Effective communication is vital

• Conflicts in family businesses are often personal and emotionally charged due to overlapping family and business relationships.
• Empathy and emotional intelligence are crucial in mitigating conflicts and addressing covert fears.
• Advisors should guide family businesses through processes rather than imposing solutions, recognising that multiple issues may arise simultaneously.

Diana Hamade is the founder and managing partner of her own firm, Diana Hamade Attorneys at Law. A boutique law firm in the UAE, it specialises in cross border dispute resolution, private clients, matrimonial issues, dispute resolution and employment matters.

The winner of numerous awards, here she talks to CampdenFB about what makes advising family-owned businesses unique, how she helps families align their process and goals, and how she navigates conflicting interests between family members. 

What are the unique challenges and complexities that arise when advising family-owned businesses, compared to non-family businesses?

Diana Hamade: There are three factors that are connected in the definition of a family business and these are family, business and ownership. This is unlike non-family businesses where the business is owned by shareholders who have a common interest as owners in the profitability of the business. Conflicts in family businesses are different in nature from non-family businesses, because not only do the members of the organisation work together, but they are also related to each other. It is inevitable that every family business faces conflicts sometimes as it combines family and business together. The values of the family don't always go hand-in-hand with business values because their starting points are so different. Problems may arise if the family business operates completely according to family policies. In order for a family business to be successful it also needs to take into account the business perspective. Conflicts are usually personal and the focus may shift from the business.

How do you typically approach defining and managing problems within family-owned businesses?

Diana Hamade: On one level, I use my own competence and specific abilities such as empathy to build rapport; and emotional intelligence) to mitigate overt and covert fears, uncertainties, and/or resistances within the family business.

On a cognitive level, I exercise my role in facilitating generational transitions and supporting future leadership. I rely on my ability to build trust, along with a willingness to be adaptable and share knowledge, which are particularly vital skills.

As an effective advisor, I employ my characteristics and skills such as systems thinking, trustworthiness, listening, empathy, courage, and patience.

As a family enterprise advisor, I manage family issues – family dynamics such as relationships and conflicts – while simultaneously balancing the needs and concerns of the business.

What strategies do you use to ensure that both the process and the goals are aligned with the family’s long-term vision for the business?

Diana Hamade: The regeneration of the family business is a main focus and the strategies used to align the process with the long-term vision include:

•           Checking for evidence of strong performance indicators such as capital, strategic thinking, growth initiatives, operational excellence, executive leadership, culture, and intellectual capital.

•           Identifying where EO exists and in what form. Additionally, assess the level of familiness and transgenerational entrepreneurship.

•           Looking for the existence of entrepreneurship such as risk-taking and innovation in current and future generations. Confirm which of the many internal and external antecedents of a strong innovation framework are in operation – openness to inter-organisational (external) collaboration and receptiveness to external sources of knowledge.

•           Developing an approach to helping families identify, clarify, and capture key narratives that are focused on the family and can form the basis of a positive entrepreneurial legacy.

•           Similarly, helping families identify their most cherished traditions and the impact they might have in ongoing innovation. I need to consider the strategies to address the innovation paradox and how they might fit each family firm.

•           Providing education where applicable. All family firms need to understand the significance of innovation and seize opportunities to adopt and deploy innovative strategies.

• Building on the foundational items for regeneration through subsequent generations to guide your clients in the development of next-generation leaders. 

When advising family businesses, how do you navigate conflicting interests between family members?

Diana Hamade: I focus on my client’s ability to move to a trust relationship, and aim to achieve the trust through both a cognitive dimension (recommendations, age, geographic similarities) and an affective dimension (intuition, rapport, modesty) with the trustee.

I have to focus on both goal orientation and client feedback which both play a positive role in my relationship with the client.

To navigate conflicting interests between family members, a total solution that integrates multiple perspectives is required to address their challenging issues. Knowledge can be acquired by collaborating with other advisors. Developing my own emotional leadership capacity through the growth of my emotional intelligence, while improving my communication skills in order to connect with multiple generations of family businesses and conflicting interests. Increasing awareness among family businesses in the transition of the presence of emotional wealth and raising awareness among family members that transition and succession planning are not merely intellectual processes where policies, protocols, and structures are discussed, but also comprise a journey to develop emotional leadership and reach a shared purpose, direction, and future.

