Feb. 16, 2022

This paid piece is sponsored by the Prairie Family Business Association.

With more than 40 years of experience working with family businesses – plus his own – Joseph Astrachan has vast expertise in helping families navigate the unique environment that’s created when work and family intertwine.

Astrachan’s own family business background includes an extended family that has owned businesses ranging from container and tanker shipping and shipbuilding to coal mining and pharmaceuticals.

A scholar of family business as much as a practitioner, he’s also professor emeritus and former executive director of the Cox Family Enterprise Center at Kennesaw State University in Georgia, a former editor of multiple family business publications and a founder his own family business consulting firm, Generation6.

Astrachan will be among the featured speakers at the 2022 Prairie Family Business Association annual conference April 28-29 in Sioux Falls, which will be held in person and virtually.

We caught up with him to preview his appearance and learn about the most pressing issues facing family businesses today.

What can family businesses and other attendees expect to hear from you at the upcoming conference?

We’re going to talk about understanding family dynamics so you can communicate better. Understanding where people are coming from greatly removes pressures and stresses inside the family, and that creates a situation where alignment can happen. If there’s one thing I’ve learned in all my research and working with families in business, it’s the more aligned the family, the better the business does.

What is the most common family dynamic challenge you observe within family businesses, and what strategies do you suggest to address it?

The one that people seem to resonate with the most is sibling rivalry, which is directly correlated with parental tension. The more parents are aligned, the less kids will be competitive and fight with one another. So that to me is the biggest one. Everything that happened when you were a kid defines how you treat your siblings and cousins. If you had good relationships, any given succession tends to be better.

All businesses have had to navigate unprecedented change in the past two years. What issues have you seen particularly emerge as ones that family businesses have needed to address?

I think family businesses have more or less had to chart the same course as all businesses, but a lot of the ones I’m familiar with were capable of making quick change and made quick and appropriate change. A lot of nonfamily businesses overreacted and reacted like they were facing a financial crisis instead of a health crisis, so they cut expenses and hoarded cash and were not prepared for what actually materialized in terms of demand.

I serve on the boards of family businesses in places including Ukraine and Venezuela, so disruption is not super unusual for me to encounter. The key is to predict how your consumer and your supply chain will react and plan accordingly, so you can be ahead of them and not behind them. The hard part now is that as we come out the other side of the pandemic, how will things change again? That level of change won’t be quite as big, but almost as big.

Do you have any predictions there?

As people start to return to work, some of the old patterns are going to come back. There will be more money spent on vacations, in restaurants and bars, those kinds of things, so if you’re in an industry that won’t respond like that, be prepared for volume to go down and what that means for you. Make sure you’re right-sized in terms of your employee base and recognize that higher wages are here to stay and some level of working from home in many cases also is here to stay.

Your work particularly has focused on family dynamics. Have you seen challenges evolve within families as new generations – millennials and Gen Z – begin entering the business or assuming leadership roles?

There’s increasing sensitivity in the younger generations, but I’m not sure that’s entirely unique. I’m a child of the 1960s, so we saw a huge increase in sensitivity way back then, but the things people are getting sensitive to seem more fine-grained to us. Of course, we have a robust economy, which gives you the luxury of sensitivity.

It’s not a generational change, but I do think working from home is going to be here, and the pressures to offer it are pretty high. We see it especially in the technical disciplines. If they can, they want to work from home, so that’s a real one.

You’ve researched and written extensively about the roles of boards during the pandemic and as they relate to future business disruptions. What should family businesses be taking into consideration as they look at how to optimize their board members?

I don’t think it’s any different post-pandemic than pre-pandemic, but there are really good characteristics of boards to shoot for. You have to have people who have the fundamental competencies they need. They understand the language of finance and strategy. They have a lot of candor, which means they can give and receive negative feedback without emotion. They don’t have a lot of ego, and candor and lack of ego run hand in hand, and they put the organization and the family before themselves. That really helps.

Many family businesses point to transitions and succession planning as areas where they need the most guidance. Over your decades in the industry, are there a couple of key do’s and don’ts that consistently have emerged in your work?

The biggest one is that you can look at succession like it’s a single time, something you’ll do once, but it’s not. The most important thing you can do is have a company that’s strong enough and family strong enough to withstand three bad successors in a row and have a system in place to be able to identify and remove bad successors. That’s key. That’s key with all employees but particularly with leaders, and succession is almost impossible to get right. If you go into it thinking it’s going to be a home run, then just think of businesses that make acquisitions and how often they work out.

Click here to connect with the Prairie Family Business Association’s 2022 conference.

Prairie Family Business Association helps family businesses thrive through generations by providing a resource network for family business success. The association is a key outreach center of the University of South Dakota Beacom School of Business.