Navigating Change in a Family Business

Dear Coach Alan,

I am the president of a manufacturing company. Recently, the CEO, who is the sole owner of the company, and I recommended an organizational change that would integrate a satellite division that supplied the main operation with product into the main manufacturing operation. The satellite division VP who had up to now reported to me would report directly to the VP of operations.  The satellite division supplied the main plant with parts used in its manufacturing process. Due to our growth, the satellite operation needed to have closer ties to the main manufacturing.  This would bring the satellite division into closer conformity with human resource policies.  It would also help to coordinate state-of-the-art processes such as Six Sigma and lean manufacturing.  The only problem was the VP of the satellite company reacted negatively to the organizational change.  He felt this was a demotion and that the VP of operations would be micromanaging him.  His reaction was so strong that the CEO, who is also a relative, decided to put the organizational change on hold.  This makes me and my VP of operations look bad, and it stalls our efforts to improve organizational effectiveness.  What can I do to move this change forward?

George P.

George, you have recognized organizational gaps and have recommended change to eliminate them.  Congratulations.  Changing the organization to better meet the demands of the company is a role that you obviously take seriously.  I see two issues that you need to sort out before you implement the change you have proposed.  The first is the support of the CEO for this change.  The second is the reaction of the VP of the satellite division.

This is obviously a family business.  As such, the CEO must decide if the company will be run as a business-first or a family-first organization.  In other words, is he willing to make decisions based on the needs of the business or the needs of family member?  From a coaching perspective, you may need to confront the CEO with the dilemma you face in improving organizational effectiveness while dealing with a family member who resists this change.  Do you have the full support of the CEO to implement the change?  If so, what does the CEO need to do to back up this change?

Assuming you have the support of the CEO, you then need to gain the support of the VP of the satellite division.  By now, he has had a chance to process the change.  His initial reaction should not be surprising.  He very likely interpreted the change as a personal failure.  Your job will be to reframe the change as one that the organization needs to improve its effectiveness.  You may want to acknowledge the feelings this VP is experiencing.  This recognition will demonstrate empathy.  You may even want to encourage some venting of the feelings this executive is experiencing as a way of releasing pent-up emotions.  Rational dialogue is much more likely after the emotion is released.

As a coach, you might consider sharing your views of the ideal organizational design, including the integration of the satellite division with the main operations.  What are the gains that will take place once the reorganization is implemented?   If the change were not to take place, what are the losses that the company would incur? Do you have the support of this executive to help the organization realize these gains while avoiding the losses?  By reframing the change from a company perspective, you take the emotion out of the decision.  You will soon find out whether this VP really is able to shift his focus from a personal to a company perspective.

The final piece needed to implement this change is to have both VPs review the new reporting relationship.  What will this relationship be?  Your VP of operations will need to be sensitive in moving this relationship from that of a peer to a role of manager.  And, of course, managing a family member will have its challenges if the family member is allowed to triangulate relationships with the owner/CEO or other family members. As the coach of the VP of operations, you should consider goals for this relationship with frequent updates on how it is proceeding.  Be sure to keep the CEO informed about your progress and gains in implementing the change, as well as the relationship between the two VPs.

Family businesses have challenges that can complicate leadership.  Open dialogue and sensitivity to the family relationships will help you navigate through these challenges.

Using a balance sheet to change behavior

Dear Coach Alan:

I have an executive, Charlie, who is up for promotion.  While he is talented and productive, he is also polarizing and is perceived by his peers as highly emotional and full of bravado.  He can be irritating and, at times, self-destructive.  This executive has an important role to play in our organization. I would like to keep him. What can I do to “save” him?

Jack P.

Using a balance sheet to change behavior

Dear Jack,

In describing Charlie, you have described some of the attributes of what I would call a “personal balance sheet.”  This is a good beginning to create a strategy for “saving” Charlie.  We all have a balance sheet of assets and liabilities.  Our goal should be to leverage our assets to get the most out of them and to manage our liabilities to minimize their negative effects. In your Charlie’s case, his personal style seems to be the problem.  While he appears to be an achiever, he also demonstrates negative behavioral tendencies.

