Companies Get Analyzed on the Couch

Brothers Jim and Steve Blois knew something wasn’t flowing in their pipeline contracting business.

Blois Construction Inc. had a healthy market niche, talented employees and a solid reputation. But the Oxnard company wasn’t as profitable as the brothers knew it could be. An unspoken tension between them was sapping their love of the business.

So they did what a lot of concerned families do: They talked to a therapist.

It sounds oh-so-California, but clans nationwide are turning to psychologists, therapists and other behavioral experts to analyze their other family unit, the company. Long the domain of old-line advisors such as lawyers and accountants, family-business consulting has become a hotbed for mental health professionals who recognize that family friction has ruined more good companies than operational shortcomings ever did.

Commanding as much as $3,000 a day for their services, these business therapists are helping families work through succession struggles, in-law problems, domineering parents, sibling rivalry--standard emotional fare that can make or break a family enterprise, but that isn’t taught in business school. They’re also changing the perception that ancestral baggage is something to be hidden rather than faced head-on like any other business challenge.

“The best attorneys, accountants and strategic consultants in the world won’t be able to help a family business that’s being torn apart by interpersonal conflict,” said psychologist Lee Hausner, a partner in Doud/Hausner & Associates, a Glendale-based family-business consulting firm.

Industry veterans say the first psychology-based family-business consultants surfaced about 15 years ago. And while the exact number earning a living this way today isn’t known, anecdotal evidence suggests the practice is growing both in numbers and influence.

The Boston-based Family Firm Institute, one of the nation’s best-known family-business organizations, culls about 20% of its nearly 1,200 members from the ranks of psychiatrists, psychologists, therapists and counselors. Organizations such as the American Family Therapy Academy now host interest groups within their organizations devoted to family-business issues, while the topic is popping up at seminars and annual meetings wherever behavioral experts gather.

Economists’ recognition that small business drives the nation’s prosperity awakened everyone to that market’s potential in the 1980s. Suddenly family firms, which make up an estimated 80% of all companies in North America, were a hot commodity for researchers, marketers and consultants alike. Add a massive generational shift, in which an estimated 39% of family-owned firms will change leadership over the next five years as post-World War II entrepreneurs retire, and behavioral experts are finding fertile ground for their services in the family-business arena.

Psychology-based family-business consultants are quick to note that they aren’t just family therapists dressed up in business suits. Practitioners frequently have grown up in a family firm, have a business background or in-depth knowledge of organizational behavior. Some are part of consulting teams that include estate planners, investment bankers and other professionals. In fact, very few play up their backgrounds as therapists or psychologists, preferring euphemisms such as “family systems expert.”

Part of that stems from lingering taboos about therapy culture and what that might say about a family firm that seeks help from a shrink. It also underscores the specific needs of family-business owners, who are more interested in preserving the company than finding their inner child.

“Family firms don’t want psychotherapy . . . or a lot of touchy-feely stuff,” said Ralph Daniel, a business psychologist and consultant with the Center for Family Business Dynamics in Santa Barbara. “They want to run their businesses more efficiently and profitably and get the family working together in a harmonious way.”

While vicious, bare-knuckles family-business feuds like those of the Shoens of the U-Haul dynasty and the Hafts of Crown Books fame grab the headlines, more typical are the growing pains of businesses such as Blois Construction.

Brothers Jim and Steve Blois were raised in the business and took over its management from their father in the early ‘90s. Steve, 47, served as president and directed field operations. Jim, 39, was secretary-treasurer, overseeing the estimating and office functions. It seemed like a good division of labor, and the brothers always got along. Still, they experienced a growing sense of frustration that the business wasn’t firing on all cylinders. They wondered if family dynamics had something to do with it.

So in the spring of 1997 the brothers hired Daniel.

Daniel declined to discuss the specifics of his work with the Bloises, citing client confidentiality. But the brothers say he helped them recognize that the way their father ran the business wasn’t necessarily how they should do it.

With Daniel serving as coach and counselor, they completely revamped the organization, eliminating the inherent tension that existed between the estimating and construction sides of the business by combining the functions and making work teams responsible for projects from start to finish. They gave more autonomy to key employees and created an outside board of directors to increase their own accountability to the firm. The brothers also opted to share the title of president to reflect their equal status.

The Bloises say business operations are running smoothly--and so is their relationship. Finger-pointing has stopped. Elder brother Steve no longer feels as though every problem ends up on his desk, while Jim has a greater voice in the firm. The changes also have paid off financially, the brothers say, with fiscal 1998 marking Blois Construction’s best year ever.

“We can see the difference in our financial results,” Steve said. “And it’s fun to come to work now.”

This kind of assistance doesn’t come cheap. Top behavioral-based family-business consultants command about $2,000 to $3,000 a day, with an initial evaluation costing anywhere from $5,000 to $30,000. Ongoing counseling could stretch the tab as high as $100,000 or more.

That’s beyond the reach of most mom-and-pop shops. But considering the size and market value of some family enterprises--nearly 35% of Fortune 500 companies are family firms--the cost may be worth it to preserve the business.