The Family Factor: Why Some Families Survive Conflict and Others Don’t

Chris Yonker (00:01):

Welcome to the Enlightened Family Business Podcast. I’m Chris Yonker Advisor, life Journey Sherpa, and a guide to families who are ready to build their future from a deeper place. In a world where most focused on structures, documents, and money, we go further. We explore what really creates sustainable continuity, clear communication, inner awareness, family alignment, and custom fit governance that evolves with your values and your vision. Here we talk about the full spectrum strategy and spirit, leadership and legacy, conflict and connection, performance and wellbeing, because the future of your family business is not just about what you build, it’s about how you live, love, and lead together. Let’s begin.

Chris Yonker (00:51):

Doug Baumoel is the author of a book called Deconstructing Conflict Understanding Family Business, shared Wealth and Power, that he’s a co-author, and it’s not really a book about how to handle disagreements. It’s about why conflict in family systems is fundamentally different and way more intense than normal business conflict. This is, I, I, I, I met Doug, um, some, some time ago, uh, through FFI, and Doug is a resource to other family business advisors that, you know, him and his firm, that are really stuck with their clients in relationship to conflict, where family business owners are at an impasse. They’re maybe going to, they’re going, they’re in legal battle, or they’re gonna be, or, you know, they’re, they just don’t, they’re stuck and they don’t know where to go or what to do. And Doug is someone who came from a family business as you hear, and he really stuck, you know, and that, that failed.

Chris Yonker (01:55):

And, and he was advised from other family business advisors. So he, he, he really took time and care to better understand what went wrong and why, and how could he take that methodology and that information and provide solutions to family businesses across the globe that are stuck. Even if you’re in a family business and you say, you know, Chris, we really have a major dispute or major conflict. This is an episode with listening to if a continuity is important to you, which happens to be the name of Doug’s firm. ’cause continuity is what most family business organizations are about. How do we maintain longevity as a family ecosystem to provide opportunity for future generations so that our, our, our family members can thrive? If that’s something that sum of interest to you, let’s get to the episode. Doug, welcome here to the show. I’m glad we are chatting. I remember as I meant, I reached out to you a while ago, as you remember. Yep. And you had give, you had given a, uh, a, a shared a talk at FFI that I attended, and I, I really, I found the, the content to be insightful and different and thought provocative. And I noted, you know, I should meet this guy, Doug, and I, it would be great to have him on the show. So, here we are. So thank you for saying yes.

Doug Baumoel (03:30):

My pleasure. My pleasure. My co-presenter was Paul Edelman on that. That’s

Chris Yonker (03:35):

Right. That’s right.

Doug Baumoel (03:36):

I wanna give them a shout out too.

Chris Yonker (03:38):

Yeah, yeah. Yeah. Thank you. Thank you. So, um, your story’s very relevant here into how you got into the world that you’re in. So could you share for the audience members who don’t know, I do know your story mm-hmm . And how you got into this field and now run a firm that, uh, specializes in being a go-to resource for families that don’t seem to have anywhere else they think they can go, that are riddled in conflict.

Doug Baumoel (04:08):

Sure. Yeah. My story, um, so I grew up in a family business. It was a wonderful business. Started by my dad in the basement of our house, became a pretty substantial company, a leader in its field of industrial instrumentation. So we made flow measurement systems for oil and gas pipelines, power plants, irrigation, a whole bunch of things, chemical companies. Um, we had an international business, hundreds of employees, wonderful business. I was the, um, heir apparent. I have two brothers. I’m the middle, and I got the engineering degree, and I got the MBA. And, uh, you know, my career was intended to be, um, focused on the family business and to take it over one day mm-hmm . Um, that was the plan. It didn’t work out that way. We had a lot of conflict. Um, one thing I tell clients since the, um, the characteristics that make one a fantastic entrepreneur are not necessarily the ones that are conducive to, uh, you know, a happy, harmonious family.

Doug Baumoel (05:21):

So we had a lot of that going on. Um, and through the late eighties and into the nineties, we hired family business consultants to help us. Okay. Um, unfortunately, most of them made matters worse. Uh, not better. Many were just ineffective. And we ended in, um, litigation, family litigation about the business. The business was eventually sold through the courts at a significant loss in value to my family and splitting of relationships for a decade. Mm-hmm . Um, you know, fortunately, we, we were able to repair those relationships over time in no small part due to the work that I’ve been doing over the last several decades, uh, in better understanding families and conflict. Um, but we had a terrible loss, uh, and it was basically due to, due to conflict, poorly managed conflict. Now, when I, uh, when the family business went into litigation, we had one family business consultant sort of let standing, and his advice to me was, you gotta get out now.

