacturing plants and a fourth in the works. He wants to retire and feels he ahs the right people in place to succeed him. However, recent events have made him concerned that the transition of leadership to his son will be shaky.

Margo’s story, unfortunately, is common. Sex and infidelity erupt in a family and cause aftershocks that affect the lives of many people. When a family also is part of a larger system such as a family firm, the web of entanglement reaches out not only to other family members, but also to employees, vendors, customers, business advisers, and the myriad other people who are part of the family/business system.

In my own experience as a family business psychologist for more than 25 years, I’ve found that extra-marital affairs are seldom a secret. A few in the company may be clueless, but lovers’ behaviors give them away. Then there are those indiscretions, like phone calls or emails from the office, or gifts purchased with the company credit card, or business trips for one but hotel reservations for two. Eventually the facts mount up and things erupt. Before this however, employees, coworkers and other family/firm members are aware of the problem but feel helpless to do anything. Some try to ignore it and carry on with work. Others may be so brave as to offer advice. Most worry about their future because they doubt the leadership that would ignore or allow the infidelity. Deception makes people uncomfortable and uncomfortable people make mistakes. As the internal discomfort escalates, and the mistakes escalate, and the stress escalates, the problem can spill out to customers, vendors and others you do business with.

As many family/business owners know, entrepreneurship with one’s family offers tremendous rewards. But this lifestyle also carries with it a larger responsibility toward others than you might think at first.

In my practice, I have seen many marriages face infidelity and come to grips with the impact it has on the couple, the family and the business. The solution almost always comes in two parts: First, you must understand the nature of infidelity itself or why it happens at all. Second, you must understand the effects that infidelity has on the entire family/business system.

If we psychologists know anything about infidelity it is that infidelity is seldom just about sex. Infidelity is a symptom, just as a sore throat is about a cold coming on, or that whirring/pinging sound under your car hood is about a loose belt. Symptoms tell us there is a problem needing attending to. If you have a sore throat you should rest, drink fluids and take some aspirin. If you press on through, chances are your cold will be twice as bad. Likewise, if you ignore the whirring/pinging sound coming from under your car hood, you risk having a belt break and cause greater damage to your car than if you took it to the mechanic right away. Infidelity is like that. There were probably symptoms long before the first act of indiscretion, but no one was looking or listening for it.

The really difficult part though is figuring out what the symptom is telling you. Usually infidelity is a big secret so it is not likely that the family is talking about it openly, even if they know about it. What’s more, the person engaging in the action isn’t always very open to discussing his or her misbehavior with the family. But talking about the symptom is exactly what is needed to get to the bottom of the problem. No doubt the talking should take place with a professional psychologist, in private at first and not with the family as a whole. But eventually the family/business system needs to be brought into the solution process.

So why are partners unfaithful to each other? There are as many reasons as there are people. Each of us is wired slightly differently and each of us breaks down slightly differently. Brett’s infidelity was related to some problems he and his wife, Laurie, were having at home, but Brett was also unhappy at work. At 42, he had a good job that afforded him the opportunity to live luxuriously. He was respected and admired in his community. But, Brett felt the psychological pressure to be his “own man.” He still worked for his parents, and that made him feel less than independent. Added to this is that Brett was still angry with his parents for never resolving their marital problems. Brett was not naïve about his father’s “indulgences.” He was angry that his parents kept these things a secret (that everyone knew) and that he had to grow up playing the game too. He was angry that a part of his innocence as a child had been taken away before he was ready to take on the complexities of life.

The issue here is not to blame or focus narrowly on the indiscretion, but to search for the root or roots of the problems, and then to build an intervention. When you are in the middle of this kind of emotional uproar, you aren’t always capable of thinking clearly on your own. You need the objective guidance of a professional trained in helping families heal from psychological assaults. Plus the natural tendency of all families- whether they are in business together or not- is to cover up problems in the mistaken belief that doing so will keep the family safe. The professional can gently guide the family members back to some semblance of common sense and solutions that work instead of hiding the problem as Margo and Glen had done years ago.

Margo was the first one to seek help. She was extremely distraught but afraid to confront her son or her husband. After we talked she realized that she could not solve this problem, so she asked Glen to attend our next meeting. Glen, now older and wiser, was not as stubborn as Margo had feared. He acknowledged that his careless behavior earlier in his career had lead to heartbreak for his wife. He was unaware however, that his affairs had caused problems for his son.

In the process of my walking the couple through the facts of family life, they were better able to understand how their role modeling had indeed affected Brett. Margo and Glen also had to acknowledge that times had changed and that the business world was not as tolerant of sexual indiscretions, especially among business leaders. If the business were to thrive under Brett’s leadership, he had better develop more insight than his parents had.