The first thing I would do is to describe the behavioral expectations for Charlie.  How would you like him to behave?  Ideally, what should his peer relationships look like?  His role should be described clearly and communicated to him so he is aware of your organization’s expectations of him.  To provide him with a contrast, I would recommend that you offer him examples of the behaviors that you describe as irritating and self-destructive. Once this gap has been established, Charlie needs to know that it is up to him to close it gap if he expects to be successful in your company.

At this point, you need to decide whether you will assign an internal or external coach to facilitate Charlie’s change in behavior.  In my experience, you are more likely to achieve success by bringing in a coach with experience in behavioral change.  If Charlie truly wants to change his behavior, he will appreciate your investing in a coach to help him to achieve this change.

There are several approaches that may help Charlie to change.  One I will offer here is to recreate experiences where he demonstrated the negative behaviors you described.  By reflecting on this behavior, Charlie should become aware of the negative consequences that resulted from his behavior.  Then, Charlie can reach into his assets to identify how he could have acted differently by using his assets (e.g., achievement).  If Charlie can “reframe” his interactions using his assets to guide him, he will identify alternative behaviors that have a greater likelihood of not only managing his liabilities but moving him closer to his goal of adopting more constructive relationships.

I call this approach “reflective learning.” Essentially, it encourages Charlie to re-analyze his behavior through a different lens, using an asset to guide him. The success of this approach is predicated on the ease with which Charlie can reframe similar situations using his assets rather than directly trying to alter his negative behavior. By substituting an asset for a liability, the chances of success go up.

In sum, Charlie needs to save himself. Your role is simply to provide him some coaching support that will facilitate this change.

The Perils of Rewarding the Wrong Behavior

Dear Coach Alan,

I am the owner of a small but profitable professional services company.  My top performer, Joe, keeps asking me for more money.  Several years ago, I put Joe on a profit-sharing program.  His annual bonus is a percentage of the profit earned for the year. Now he keeps questioning expenses and other deductions from revenue, including his own bonus. It has gotten to the point that profit-sharing has turned into a nightmare.  How do I get Joe to stop challenging me and the company income statement?

 Steve P.

Steve, you may have created this dilemma by basing Joe’s bonus on profits.  Because money is so important to him, he is questioning anything that reduces profits that, in his mind, is not a legitimate expense. I agree with you that this needs to stop.

You might begin by asking what your goal is in compensating Joe. Is your purpose to make him feel like an owner?  This is the usual reason why profit-sharing is presented to employees:  they then share in the success of the company. They also share less in down years.  Not all employees trust the honesty of profit reporting. Small businesses often write off marketing costs, entertainment expenses, and membership fees that are used to generate business.  Expenses also include overhead that might be challenged by less-trusting employees.  For example, an employee may question why the boss plays golf with customers when he or she should be adding to revenue. Also, most employees are risk averse. They prefer to have certainty to their compensation. As one my colleague states, “Profits are about risk, and pay is about work: don’t confuse them.”

If the purpose of compensation is to reward Joe for his productivity or billable time, then profit-sharing may not be the preferred method of compensation.  You may want to consider a bonus program based on the revenues Joe produces. This is easy to track for you and Joe.  Because Joe has more control over his productivity, he will have fewer challenges over the method of determining his bonus, whether it is billable time or margin.

Summarizing your dilemma, you need to decide on how to compensate Joe.  From what I can determine, he seems to want more income and control, not ownership.  Therein lies the clue on how to choose the best compensation program for Joe.

If you accept the assumption that Joe wants to maximize his income, you should consider having a candid conversation with him about his compensation plan.  You may want to point out how the goals of an owner are different from those of an employee. Unless he is willing to risk part of his compensation, the two of you need to agree that a change is in order.  The tension you create by contrasting a compensation plan based on profits with one based on Joe’s productivity should be sufficient to demonstrate the need for change.

Your next challenge is to design a mutually beneficial compensation plan.  You may decide to hire a compensation consultant to help design this plan, or you may do it yourself, taking into account Joe’s needs and your desire to motivate him.  By bringing Joe into the plan’s creation, you will likely get less hassle from him about fairness and how you choose to spend company money.  Anything you can do to reduce the tension between you and Joe and raise the tension between Joe’s desire to make more money and his generating more revenue for the company will yield positive results.  You can even include customer satisfaction in the plan.