Doug Baumoel (06:36):

This is gonna end poorly and you should consider doing what I do. There aren’t enough folks, this is around 2000. There aren’t enough folks in this business with actual family business experience with MBAs, et cetera. Um, so I thought about that. I clearly, I would need another job after the family business imploded like that. So I was thinking of options, et cetera. But I took what this gentleman said to heart, and I thought, well, why would I join a, an industry that I felt so poorly served by? But then I thought, again, if I was going to, if I was gonna do this work, I would do it very differently than I experienced. I experienced a variety of pro of approaches. Um, you know, if I had to categorize them, I would say best practice approach, consultants coming in that have studied family business and studied specifically successful family businesses and what they do, what they have done, what processes with policies, what behaviors they have, um, done to succeed.

Doug Baumoel (07:44):

And the therefore, those must be best practices that other folks should adopt. And they would be well served by that. So that was some of the consulting that I received on the client side. And others were more of a psychological approach, um, you know, trying to deal with communication and had histories with, uh, with our family that was arguing, uh, with each other. And all those approaches failed. And so I thought if I was gonna enter this field, I have to understand, A, why my family failed, and B, why the consultants had tried to help us, why they were not successful, and more importantly, why many of them made matters worse, not better. So I spent about a year and a half studying conflict. I mean, my, my epiphany was, while the best practices were certainly logical, they were, they didn’t address conflict, not directly.

Doug Baumoel (08:45):

And my epiphany was the, the thing that was missing was an understanding of the kind of conflict that happens in family enterprise. And I quickly realized that the kind of conflict that we were dealing with was identity based conflict, not civil dispute. So most of the folks that were attempting to help us manage conflict approached the problem through the lens of civil dispute, things that can be mediated, things that can be negotiated. Identity based conflict is very, very different. Identity based conflict is what, who you believe your identity, uh, who you are, what is your place in the world. And when those things are threatened, excuse me, it’ll go to great lengths to protect that identity. And that quickly escalates conflict to the extreme.

Doug Baumoel (09:45):

Um, so I thought, well, if what family businesses, and certainly my family was experiencing was identity based conflict, what other, what can I learn from the field of identity based conflict that I can apply to a, a, a process for family business consulting. And I read everything I could find on other types of, uh, identity based conflict, religious, political, ethnic type conflicts, which are conflicts about what you believe, who you are and what is your place in the world. And from that, I got some insight into what was at stake and what are the moving parts.

Doug Baumoel (10:31):

I also benefited, you know, I also was thinking about the methodology, and that if I was going to do this work differently than I experienced, I needed a very, very different methodology. And I thought back, uh, to methodologies that I found, uh, that made sense. And that led me to not my MBA, not my business school training, but more of my engineering training. And when engineers are faced with a problem, they think systemically, they think about the moving parts and how they relate. And, um, I don’t know if this is off topic, but one of my professors, not an engineering professor, but related, I took an astronomy course and one of my, um, professors made this statement, and this was what his course was about. Uh, the statement was, if you truly understand the system, you should be able to express it mathematically. And that was Carl Sagan, I studied at Cornell.

Doug Baumoel (11:36):

That’s where he taught in the seventies. Wow. Uh, so I was fortunate to have this wonderful professor to teach us about systemic thinking. And that, that thought about, if you truly understand the system, you should be able to express it mathematically stuck with me. So while I was in my garage office during these early years, thinking about if I should get into this field, I said, well, I need to understand where my family failed. What are the moving parts of conflict? What did we not get right? And so I started a rudimentary, uh, sort of identification of components of conflict, how they related, what adds to conflict, what de what, what, um, uh, impacts conflict, what are the levers for managing conflict. I came up with a methodology, we, we call it the conflict equation methodology. And it’s, uh, detailed in my book, if anybody is interested Yep.

Doug Baumoel (12:37):

In more detail than you’d probably want to know. Yeah. It serve as our training manual for a consultant. But that gave me at least the a starting point to, to begin, first of all, understanding what happened to my family and started, you know, healing, healing the damage that was done in our family. Um, but it also created for me a platform to approach other families that were in conflict, to understand what they were going through, and to start coming up with approaches that would be helpful. Uh, shortly after I started the company, I was joined by Blair Trip, who was my co-author on the book. Blair came from a mediation practice, or mediation profession. And was, um, came to me because she realized that when, um, she tried to mediate family business conflict, it didn’t work well. And so together we put our heads together, um, and fleshed out the rest of the, the, uh, conflict equation methodology.

Doug Baumoel (13:46):

And, um, that’s when we started working with the larger and larger families, and eventually wrote, wrote the book. But the, um, you know, the key is that mediation is a dispute resolution methodology’s based in civil dispute. Yeah. And the things that separate families when they’re, um, when they have differences over something as existential as their family enterprise, their careers in that family enterprise, it’s not something that can easily be, be compromised. Uh, not something that can be mediated and is rather something that, that the way we frame it, families have to grow out of these conflicts to derive development.