The next step was to meet with Margo, Glen and Brett. I encouraged the parents to carry the conversation as they pressed Brett to be honest about his predicament. They were loving but firm that Brett needed to resolve his personal problems or that he would hold back the company.

Glen and Margo also confessed that they had let him down as parents. They were willing to take some responsibility for poor parenting, but they were not willing to take responsibility for an adult child. Brett needed to face the consequences of his own actions.

Brett was angry and confused but was willing to seek individual psychotherapy to figure out what he wanted- in terms of his marriage as well as whether he wanted to continue with the family business.

Over time Brett and his wife, Laurie, became involved in marital therapy again and they recommitted to each other. Brett didn’t want to run away from his wife or his responsibilities to the company, but he didn’t know who he was. He had been his parents’ child and never really grew up until the confrontation forced it.

Eventually I met with Margo, Glen, Brett and his wife Laurie to discuss how to resolve the problems at work. With the secrets out of the closet and spread out for all to see and discuss, it was much easier to plan for rebuilding the lost trust at work. Brett’s behavior had seriously compromised his leadership at work, especially since he had had an affair with an employee. Was it fair to fire her? The company was large enough to transfer her to another operation but was that a kind of punishment? Would the other employees have opinions about all of this?

The best solution for this family business was to transfer the employee and require of her that she attend psychotherapy privately. (She too must have some unresolved growing up problems.) She was a hard worker, but her behavior could not be allowed to influence the morale of the team.

Brett met with the managers and talked about his indiscretion and what he was doing to correct the problem. They were relieved by his candor: It meant they didn’t have to keep a secret any longer or talk behind his back.

As this case suggests, unresolved marital infidelity, led to a similar problem in the next generation. If Margo had not sought help for her family, Brett may have deteriorated further and never grown up. Company managers were already questioning his leadership, so upon Glen’s retirement or death they might have abandoned Brett.

Organizations can survive infidelity without cleaning it up, but in such cases the culture becomes one of getting by rather than thriving. Mentally healthy people choose to work in more ethical organizations.

It’s not so easy any more to dismiss infidelity as “flings” or “indulgences.” People are willing to level sexual harassment charges at the President of the United States, so I doubt that your employees, customers and others are more tolerant of these types of behaviors among the family/firms they do business with. This type of behavior can be very harmful to your business in terms of respect and market share. So the object is to deal with it swiftly but not punitively. For example, a large trucking company continually ignored the sexual harassment complaints of employees regarding one manager because he was dynamite at getting the work done and ahead of schedule. However, after the third lawsuit, they began to see that the problems he brought to them and morale problems of their staff far outweighed the gain. (They waited until his behavior was so outrageous that he was having sex with employees on pallets in the warehouse!)

The minute you get wind of the symptom of infidelity, confront the people immediately. Don’t cast blame, but explore or investigate what the real problem is. It’s easy enough to suggest that an employee seek professional help, because his or her job is on the line. With a family/business member and a co-owner of the business, it may be necessary to arrange an intervention, or a meeting of trusted family members and advisers who meet with the troubled person and confront them, similarly to the confrontation of an alcoholic.

Many people see infidelity as a moral issue, but it may be more useful to see it as a problem of practicality. Infidelity destroys trust not just between marital partners but among those who know the people involved. Deception and betrayal are not characteristics we want in our children or employees, so why would you condone them? Better to confront the problems head on. Refer troubled people to professionals for guidance and refer troubled family business managers to consultants who can help you redesign a system that helps people solve their problems and power issues in an enlightened way.

Kathy J. Marshack, Ph.D., P.S., Licensed Psychologist and Family/Business Consultant is the author of Entrepreneurial Couples: Making It Work at Work and at Home. Please visit her website at www.entrepreneurialcouples.com. On line consultation is available also.

By Kathy J. Marshack, Ph.D., P.S.

As Published in the Fall 2001 Family Business Compensation Handbook
For more information on the handbook visit –
http://www.familybusinessmagazine.com/handbooks/fbbooks.html#compensation

Because women tend to put family first, their contributions to the enterprise often are discounted. But paying them inequitably may cause family disharmony—or a ‘brain drain.’

When I was a girl, my mother used to tell me, “Women focus on relationships, not money.” Whether she was trying to teach me a lesson or merely to advise me of a fact, I have noticed the truth in this saying.

The value of relationships seems to be more important for women than for men. Women tend to define themselves in terms of their relationships more than men do. Women and girls are more willing than men and boys to put their needs aside to maintain a relationship.