What are the most common goals that family businesses look to achieve when they seek your guidance, and how do these differ from traditional businesses?

Diana Hamade: Resolving conflicts, and aligning goals are among the many sought results by family businesses and non-family businesses. Early research in the field of family business was primarily focused on differentiating between family and non-family firms to better understand the unique characteristics of a family-owned entity and determine how the family enterprise can be better supported in its pursuit of success.

However, those involved in the field had difficulty establishing “norms” for family businesses. It became clearer that an emerging belief was correct – family firms are not all the same; they are not homogeneous. Indeed, it was (and sometimes still is) a struggle to even determine a universal definition for family businesses.

Researchers came to realise it was critical to focus on comparing family firms to family firms in order to identify key differences among them – their heterogeneity. In the last decade particularly, the need to better understand “what makes the family business tick” has driven research further into the heterogeneity of family firms.

How do you incorporate your legal practice into your role as a consultant without allowing legal concerns to dominate the advisory process?

Diana Hamade: As a lawyer, I am always deemed the problem solver. I am trained to listen to my clients and solve their problems. I do not see myself as an expert in family business who can "solve" a problem. In the family business, there is no one single problem, it is a process or may be multiple issues, hence I assume the role of the facilitator, which I believe I can take upon myself effectively. The matters of concern should be addressed through a process, and they need to prioritise their issues and allow space to focus on what matters and is meaningful.

To help families put function ahead of form, family enterprise advisors can present clients with questions about family culture, the values and aspirations that the family wants to preserve, and which results the family wants to avoid. This is what I do in my practice with a precise questionnaire for the client. However, I do avoid questions which can deepen chasms of difference rather than bridging them. Differences in families can feel insurmountable. If we can help families elevate their dialogue away from binary “yes/no,” “good/bad,” or “right/wrong” questions to broader questions that open up conversations, we can perhaps help families address concerns that otherwise feel like dealbreakers.

Trust comes first. Trust in the trustee and trust building in the family and among the family members. As a lawyer, my privileged relationship with my client and the power of attorney I have on behalf of my client makes me listen and care. I have learned to trust that the greatest gift a family can receive is the gift of being listened to, cared about, and trusted that they are indeed resilient, capable, and believed in by this advisor.

I am trained as a lawyer to work in a team. There is no doubt that an advisor working alone can be efficient, controllable, and sometimes more palatable for the families he or she is working with. But there is simply no one discipline and no singular advisor who can meaningfully help families with all their moving parts. I always seek advice and share knowledge and experience.

In your experience, how do successful family businesses maintain a healthy balance between professional management and family values?

Diana Hamade: Without clear boundaries in a family business, it can be difficult to maintain professionalism. This can lead to a conflict-fueled home and work environment. The best way to ensure clear boundaries in a family business, and promote a healthy balance between family life and time at the office, is to outline acceptable behaviour from the start.

Emphasising competence can reduce conflict. 

One of the key components of maintaining professionalism in your family business is to ensure that your staff are competent. This means that the right person should be hired for the right position, based on their skills and knowledge, and not their position in the family. You also can hire from outside the family depending on your unique situation. If that is possible, make sure you have consensus about the decision, and that they’re the right fit. If it is not possible, an alternative is to ensure the family member you want to employ has access to training and development to ensure that they have the right skills for the job. That way, they can flourish, and so can your business. 

The needs of the business and the family may change over time. And that means that so too will policies around boundaries in a family business. Also, when introducing boundaries for the first time, there is a need to review the systems put in place and tweak them to ensure they function for the family. 

What communication strategies do you use to convey complex information and advice to family business owners, who may have varying levels of business acumen?

Diana Hamade: Effective communication is vital to gain trust, align efforts in the pursuit of goals, and inspire positive change. When communication is lacking, important information can be misinterpreted, causing relationships to suffer and, ultimately, creating barriers that hinder progress.