Chris Yonker (14:32):

Yeah. Which, which kind of goes back to when I was listening to Sagan’s quote about the system. In my mind, I wonder though, if I’m gonna replicate something, I can replicate it, but also, is it fixed? Is it static? Is it dynamic? Because my, you know, ’cause in my, from my, the work that I think we both do is mm-hmm . We’re looking to create movement in something that’s been held and stuck and repetitive and, and fixed, if you will, because of Yeah. Where, how, where people are in their own and inner realities.

Doug Baumoel (15:09):

Yeah. Most of the families we start off with are stuck. I mean, maybe they’re in extreme conflict, some of them, but most are simply just stuck. There’s no movement. They’re at odds. They’re, they’ve gone to their corners, they’re not speaking, or they’re not making decisions together in a timely manner. Mm-hmm . The way I think about conflict management, I never speak about conflict resolution in a family enterprise. The, the, um, the propensity for conflict is, or, or the, the, um, I can’t find the word. The, um, likelihood of conflict is sort of built in . And you are, you are always, yeah. You are always dealing with that as a family business stakeholder. And so since the, um, propensity for conflict is high in family business, you never really get to, uh, to resolution. What we talk about is management. And what we’re trying to do is fix some of the, or improve the systems that connect each of the stakeholders, you know, the family employment policy, policy governance, and, and all of the moving parts for the business or the shared wealth, if it’s it’s wealth, you know, looking at the trusts, looking at how decisions are made about, uh, philanthropy and how, how, uh, wealth is used in the, in the family.

Doug Baumoel (16:36):

But you never get a totally fix. What you can do is build a more, um, reliable system and a more resilient family and a more capable family. A family that knows how to talk about differences better, knows how to resolve what can be resolved, and manage what needs to be managed going forward.

Chris Yonker (16:59):

So when a family comes to your firm, are they saying that we’re in conflict or are they calling it something else? What, like, what, what, what would, I guess that would probably be a terminology that we would hear repetitive patterns. Groundhog Day, we’re getting nowhere. Um, this is going the wrong way. Yeah. Uh,

Doug Baumoel (17:24):

It’s kind of all over the map. We get families that say that they’re stuck. They wouldn’t necessarily say they’re in conflict, but they’ll say we’re stuck. There’s other families that say, you know, we get along great, but we’re heading to this transition. Maybe it’s a sale of the business. Maybe it’s a retirement of a senior leader. And we are worried that that transition will be fraught and will bring up It will cause conflict. Yeah. So we wanna prevent it from happening. And then there are families that, you know, outright say, we’re, we’re in the danger zone. We’re in. We’re one of those red zone families that are in conflict in crisis. We need help now.

Chris Yonker (18:11):

So perhaps, is it, is it fair to say and on mean as an inception point? ’cause what happens, and, and, and I, and this thought, this now preparing for our interview, but this happens to me, and I’m sure it happens to you, is we get referred in, we we’re gonna meet with, you know, we try to meet with multiple people, or you meet with one person. Usually it’s one person who sends the email though, or that it makes a phone call, not three together, four together, five together. You’re gonna, you’re gonna get there. But as soon as you come in, you get, do, you know, you get labeled. My, his guy, they’re a guy, you know, you’re right. They hang, someone hang, which tells you something about the system already out of the gate, that you’re, you’re getting labeled that you’re someone’s person. And then now it’s not gonna be, there’s an undercurrent or a perception that it’s not gonna be fair.

Doug Baumoel (19:11):

You know, because we’re the family business consulting firm that focuses, um, specifically in the area of managing conflict. We learned early on that we can’t let that happen. Yeah. So, in our contracting process, from the first, uh, phone call we get, yeah. Typically from a, a, uh, very disgruntled stakeholder, we have to be very careful to hear, to hear some of their story, but not to let them tell the whole story. And then certainly not to let them tell us, you know, what’s wrong with their sibling, their cousin, et cetera. We have to stop them. And we have to say, we need you to go back to your family and tell ’em that they wouldn’t let me tell the whole story. So, um, that’s an important part of, of our process. The fact that from the moment we get that first call, we have to prepare the landscape to be accepted as, uh, fully unbiased and, and also avoid any perception of bias. And that starts at, you know, with, with the first person. ’cause there is always that potential for bias that, well, if my cousin called you first, you’re probably, you know, badmouthed us. And you’re probably right.

Chris Yonker (20:31):

And now I’m on the defensive mm-hmm

Doug Baumoel (20:33):

. Mm-hmm . So we, we take great care to make sure that that doesn’t happen. Mm-hmm . To try to, um, meet with all the key stakeholders before an engagement.