Within a family firm, often the wife doesn’t draw a formal salary. She’s equally likely to forgo a formal title in the corporation, even though she may work just as hard as her husband. The same is true of daughters in family firms. They often assume their role is to support the family. They aren’t as driven as their brothers to be leaders. This doesn’t mean they eschew recognition. But their first priority is to ensure the success of the loving relationships. After all, these relationships came before the business and are the reason it came into being.

The value of love

Research indicates that most family firms were started by their founders primarily as a way to support the family. Women in family businesses still recognize this intent long after the men have turned their attention to developing a thriving enterprise. This concern for family first often gets in the way of equitable compensation for female members of family firms. Because the women are seen as caretakers of the family, they receive low salaries, while the men, who are viewed as caretakers of the business, are well compensated. It’s always been hard to put a value on love.

Even when women in family firms hold positions comparable to their male counterparts’, they’re often paid less than the men—even 50% to 70% less. Indeed, many women are paid nothing at all; the rationale is that they’re gaining other benefits of ownership. One national study touting the benefits of working for a family firm found that women across the nation earned an average of 16% of what their brothers earned!

Pat came to me because she was at odds with her brothers, who were her partners in their family company. There was a lack of trust and respect. Cooperation was grinding to a halt. She wanted help in restoring the relationships. Other family members also worked in the company, and Pat wanted her family to remain cohesive. Pat and her brothers needed to face and correct several problems, including issues related to stock ownership and compensation.

Two of the brothers were dissatisfied with the distribution of stock. Because they had joined the partnership years after the three founding partners, they owned less stock and wanted to buy more. The senior partners agreed in theory to an even division of stock, but they wanted the stock sold for its current value. While this disagreement raged on, no one took note of salaries until I talked with the accountant. While Pat, a founding partner, had as much stock as the two other founding partners, her salary was as much as 45% less than that of any of the brothers.

Pat had never really considered this inequity as a problem. On more than one occasion, she had been the only one to take a pay cut to help the business make it through a rough cycle. As a founding partner, she believed that she would be compensated well for her sacrifice. Now, however, her siblings were suggesting that she sell some of her stock to the two brothers at a reduced rate. Pat not only was a founding member of the business but also had contributed half the start-up costs, although the amount of stock she owned was equal to the amount her two brothers owned. No one was considering that Pat should be treated fairly, but it seemed important to be more than fair to the two brothers who wanted to buy in.

When I suggested that before the stock purchase the salaries should be re-evaluated and that Pat should be compensated for her years of delaying pay increases, I got blank stares from the men. It’s not that they didn’t value Pat; they just had never considered her salary before. They thought she was happy with what she was paid, so they never offered to increase her salary.

Women in family firms need to learn that if they don’t speak up, they get ignored. Men generally voice their opinions, as Pat’s brothers were doing. Women, on the other hand, tend to wait to be recognized.

Why pay women less?

Family business owners’ justifications for paying their female relatives less are often strange and misguided.

• “We save taxes by having my wife work for no salary.”
• “She owns stock in the company, so she doesn’t need a salary.”
• “She works only part-time, so we just pay for child care.”
• “She has flexible hours and can come and go as she pleases, which is a benefit in lieu of money.”
• “Her brother has a family to support.”
• “My son-in-law makes a good income, so my daughter doesn’t need the money.”
• “When she can take on a man’s job, she’ll get paid a man’s salary.”
• “She couldn’t make that kind of money working anywhere else.”
• “She may quit soon to have children, so I see no need to give her a raise.”

It’s hard to believe that in the 21st century, people still say these things, but they do, especially in family firms. Family-owned businesses are often closed systems. Although outsiders may work in the firm and even hold relatively high positions, the power and decision-making rests with the family owners. The closed nature of the system is demonstrated further by the tendency of family firms to follow traditional gender roles, regardless of what their competitors are doing. Generally wives and daughters hold support positions, while husbands and sons take leadership roles or technical positions. Thus, the women are assigned to lower-paying jobs.

When they join the company, daughters often are assigned the kind of jobs that keep them off the management track. Over the years the discrepancy increases between their salaries and benefits and those of their brothers. Rarely are daughters groomed for succession to leadership. Even if they possess native talent, they’re unlikely to acquire the requisite leadership skills if they’ve spent years being a secretary or bookkeeper. Furthermore, research in this field demonstrates that “Daddy’s little girl” is rarely considered for leadership unless there are no sons, even if she’s qualified by education and training.

Unfair compensation is counterproductive

Most self-employed people start their own businesses because they want to be compensated fairly for their work and they want freedom to be more creative. Money is one way to recognize a family employee for her contributions. Titles and other perks and benefits also are rewards for a job well done. When women aren’t accorded the same respect as men in the family business, two major problems develop. First, resentment and eventually power struggles arise. Second, talent development is thwarted.