I have always viewed compensation as a reward for performance.  It is important that the reward be related to the goals of the company and the behaviors that are consistent with its values.  In Joe’s case, the misalignment of rewards and behavior is creating tension that needs to be eliminated.  As Joe’s coach, your job is to make him aware of this and create a compensation plan that is relevant and within his control.

Turning an Asset into a Liability

Dear Coach Alan,

I have an executive whom I would rate as an A player.  He may even be my successor.  His name is Tom. Tom has many assets, but there is one area of leadership that concerns me.  He is so good at reasoning through problems that he seems invulnerable to several of his associates.  These associates are reluctant to approach him with concerns because they feel he will turn the approach into a debate, which he will ultimately win. Don’t get me wrong; his associates love and respect him. My concern is that he may be undermining his leadership by sending an unintended message that stifles two-way communication and openness.  How can I help Tom to become aware of this liability and encourage the actions he needs to take that would allow his associates to be more open with him?

Sandra M.

Well Sandra, this is a challenge.  It seems to be a case where an apparent asset may have turned into a liability.  It is likely that Tom has learned that his ability to perceive a problem and solve it has been a positive asset in his success and promotion to a leadership position. Now that he is in a leadership position, his role has changed.  He is no longer the “expert” who is rewarded for solving problems. He is now responsible for developing his associates and listening to their views and challenges and encouraging them to solve problems on their own.  His role has changed into one of a coach and not the expert.

This may seem like an obvious shift, but it is sometimes a difficult one to make. Our behaviors often become habits, and “unlearning” habits that have worked for us in the past requires both insight and the learning and practicing of new behaviors. Developing a clear understanding of his leadership role is the first step in helping your Tom.  What he does not want to do is create a culture that makes people feel vulnerable and incompetent. By adopting behaviors that encourage two-way communication and encouraging associates to do the “heavy lifting” and problem solving, Tom will build their confidence and competence.

One way for Tom to encourage his associates to be more engaged is for him to ask probing questions that lead to deeper thinking.  Good coaches are masters at asking questions that require reflection and consideration of the many factors that go into problem solving and decision making.  As his coach, you may want to have Tom reflect on a specific experience in which he behaved in a way that shut off communication and limited involvement by his associates in resolving a problem.  You should encourage him to analyze this experience by exploring the consequences of his behavior from a leadership/culture perspective.  Once he “gets it,” encourage him to practice asking the kind of questions that will encourage his associates to become more engaged in problem solving.  You may even try to role play with Tom.  You could play the role of one of his associates, and Tom, being the coach, could ask you questions that help to get you more engaged in problem solving.

I would like to make one last point. Very bright people who are looking for short cuts and efficiency often justify their behavior as an effective use of their time and energy. They fail to understand the negative consequences of always being in control and demonstrating their ability to resolve problems quickly.  As his coach, your role is to help him to understand that his need for efficiency can undermine his leadership effectiveness.  To grow as a leader, he needs to stop doing the “heavy lifting” and delegate this skill to his associates.

Dear Coach Alan,

I am the president of a small manufacturing company. How do I keep my executive team from letting day-to-day firefighting interfere with their strategic goals?  Is my company too lean? Do I need to hire more people? Does my team need more training?

Ken B.

Ken, this is a great question.  My first response is that you have a head start in finding the answer to your question just by recognizing the problem. I hear this complaint all the time. I am reminded of Steven Covey’s discussion about how urgent demands often get more attention than important ones.  The urgent tends to demand our immediate attention—even if it shouldn’t.  And, there will be no shortage of these kinds of demands that challenge us throughout a normal business day.  I have often heard executives comment that they had a busy day but accomplished little.

You have several options to consider.  But first, it is important to define a strategic goal for your company.  Most companies use this term to identify a major initiative that will differentiate them from their competitors and give them a competitive advantage. Typically, there are also actions that need to be taken in order to accomplish a strategic goal.  This is not what you are concerned about.  Your concern is how to get your executives to stay focused on strategic initiatives and not be derailed by distractions that may seem urgent but are actually less important.