Chris Yonker (20:45):

Yes. Yes. And you probably tell ’em that, uh, as we do that, I, I work for the, I work for the family. Yep. So when they sign the agreement, but I don’t, the person who signs the agreement, I don’t work for them. I, I’m, from my mind, I’m working for the whole greater good of the greater system. Because if I can’t, then how am I gonna be an advocate for a betterment for, for, for everyone.

Doug Baumoel (21:11):

Uh, we take that maybe even a step further and that great. We try to give voice to the enterprise itself. Mm. Of the, the company needs a voice at the table’s. Right. There’s a That’s right. If it’s a family business. That’s

Chris Yonker (21:24):

Right.

Doug Baumoel (21:25):

So we try to represent the company as an as, as an independent stakeholder.

Chris Yonker (21:29):

Yeah. Is there,

Doug Baumoel (21:35):

Can,

Chris Yonker (21:35):

Do you find it that you can get, if you can create an assumption that if we do what’s best for the, for the, for the organ, well may say I correct myself probably outta gate on this one. May, it may not be always true, but if we did what’s best for the company, could it be what’s best for the family? But I think in many cases, some people may feel that it’s already off course, and it could be in relationship to shareholder structure. And that, you know, in, in regards to percentages of share voting shares and who’s got more power over someone else. Do, do you do, do you find that if, if, if people can align the ideal to what’s, you know, what, what’s the orient? Because we have to find an orientation that we’d agree to something. So what, what, what do you find, Doug, as an orientation of what we might might be able to map people to? What, what do you find is helpful?

Doug Baumoel (22:27):

So as a Yeah, we’re often asked the question, so as a family business consulting firm, are you family first or business first? Good question. And we say that the two words are like one word. Family business is a single thing. You can’t extricate the family from the business and the business from the family with one caveat. And that caveat is, um, the continuity in the, the name of our company is continuity for a purpose. The continuity of the family is paramount. So in doing our work, we treat the family business as a, as a thing, as a united whole. But our focus in terms of long-term stability, long-term health, is the family. Because businesses come and go, families stay.

Chris Yonker (23:23):

Right? We could sell a business, you could buy another business, we can invest somewhere else. So how do we define family debt? Because some, the families that we work with could be through a marriage, and then they, you know, and, and some, or someone, someone becomes part of the system, uh, ’cause of, you know, ’cause they, they got married in or whatever. And so how do, how do you get people to get on the same page on something that we might just throw the word around, but perhaps we’re not looking at it the same way.

Doug Baumoel (23:57):

I don’t believe in using the word should a lot in, in our work. I think once you start saying, should you should do this, you should do that. You shouldn’t do this. That way. It’s a slippery slope to directive, best practice consulting. And that’s not what we do. So we would find out from the family who they consider family. Okay. And that’s our starting point. We we’re not here to say, well, you should integrate others. Right. Second, third.

Chris Yonker (24:26):

But how about defining family, like what family is?

Doug Baumoel (24:30):

Yeah. They have to come up with that. You know, we can guide them, we can open up conversations for them to think more expansively about family. But, um, we’re a family business consultancy. We work with families that identify as a family, you know? And that’s, that’s an interesting thing. Um, I had a call a couple of weeks ago from somebody who said, um, you know, describing a, it was family conflict. Who describing the conflict? Him and his sister, they own a bunch of real estate. They handed down from grandfather, uh, you know, to a generation. There’s some cousins involved. And, uh, the two key stakeholders were the brother and sister. And, um, you know, we talked about the conflict a bit. And as I said, you know, I put in the, the guardrails about, you can’t tell me too much. But at the end of the conversation, the, the gentleman I was speaking with said, well, it sounds like it can be really be really helpful. I just want to get to the other side of this conflict so I never have to speak to my sister again. Mm-hmm. I said, call somebody else. We’re not in the business of breaking up families. We’re in the business of, um, helping families stay together. And so he defined his family as without his sister. And that’s not a family to me. That’s not a family we would be successful working with.

Chris Yonker (25:57):

What are the qualitative aspects of a healthy family to you?

Doug Baumoel (26:04):

Well, uh, that’s embodied in something that is described in our book, but something we call the family factor. And the family factor is the answer to this question. Is the family bond strong enough to leverage compromise, forgiveness, and a commitment to change? And does, and does the family show proportionate care to each family member? That’s a big sentence. A big question. Yes. And from the moment I get the first phone call from a perspective client and or anybody in my company gets that call or works with a family, we’re constantly trying to gauge that. Right? So it’s the most important question that pervades our work. What is this family’s family factor? And when we start with a family, it could be terribly low. They had had no capacity for compromise, forgiveness, or committing to a change for the, for the sake of the family. And they could show very little care about each other.

