The art of balancing honesty and diplomacy in the family business

Captureby: Walid Chiniara, Partner and Head of Private Client Services, Deloitte, Middle East

As a family business advisor, I have observed numerous interactions between family members as owners and employees of their family business.

Among them, these individuals have navigated myriad obstacles and challenges, whilst in the majority of cases displaying an admirable amount of love, courteousness and respect for one another.

However, a common pitfall that I have witnessed time and time again is the misconception that diplomacy is the avoidance of the truth.

Being diplomatic is not the same as avoiding the truth, and the two are not mutually exclusive.

Diplomacy is the art of creating and managing relationships, and of managing the communication between different parties, often with differing interests or viewpoints.

As we no doubt know, differing interests and viewpoints are a common occurrence in any walk of life, including family businesses, but such matters should not be swept under the carpet but dealt with head on.

That is not to say diplomacy or tact is redundant. Of course the manner in which messages ought to be delivered differ depending on the circumstances at hand and the individuals involved.

However, all relationships demand a measure of honesty, and communication is an important factor that goes into making any successful relationship.

Successful communication and the art of diplomacy hinge on the ability to know what to say, when to say it, and how to say it.

This is the balancing act between diplomacy and honesty.

For example, consider the following scenario:

Karim is currently a Director in the Family Business, and is resentful of his brother Khaled, who is currently the Group CEO and monopolises operations, whilst not communicating or consulting effectively with the shareholders or Executives in the Business.

Karim is of course frustrated, and Khaled has sensed this frustration and has approached him to ask if there is a problem. There are a number of ways that Karim can respond:

* “Everything is fine”

*  “Well, I’m feeling a bit out of the loop with what’s going on in the Business – I’d have liked to have known about the latest acquisition before I read about it in the news this morning.”

*  “No, you’re taking control of the Business. Even though you’re CEO, you’re still an employee, that is not your decision to take. As shareholders we have a right to be consulted on what’s going on.”

* “You’re an absolute power and control freak, I’m tired of your behaviour.”

Of course these are exaggerated reactions, and not an exhaustive list of the options available to Karim, but what is important is the message that is being conveyed.

Demonstrated above is the fine line between avoiding the truth, brutal honesty and diplomacy.

You’re probably thinking, “Well, which is the right response?

In the above scenario, we have no context, no awareness of the personalities of the individuals or the history of the relationship.

But what we do know is that transparency and communication is key. Based on that, I can tell you that answer one is most definitely not the right answer.

This leads us onto the topic of negotiation, perhaps the subject for my next post.

There is a certain skill to diplomacy and it is founded on the principle of negotiation.

You yourself as a member of a family business are a ‘negotiator’.

In this capacity there is a need for continual negotiation between you and your counterparts and any other party related to the family business, and you have a duty to harmonise the interests of all parties concerned.

Focusing on doing so allows you to build relationships based on trust and transparency, which in turn stands you in good stead to face any hurdles that the family business may throw at you.

The views and opinions expressed herein do not represent nor reflect those of Deloitte. Deloitte shall endeavor, as reasonably as possible, to screen such information which is obtained, to the best of Deloitte’s knowledge, from reliable source. As such, Deloitte cannot guarantee the accuracy of the information featured nor the validity of the opinions and/or analysis and interpretation expressed herein. Opinions, conclusions and other information in this interview/article which have not been delivered by way of the business of Deloitte are neither given nor endorsed by it.

This article contains general information only, and neither DTME, DTME affiliates nor any of Deloitte Touche Tohmatsu Limited member firms are, by means of this article, rendering any accounting, business, financial, investment, legal, tax, or other professional advice or services of any nature whatsoever. Information included in the article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. None of Deloitte Touche Tohmatsu Limited, its member firms, or its respective affiliates shall be responsible for any loss or damages whatsoever sustained by any person who relies on this publication.

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