In Hans Christian Anderson’s classic, “The Emperor’s New Clothes,” a couple of shady tailors convince the king that they can make him the finest clothes and that those who are unfit for their positions, stupid, or incompetent will not be able to see the clothes at all. They pretend to dress the king in these “invisible” clothes and he pretends to see them as he surely does not want to seem an unfit ruler. In his parade he marches naked and the subjects all pretend to see beautiful clothing as they certainly do not want to appear foolish. Finally, a young child shouts out the obvious – “He isn’t wearing anything at all!”

Family businesses and their advisors often choose not to see what is really in front of them. Parents want to believe their kids can accomplish what they themselves did even when the next generation has a different set of talents (which may very well be harnessed for the family enterprise if seen for what it is and developed in its own right). Cousins may believe their inherited share of ownership relates to an innate ability to lead and grow the assets while other cousins have the same share of ownership AND more experience and a proven track record. Senior generation family members insist on having next generation family members enter the business when their true passion (and often education and experience) lie elsewhere. Examples abound.

Many of the varied professionals I know and work closely with have family clients with serious issues that are not addressed and are at the intersection between family dynamics and ownership/leadership of shared assets. These dynamics tend to fester and even when they do not bring a business to its knees (which does happen) they can still stymie the level of productivity, profit and family harmony that might otherwise exist. These professionals are good, smart people with integrity. But in law school or university programs for finance, accounting and related professions there is often little to no training for intervening in this tender area where family dynamics (an emotional system) combine with ownership and leadership of shared assets (an economic system).

Rather than stare at the naked king pretending things are not what they really are, there are lots of simple ways to educate family clients about typical pitfalls in family business (and by “naked king” I am referring to the whole system of family-business interplay and all those involved rather than only the patriarch or leader). In my article published in the Family Firm Institute Practitioner, “Tips for Those Difficult Family Business Conversations,” I detail how professionals can approach these conversations without exacerbating problems or insulting clients. When done right, professionals gain esteem in their client’s eyes.

What is the Lesson?

Enterprising Families: Take a deep breath and ask your professional advisors the common challenges their family clients face and give them permission to share feedback on your situation. Consider joining a university-based family business center and become involved in their professionally facilitated groups; learning from fellow families is invaluable.

Advisors to Enterprising Families: My close colleagues express to me the risk they feel in trying to attempt these kinds of open conversations with their family clients. However, many of them have sought additional training in order to achieve a level of competence in facilitating these open conversations. All my professional colleagues know that they can call me for support around strategizing a conversation like I describe here and many take me up on the offer. And when they embark on a series of conversations if they feel they are getting in over their head, they call for backup.