Chris Yonker (27:08):

Right.

Doug Baumoel (27:10):

That could be a starting point. Um, if they’re willing to build their family factor Yeah. Their job. Like the gentleman I just spoke about, not holding to build a family, not interested in family, just wanting to keep separating. That’s not a family we would want to work with or would be successful working with. So it doesn’t matter where their starting point is. For us, it could be low, a very low family factor. If they’re committed to building it to saying that they have a vision for being family in the future, we just gotta fix what went wrong. That’s a family we could do a lot of good work with.

Chris Yonker (27:48):

So in essence, what we’re doing is, is laying out the core assets of a healthy ecosystem. Mm-hmm . And we look at where we’re at in relationship to healthy ecosystem. But the requirement though is there has to be a commitment to change. ’cause if I’m in a healthy ecosystem and I’m, and I’m, I’m, I’m stuck at a low level, I’m not willing to compromise. I’m not willing to forgive. I mean, we can go down the list and several folks are in that same place, and we’re fixed. There’s not a lot of room. True.

Doug Baumoel (28:22):

You know, we, we families will not say at the outset of this work that I’m not willing to forgive. I’m not willing to compromise. I’m not willing to, to commit to change. They won’t, they won’t draw that line in the sand. They will say that I’m not ready to compromise. I’m not ready. Um, and our job is to make them ready, to give them the skills, the insights, the, uh, to rebuild trust so that they can sit at a table together and make decisions together that involve compromise, forgiveness, and commitment to change. And to make the effort to show care for one each other, for for each other. So, so, yeah. Um, the, the gentleman that I, that I, uh, referred to before, drew the line in the sand, I’m not gonna compromise. I’m not gonna do anything. ’cause I don’t want my, I don’t wanna be in relationship with my sister. Mm-hmm . We often start with folks that don’t know where to start. They just know that in the future they will be family with these other folks, and they need it to work better. That’s a good enough starting point for us. Yeah.

Chris Yonker (29:39):

Yeah. Probably. But probably as human beings, we’re naturally wired to want to care about one another. Do you agree with that statement?

Doug Baumoel (29:55):

Um, and

Chris Yonker (29:55):

A true essence of who we are.

Doug Baumoel (29:57):

Actually, this is, this is an interesting question. It probably deserves a second podcast. I think . So we, uh, not that I’m pushing for more, but, um, we do a lot of work in the area of wealth integration. So that’s different from family business consulting, the in family business consulting. The issues are urgent. You have, you’re running a business, you have to make decisions in a timely manner. And that’s what drives the work for families of wealth. Where we’re working with, uh, through the family office or, or a few trustees. The issues are often less urgent, more seemingly existential, more personal, but they’re different in, in the nature of their urgency. And so we think it through a little bit differently. We are more focused on, uh, does the, is the wealth, um, providing an opportunity for finding purpose and to better understand who you are with in relation to generational wealth. Different questions. So let me, before I go off too much on a tangent, your question was, um, yeah. So

Chris Yonker (31:10):

Karen, as a human being,

Doug Baumoel (31:13):

Yes.

Chris Yonker (31:13):

I, I’m naturally wired for love and compassion and care towards another human being in my innate nature. That’s my perspective. That’s my

Doug Baumoel (31:21):

Paradigm. Right. So getting back to my original thought, that trigger was triggered by that was, um, this idea of evolution. You know, we have as a species, 250,000 years of evolution. Most of that time being hunter, gatherers, nomads, whatever. This modern world we find each other in is very different from how our DNA has been programmed. And we, if you think it through, from that perspective, if we’re wired to serve the tribe to be useful to the tribe for survival’s sake Yeah. And then we find ourselves with, for example, generational wealth where we don’t really need to work.

Doug Baumoel (32:08):

We don’t need to, we don’t, do we even matter to our tribe? Who is our tribe? Is it our family? Right. You know, we live in a western culture, which is very individualistic is our tribe anymore, our family is it, uh, you know, people we put yes to on some app or Facebook. Friends are more important, you know, family. Yes. Family is certainly important to, to most, not all of us, but it means a lot different. It means something very different than what I think our DNA has programmed us for. So in there, in that disconnect lies the potential for, uh, not finding purpose, not finding identity, um, relationship disruption. So yeah, we are naturally programmed to care for one another. But when you say that, you also have to say, we’re naturally programmed for being essential to our survival by caring for each other. Yeah, that’s true. That’s no longer the case.

Chris Yonker (33:21):

Yeah. But we know you, you know, I both know from these families, from families that we work in the, when we, we put someone in a position where they’re not getting clarity, who am I? Why am I here and what do I want? And they’re not leveraging and growing themselves in a way that benefits humanity. That road is gonna lead to a road that’s not gonna have a level of fulfillment and aspiration that they would have otherwise. Right? Yeah.