Before you go out and hire people or second-guess your staffing needs, you may want to get a better understanding of why your executive team members are not staying focused on strategic initiatives. Do strategic goals exist for your company? Did your executives participate in the creation of them? Were the strategic goals well understood?  Is your team aligned with you in pursuit of these goals? Are they aware of how important it is for them to accomplish these goals? Have they shared with you their frustrations and distractions as obstacles in maintaining focus on strategic goals? How committed are they to the company strategy and initiatives?

As their coach, it is important that you create tension between the strategic goal and the current status of where your executives are in reaching this goal.  The difference between the two is the gap that needs to be closed.  If an executive is committed to the strategic goal, the tension will be strong to close the gap.  Through carefully crafted questions, you will need to facilitate a dialogue that will focus your executives on understanding their challenge and creating the action steps needed to accomplish the goal.

If your team is cohesive and buys into the company strategy, one option you might consider is group coaching. In group coaching, each team member can be encouraged to offer examples (reflections) of how he or she gets diverted from working toward a strategic goal.  The group can ask clarifying questions to be sure they understand the situation of the presenting team member.  Then, the group can offer suggestions on how the team member can manage the urgent demands while staying focused on the strategic goal.  Each team member should offer an example of the same dilemma; the group will go through the same process of questioning and offering ideas to help the coachee. This process, which is sometimes referred to as “guided discussion,” is a great opportunity for executives to share their challenges while engaging in problem-solving behavior.  The challenges presented are real, and the support given to each member by the team will be felt and appreciated.

I highly recommend you follow this team learning with individual coaching sessions.  These sessions will reinforce the team learning.  They will also give you the opportunity to reinforce the executive’s commitment to the strategic goal.

If your team members vary in their commitment to a strategic goal, or if there is little alignment of team members, individual coaching is your best option. You can use the same process of inquiry as described in group coaching but without the additional breadth of group feedback and shared learning.

There are many advantages of individual coaching sessions. Some individuals are more comfortable in a one-on-one meeting than in a group meeting.  Individual coaching sessions will also give you and the executive the opportunity to explore challenges that were not part of the group coaching session.  Another important reason for individual coaching sessions is to communicate how important the coachee’s achievements are to the company’s mission and goals.  Giving your executive team members personal time is a way of showing your support for them as individual contributors.

Ken, I hope this answers your question. As a coach, your role is to bring out the best in your team members and provide the resources they need to accomplish strategic goals. This requires full engagement, communication, and commitment. Coaching plays an important role in accomplishing your objective of keeping your executives focused on what is important to their success and the success of your company.

On Becoming an Executive Coach

Dear Coach Alan,

I work in an HR department for a large bank.  I have a master’s degree in communication and am active in local HR organizations. In my work, I have had some experience coaching middle managers. My career goal is to become an executive coach. How do I get started?


Thank you for your question. I will honor your request to remain anonymous. Becoming an executive coach requires two areas of competence.

First, it requires you to be knowledgeable in the areas you will be coaching. Since you are in the banking industry, I will use this as an example of how you can advance your career. In banking, you will need to learn about the issues that your coachees face. This will guide you on how to ask questions to help your coachee structure and resolve the tension that will move him or her to change.  Secondly, other competencies relate to the process of coaching. These include, but not exclusively, an understanding of motivation, leadership, change, and communication. Personal attributes that are important for any coach are emotional intelligence, listening skills, intuition, and the ability to empathize with the coachee.

Working in human resources in a large bank will give you an opportunity to engage with many levels of management. It will serve you well to get to know the challenges of these executives.  These challenges include leadership, business strategies, the legal environment of banking, and the different business models within banking, as well as the organizational structure, internal politics, and financial products and services offered by your bank. This knowledge will provide the background you will need to understand the challenges your coachees face in their quest for goal attainment.

Your academic preparation is a good background for coaching. You probably have the conceptual skills you will need to be a coach. In order to learn the behavioral skills needed in coaching, you should enroll in a coaching program. In my book, Executive Coaching and the Process of Change, I wrote about becoming a coach. In it, I reviewed several programs that you should consider. If you are fortunate enough to live in a community that offers a recognized program in executive coaching, you should think about enrolling. Be sure to examine the program and the success of its graduates before committing to it. There are also a number of online programs, and they vary in effectiveness. There are reviews of these programs that offer insights about their efficacy. Coaching certification programs require many hours of supervised coaching.  This will help you to develop and practice your coaching skills. Dozens of books have been published on executive coaching. You should become a student of coaching and read about the profession you want to enter. Finally, search out a coaching peer group in your community.  If there isn’t one, talk with like-minded colleagues and start one.