While it’s true that women are willing to sacrifice salary and recognition to help the family and the business, they also usually believe that their sacrifices will be rewarded in the long run. But these sacrifices may never be rewarded. It’s just assumed that the women will play these roles without complaint. But when the rewards aren’t forthcoming, many family business women become depressed or angry. Depression and anger lead to illness or disharmony in the marriage or family. And personal problems in a family firm can lead to serious business problems.

My research with “co-preneurs” has shown that family business wives work as many hours as their dual-career counterparts, and they attend full-time to the home and children, too. Their husbands rarely help out at home. While this arrangement is what many family business couples feel is necessary to build a successful company, it takes its toll on self-esteem and intimacy. It seems foolish to compound the stress of this lifestyle with a thoughtless compensation plan. Family business wives should be paid what they are worth to the business and the family.

Many family business women don’t work full-time in the company. They have chosen to be more available to attend to family matters and contribute their talents to the community—and business success has allowed them to do so. But part-time work shouldn’t be considered less valuable to the family firm. Many law firms, for example, are changing their policy regarding part-time lawyers in recognition of the contributions of part-time professional employees. Because more women are becoming lawyers, and because these women want to maintain a healthy balance between home and work, many of them work half-time or three-quarter time. Law firms are even offering partnerships to their part-timers.

If a family firm wants to retain its talent pool, it’s time for CEOs of these firms to recognize—through fair compensation—the many contributions that the family business women make.

How to change the system

Women in family businesses are often the backbone of the organization. Whether she’s the founder, a founding partner, a supportive spouse or daughter, or an employee of the family enterprise, a woman often is willing to do work that others feel is beneath them because she recognizes the greater good. Research has shown that when a man starts a business, he usually can count on his wife’s unpaid labor during those lean start-up years. Women entrepreneurs, on the other hand, realize that they must go it alone if their businesses are to succeed. They too use the services of family and friends in those early years, but often their husbands don’t offer unpaid help with such menial chores as housework, child care or envelope stuffing. Limiting recognition of all of the contributions Mom makes to one day a year—Mother’s Day—is insufficient. As a stakeholder or a stockholder, a family business woman should be accorded compensation, benefits and perks befitting her considerable contributions to the health of the family and the enterprise.

There are two ways to accomplish this. First, the business owners should re-evaluate their standards and update stock, compensation and benefits plans for female employees. Second, they should implement programs to encourage the talent development of the girls in the family. Here are some suggestions:

1. Develop flexible compensation plans that reward women for their hard work and talent even if they work part-time or take a leave of absence.
2. Institute stock purchase plans for part-timers.
3. Evaluate voting rights. Is it absolutely necessary to be a partner or a full-time worker to have a vote?
4. Don’t ever pay the women according to what they would earn at another company. Pay them for their value to your family business. Obviously, a wife or mother is worth much more as your advocate than she would be paid as a bookkeeper in a non-family company.
5. Pay for child care, and encourage the family business women and men to take advantage of the opportunity. Better yet, set up on-site child-care centers so that family business women will not conflicted about leaving their children to go to work.
6. Set up a system to mentor the girls in the family. Often young women don’t even consider joining the family business, because they see the handwriting on the wall (i.e., the guys have sewn up all the good jobs). Arrange apprenticeships for the girls so they can learn first-hand about opportunities at your family firm.
7. Offer scholarships to girls who are willing to study business in college or major in an area applicable to your family business.
8. Don’t restrict scholarships to college. Offer start-up capital to young women who want to set up their own businesses if they write a good business plan.

Many family business owners mean well but just haven’t taken the time to delve into this problem. But if compensation and other recognition aren’t handled fairly for family business women, the enterprise will suffer from relationship disharmony as well as a “brain drain.” For the health and future success of the family business, these problems need correcting immediately.

I have found, however, that once the problem is presented, the average business owner wants to solve it. Many family business owners are innovative entrepreneurs, which means they do what works and are always looking to improve on the old, outdated ways. They know that to stay ahead of the competition and to keep the business thriving, they must look at opportunities that others don’t see. The development of family business women’s talents and skills through fair compensation is one such opportunity to put your business miles ahead of the others.

Kathy J. Marshack, Ph.D., a licensed psychologist and family business consultant in Vancouver, Wash., is the author of Entrepreneurial Couples: Making It Work at Work and at Home (Palo Alto, Calif.: Davies Black Publishing, 1998) and writes the “Families in Business” column for the Vancouver Business Journal.