Doug Baumoel (33:50):

Those, that’s sort of the central, the, the, the central work we do with, um, our wealth integration practice.

Chris Yonker (33:58):

Yeah. Yeah. It’s very, that’s very, very me, very meaningful work. Um, it goes back to, um, you know, someone that you and I will, like j Hughes who talks about Sure. You know, you know, our, our, as in a family ecosystem, our, our, our goal is really is to help each other thrive. Right? And mm-hmm . That’s part of the nature Yeah. Of, of what we’re out to do, right? Yeah. Um,

Doug Baumoel (34:23):

How do,

Chris Yonker (34:24):

One of the questions I wanted to ask is what are early warning signs that we’re heading towards a destructive conflict? Like, you know, conflict. We can, you know, we have enough time to get into the premise of it. Conflict it’s going to was, you know, we’re always dealing with conflict businesses, families, right? It’s when we, we disagree and it hung conflict’s not necessarily bad. We, we can always call conflict actually is good. ’cause if I say I don’t have conflict, then I’m probably lying, right? Because I, if you and I aren’t gonna agree today on things, and, but if I’m not willing to own the dis, if I can’t be transparent with my disagreement with you, and you can’t be with me, then I say, well, I don’t have a disagreement. Then down the road, I, I go talk to someone and say, oh, you know, this guy po you know, he is, you know, my uncle says so whatever. But I really did disagree, right? Because I did get into the artificial harmonies side side of the equation, right? So that conflict necessarily is not bad, but what makes, what makes conflict as we define conflict unhealthy, and how do we know we’re going the wrong way?

Doug Baumoel (35:23):

So I’m gonna disagree with you on one

Chris Yonker (35:25):

Thing. Okay. That’s good. I’m okay with that.

Doug Baumoel (35:27):

Conflict. Conflict is healthy. So I see, I see our work in the conflict space as helping families manage differences. And those differences, those differences exist on a spectrum from simple disagreement through dispute, through systemic identity based conflict, uh, and then through cutoffs. So when, when you don’t resolve a systemic identity based conflict, well, you risk, uh, family members leaving or being kicked out of a, of a family cutoffs, in other words. Yeah. Um, simple disagreements are certainly healthy. They’re sort of like, I, I think about them as the cuts and scrapes you get from learning a new skill growing up.

Doug Baumoel (36:23):

Um, you learn when you, when you manage disagreements well, you learn about the other person, what they value, how they communicate, et cetera. And, you know, sometimes you need help. So you call on a con, uh, uh, a content expert or a communications expert to help manage a, a set of differences. I don’t call that conflict. Okay. I call that differences. The, the beginning part differences. Then you get into disputes. Disputes are generally more, more systemic, not completely systemic. You can sort of sequester them and deal with them as a, as an isolated issue. You think of mediation as a dispute resolution technique, but they’re typically more important. They, they create roadblocks for progress. And sometimes you need to resolve a dispute. Disputes can be resolved in order to move the system forward. Uh, I think of those as, um, you know, broken bones that can heal stronger when you successfully resolved a dispute.

Doug Baumoel (37:31):

Okay. Conflict is very different. Conflict. Um, conflict leads, scars, conflict, um, is sort of like, if I had to make a, an analogy, conflict is when all of those disputes and all of those disagreements sort of metastasized, and nobody will say that they had a, that cancer is good for you. It’s not, conflict should be this kind of conflict, the way I describe it, should be prevented. You can’t avoid it if it’s gonna happen, but you can put in the systems and the understandings and the relationships to prevent conflict from arising as best you can. And it’s important to do that. And once families are in this kind of conflict, it’s important that they get, um, the best possible help in getting back in, backing out of that conflict. ’cause if they don’t, they’re heading to cut off land and lawsuits. Okay. So you’re not sharing the, you’re not sharing the conflict definition, definition of conflict by Patrick Lencioni uses use this, right? No, not at all. No.

Chris Yonker (38:36):

Okay. ,

Doug Baumoel (38:37):

This is, yeah. This is where we, we live and breathe and

Chris Yonker (38:40):

Yeah, I get it. Yeah. So, but how do I know I’m going the wrong way in regards to how you, how, how you look at conflict. What, what, what are indications that we probably can’t get through this ourselves or that, you know, like, like what are the, the check engine lights?

Doug Baumoel (38:58):

So when I think about conflict as being active or passive, and passive conflict is, you know, is when people are, are not talking to each other when they’re excluding each other from information. Okay. Uh, when there’s a lack of transparency, um, communication breakdown. Okay? So the early warning signs for that is when you feel you’re being excluded from information when, um, uh, when you’re no longer at meeting, if it’s in a family business, when you find out you’re locked out of the meeting you should be at when you’re not getting timely information about, um, financials or marketing information, whatever.