Most potential coaching customers/clients want their executive coaches to be experienced. You will need to create a strategy to develop and practice executive coaching. This can be done within your current organization or by looking for opportunities in another organization that offers you the opportunity to coach. With a solid understanding of the coaching process and many hours of organizational experience in coaching, you will be well on your way to launching your career as an executive coach.

Dear Coach Alan,

What wisdom can you share about leading a new geographical satellite operation of an existing, established organization? Is it best to focus on a unified and consistent culture and cross-location collaboration? Or do you recommend the new arm of the organization to develop independently? What needs to be considered when you have team members in multiple locations?

 Dear Mike,

Thank you for sharing your question with Coach Alan. Also, thank you for answering my questions related to your startup.  You will see why it was important to know more about your specific situation in order to identify how coaching can help.

I will answer your question in two parts.  First, I will focus on how you will launch your satellite operation, including the strategy and culture that would support your success.  The second part will explore how aligned you are with your CEO on the goals and strategy for launching a successful satellite operation.  If the two of you are not aligned, I would coach you on how to obtain alignment before proceeding any further.

Before I respond, I would like you to understand that executive coaches work hard not to offer advice or, as you call it, “share wisdom.”  Rather, a coach will work with you by understanding your challenge and, through a process of inquiry, help you to structure your challenge in a way that clarifies what needs to be done to accomplish your goals.

Let me first describe the dilemma you face.  Whenever an established company opens up a new office or launches a new division, a challenging question will be whether to attempt to implement the culture of the established company or to create a new culture that is more likely to fit the customer base that it is selling into.

Since you are the leader of the satellite startup, I would first ask you what your short-term and long-term goals are.  I would also inquire about the strategy you have chosen to realize these goals. The culture you choose is a strategic decision.  Whatever you choose, the culture should serve the strategy and goals of your division.

So, here is your challenge.  You have two contrasting strategies and cultures.  The established company is more deliberate, engages in long-term, higher priced projects and is accustomed to controlling the work schedule.  By contrast, the satellite startup needs to establish its brand, customize its programs, and price its projects to be affordable to its customers. Your coach should be asking you questions about “how” you will achieve your goals.  What needs to happen for you to succeed?  As coaching proceeds, you should bring your experiences, both positive and negative, to your coaching sessions.  By reflecting on these experiences, you will gain insight and become clearer on the actions needed for success.

In my experience, most established companies are aware that satellite divisions need more flexibility to succeed. In your case, the established brand is relatively unknown in your new market, and the customers you plan to serve are different from those of the established company. I suspect if I asked you questions about your market and strategy, you would likely lean toward a more flexible, entrepreneurial approach to launch your business.  This would seem to fit your situation.

It is my understanding that your startup will use many of the expert resources from the established company. This presents you with a dilemma in dealing with personnel from the established culture and embedding them into your customer base. Ideally, you will be able to capture the advantages of both cultures.  I say “ideally,” because it could also be a major challenge for you.

From a coaching perspective, how will you integrate two cultures as they interact with each other?  Do you plan to “prep” the executives from the “mother ship”?  How will you prepare your own personnel to deal with these differences?  You may want to consider a strategy of only bringing in experts who can adapt to your customers’ needs and fit into your culture.   This is not very different from the structure of a matrix organization, in which experts are drawn from established departments and assigned to projects or programs that have a different customer base and culture.

Once you have clarity on these two contrasting strategies and cultures, you will need to share this with the CEO of the established company.  Your CEO will want to know your goals and strategy. Your ability to articulate why a more flexible strategy is likely to succeed will help you gain the commitment you need for a successful launch.  Your CEO will also want to know how you plan to utilize resources from the established company.  All of the thinking that went into your choice of a strategy and culture will be important to share with your CEO.  This is where alignment is crucial.  You will be well served to get a commitment to your goals and strategy.  This will give you the support you will need as you move forward with your new venture.