Founder of Family Business Is Abusive

Question to Ask the Workplace Doctors about a family business: the father, major stock holder, abuses his daughter. He also tells anyone who will listen to him that I am a liar, stupid and a thief. He is also verbally abusive to ALL of the employees.

My father started our company 35 years ago. A succession plan is in place – with me being the only one of five children working with my father. Our company was always quite profitable; however, due to several years of poor management and bad business decisions, We have been having financial trouble. Due to several reasons – starting with serious financial difficulties that are gradually being worked through, my father has become verbally abusive with threats of physical abuse toward me. We have both invested our personal money/assets in our company.

Since these difficulties, he has accused me of stealing shares of the company. He screams, yells, and swears at me daily. He has threatened to “beat me to death with a baseball bat”. He forbids me to consult our long time accountants and lawyers. In his opinion, I should be able to prepare documents/financial statements, etc. without the experts’ advice. Because I am not an accountant or lawyer and am not able to prepare financial statements/legal documents – then I am stupid. (Although I still contact the accountants and lawyer, without his knowledge, when I need their services.) Daily he threatens to close the company.

I am not afraid that he will physically harm me, but I am finding it more and more difficult to go to work every day. By the way – Our lenders all put me in charge of running the company otherwise they would have called our loans 3 years ago, and it would have been done back then. I have to carry the company cheque book home with me every night because my father buys whatever he wants. He does not care if we have the funds to cover the cheque. My father is 79 years old and has told me he would rather see the company fold than to see me running it because I am “stupid, a liar and a thief”.  He also tells anyone who will listen to him that I am a liar, stupid and a thief. He is also verbally abusive to ALL of the employees.

My father and I always had a good relationship; however, that is no longer the case. My father is majority shareholder (51%) with myself (49%). Any suggestions on how to deal with this abuse?

Signed, Son Of A …

Dear Son Of A …:

I have no neat solution for the fix you are in. Apparently for many months, perhaps for several years, your father and you have been at odds about how your family business is to be run. What was once amicable between your father and you has descended to his physical threat, accusation of you stealing and to his verbal abuse of you and other employees. I gather you both have major investment in your company and its survival has been in the balance and is currently dependent on maintaining financial support.

In the article How to Run a Family Business by Christine Lagorio | Inc.com staff Mar 5, 2010 http://www.inc.com/guides/running-family-business_pagen_3.html, we are told that: “Fewer than 30 percent of family businesses survive to the second generation, and just 10 percent hold on through the third. Sound bleak? It’s not. Those are far better survival odds than for small businesses not run by a team of family members.” It sounds as though your company could become one in the 70% that fails.

The tactics you are resorting to in order to survive (secret meetings with accountants and attorney and taking home a checkbook at night) are not the way one partner should act toward another, but it all you know to do in order to survive. Resolving your situation is extremely difficult because apparently you have no contractual agreement of how to exit and what should happen when conflict is so high that financial and interpersonal working relationships are in the balance.

You should take seriously that your father physically threatened to be beaten to death, called liar, stupid and a thief and screams at, yelled at, and swears at daily. Such talk often foreshadows violent behavior. Chances of persuading your father to stop his accusations and abuse are not high. What remains?

Here are several overlapping options:

–Family-wide and possibly employee-wide confront your father with the problems you describe. Put them up front. Ideally in advance you and all concerned can engage someone to moderate and facilitate hammering out a legal/management agreement. Solicit peers who have family businesses. Many communities have Family Business Peer Advisory Groups.Engage a bank representative with legal/mediation/family counseling skills to spell out the rules of how your company must be managed if it is not to go bankrupt.

–You say your bankers have already put you in charge. Sue your father for your share of the company. This should bring to a head the kind of confrontation and resolution of what has become dysfunctional operations. I’m copying excerpts from those who have experience with family-run business. Ideally, they begin with advance planning, akin to a prenuptial agreement. Cheryl Stein, president of Stein Consulting and Coaching in Chicago, says,”The families that are really smart about it, that set up rules, are typically the families who do not fall apart and end up never talking to each other again,” Stein says. “Setting up rules when you are getting along can save years of heartache – even if you just set up a rough framework.” And she knows this from experience.

Stein served as a vice president of her family’s multi-generation real estate company, working alongside her siblings, parents and grandparents to sustain their 80-year-old company. But a lack of clear expectations, and unerasable family dynamics, caused her to leave the business. She adds, “While my father was alive, he always treated me like his little girl . . .I really couldn’t work hard in that situation because my brain wasn’t in it. So I went back to school.” She advises that long-term planning should be done at formal meetings, not piecemeal or around the dinner table. (More of this can be seen in Lagorio cited above.

You also should find the following site of interest: UPPER MIDWEST FAMILY BUSINESS ADVISORY GROUP http://www.fredlaw.com/areas/familybusiness/AdvisorGroup.html The Upper Midwest Family Business Advisory Group provides education and networking opportunities for professionals dedicated to serving family businesses with all their needs in a client-focused, collaborative manner. The Group brings together members with diverse professional backgrounds in the interest of sharing information and learning from each others experiences.More than 80 percent of the companies in the US are family businesses. Mixing family and business generates many unique challenges and uncertainties which, when combined with the normal challenges of running a business, can be overwhelming without the right counsel.

These additional issues can (and often do) increase the risk to the sustainability, growth, and transition of a family’s business. Current trends indicate that the myriad of issues arising from the interplay of business and family are going to intensify in the coming 10 years, and family enterprises are not nearly as prepared to address them as they are to handle the normal issues of business.

Consider: Nearly 60 percent of majority owners are 55 or older, nearly 30 percent are 65 or older; 85 percent desire to pass ownership to the next generation of the family; 75 percent expect family members to hold at least one key management position;Less than 30 percent have succession plans; fewer than 40 percent have identified successors.

What this adds up to is that you must struggle along as is; tolerating the abuse of your father until he retires, or you deal with your stress one way or another. Working together with hands, head, and heart takes and makes big WEGOS, my signature advice captured in a sentence. This is the goal of saving your business; creating the conditions that maximize the best in all of you stakeholders. Do any of these suggestions make sense? There is no quick fix.

William Gorden