Doug Baumoel (39:48):

And so that’s a, a warning sign. Uh, active conflict requires a trigger. And that trigger is usually when, or is always when power is exerted by one party over another, or one group over another, uh, in a way that’s disrespected. So when power is used, you know, somebody gets fired, um, uh, somebody, uh, there are different degrees of being excluded. If somebody is using power to actively exclude you, that’s using power that can trigger active conflict. So the early warning signs are, um, are the early warning signs associated with passive conflict being ex, you know, exclusion, uh, communication breakdown, uh, decisions being stalled, siloing up, you know, people are, are, um, yeah. In a business setting, they, they’ll go to their silo and you see that passive conflict might have existed for 10 years, and now the three siblings that are running this business no longer have meetings together. That’s passive conflict. Active conflict is when they’re actively using power to advance their interests over their, uh, their other stakeholders, uh, interests. And this, you can think of a hundred examples, but, you know, freezing people out, um, firing people, um, I don’t know, uh, yeah. Undercutting them at the office. Uh, not, uh, uh, you can think of any number of examples, I’m sure.

Chris Yonker (41:43):

Does the pattern show up differently? And, and pro me or me, I’m curious, uh, from your vantage point in, like parents and kids versus sibling, siblings and relationship to patterns that you’ve seen.

Doug Baumoel (41:57):

Yeah, I, I’m not a pattern guy. I don’t, um, I don’t go in saying, you know, I’ve worked with a hundred families and Right.

Chris Yonker (42:06):

I get that. Usually

Doug Baumoel (42:07):

The butler who did it. So it’s fun. Let’s look at the bottom.

Chris Yonker (42:11):

Yeah, I get that. I get that.

Doug Baumoel (42:12):

Yeah. We look at the evidence and we start with paper. So yes, there are certain things that are obvious. So first generation, first generation, you have a, a hard driving entrepreneur in the mix. And it’s likely that, again, we don’t start with this, I get it. But it’s likely that, um, there might be some communication issues and some, um, territorial issues that are, are related to, uh, an entrepreneur who’s also potentially head of the family, head of the household, um, dealing with children trying to, uh, trying to find and or assert their identity in an environment where you have a very charismatic leader and there’s not a lot of room. So yeah, we’re, you know, sort of predisposed to looking for those things, but that doesn’t mean we assume that they are there siblings, of course, you have, um, sharing issues to consider and who got there first.

Doug Baumoel (43:23):

Uh, you know, when you get to later generation fam families, um, the, the demarcation between those lines become blurred. So, uh, cousins and siblings and parents or, you know, it could be in the same age group, for example, uh, across many different branches. So family branch starts to mean less and less, maybe. So there are some generalities that we, we can make, but again, I think it’s, I think it’s, um, it’s the opposite of what we do to come in and say, well, you’re a third generation family business, so here are the best practices for you.

Chris Yonker (44:08):

Yeah. Oh yeah, of course. Yeah. Yeah. Um, what’s your vantage point in regards to how governance help helps or takes away from resolving issues in relationship to the clients coming to you? Like, yeah, we need to work on our governance. We need, we need, we, we need better governance. And, you know, it’s, so clients sometimes try, try to advise us on how to advise them, right. Or how to help them through.

Doug Baumoel (44:42):

So one of the things that I realized was, um, a mistake that the consultants, when I was on the client side of this work, the consultants came to us with the mistake that consultants made with us was to come to us with solutions first. So yeah, we had a problem in governance. Absolutely. We had a problem in governance. And, you know, if I could, if I could rewind 30 years or whatever, I’d say, yeah, that company needed governance, would’ve solved all their problems. The problem is that wasn’t the presenting problem. The presenting problem was we were in conflict. Yeah. And presenting a solution like good governance, while it made sense, was throwing gasoline on the fire in the following way. And I won’t get into the, my specifics, but any suggestion, when a family is in conflict, any suggestion take governance is going to work towards the perceived interest of some stakeholders, not others.

Doug Baumoel (45:52):

And maybe even against the interest of some, uh, stakeholders, the governance for an entrepreneur who wants autonomy and, and, um, yeah. Uh, uh, doesn’t believe in transparency or the, or the, uh, uh, or to acknowledge the legitimate rights of minority shareholders. Governance is a terrible thing. That’s right. And it will work against their interests in promoting the family business vision that they have. And they could be the majority stakeholder, majority shareholder. So governance might make sense, but in a conflict situation, coming to early with a solution, no matter how sensible it is, can be like pouring gasoline on a fire. Hmm. So, but governance in general, yeah. Great. I define governance as how families make decisions together. Corporate governance is how they make decisions together around their shared asset. Mm-hmm . Um, family governance is how they make decisions about, about family matters. And so, yeah, the more structured it is, the more, uh, the more people know what their roles are and, and have skills in those roles, the better governance will be, the better decision making will be, and the better served by those institutions. The family will be. But again, though they’re not solutions for conflict, solutions for conflict are different. And that’s what what we do with first managing.

Chris Yonker (47:36):

What about, would you say to families listening that are, let’s say they’re, they’re moving to gen three, to gen four, and Gen three’s got maybe a 10 year horizon, and they’re gonna be moving the business onto gen four, and they’re, they built a family council and they’re developing gen four, but they’re, they’re concerned because end of the day, down the road, when gen four has dis stock distributions and they’re making, they’re, they’re making decisions together, the different people, or maybe, maybe they’re not even, you know, they’re, they don’t know each other as well, because, you know, they’re second cousins. And what, what, what, what advice do you give those folks to work on that ecosystem you talked about earlier? To put, to set me up better for success for down the road?

Doug Baumoel (48:26):

So building the family factor is crucial. Building the family factor, uh, increases resilience in families. It’s really the linchpin for helping families manage conflict well. And so how do you build the capacity for forgiveness, compromise, commitment to change care? Step one. Um, and I, I want to answer this in another way in a minute. Uh, but the first way is to get them to know each other. Hmm. So, uh, if family members know each other well, they may not, they don’t have to like each other, they don’t have to share values. But if they know each other well, and if they know the system that connects them, if they know how the trusts operate, the business operates, if they know how to get on the board, how to get a job in the business, if they understand the, um, the compensation, uh, chart and what you need to do to get advanced in the, in the business, uh, how distributions work, then there’s a, there’s a level of predictability in the family if, uh, and with predictability, we believe that the first stage of trust building is predictability.

Doug Baumoel (49:46):

So very often when families call us saying that they’re in conflict, the first thing that they say is, I don’t trust my sibling, my parent, my cousin, whatever. We know we have to do trust rebuilding. And we start with predictability. And predictability begins with getting to getting the stakeholders to know each other better. Uh, removing the expectation that they need to like each other or want the same things, because they may not. That’s what compromise is about. They want different things, but if they know each other well, they know that they, they know the system that connects ’em, what the rules are, what the guidelines are, and if they have a shared vision to be family in the future. Mm-hmm. Yeah. That’s the key. If they, they have a commitment to being family in the future, we can rebuild trust by getting them to know each other, uh, each other better. Through, through facilitated conversation, through exercises, through retreats. Many of these things are done at retreats, um, to get the, their next gens to have relationship with each other. So if, uh, my group of siblings are barely speaking, if I can get the cousins together to form alliances amongst the cousins, and building family factor for that family,

Chris Yonker (51:12):

Yeah, that’s great.

Doug Baumoel (51:13):

So it’s a mixture of, of building trust through predictability and having a shared vision of being family in the future.

Chris Yonker (51:26):

Doug, where, where can we go to learn more about your work? I know you talked about the book earlier. It’s on Amazon, right? Mm-hmm . Um, and we’ll put that in the notes section here. Um, your, your firm is continuity. It’s, it’s, it’s, uh, you can find it on what’s UR up for the, the, for folks

Doug Baumoel (51:47):

Listening? Yes. Continuity. FBCI think we might be changing that too, but it’ll all link through. Yeah. Reference, but continuity. FBC setting for family business consulting.com.

Chris Yonker (52:01):

Great. Great. Yeah. Um, any parting words?

Doug Baumoel (52:06):

Well, yeah, these, uh, I thank you for the opportunity to, to share this information on, on your podcast. I think podcasts are a great thing. You know, you ask where can you go to find this information? Your website, your podcast is a great, great place to find this information and other information on a variety of related topics. Uh, but, you know, I, I speak at university based, uh, family business centers a lot. So does my whole team. We have a team of about 10 people doing this work, uh, as you know, doing this consulting work across the country. And we also support advisors globally, um, and wealth managers to attorneys, uh, and other family business consultants that don’t specialize in the area of conflict. Yeah. And, um, this area, this specialization also enables us to work with families in active litigation. I think we’re the only firm that will, uh, actually work with families in active litigation.

Chris Yonker (53:09):

Great. Well, thank you for doing the work that you’re doing and, um, making the difference and, and really quick providing a resource to families that perhaps wanna have another, another option. So, thank you.

Doug Baumoel (53:23):

Thank you. Good pleasure.

Chris Yonker (53:27):

Thanks for being here on the Enlightened Family Business Podcast.