The Loyal Demons in Family Businesses (A Short Story)

Not so long ago, I worked with a family business on restructuring and building its own strategy. The holding company owned numerous real estate assets and subsidiaries. However, it had been struggling and faltering for more than 15 years; it suffered from a loss of direction, lack of focus, and recurring problems, particularly regarding the difficulty of hiring talent. The salaries were good, and though the company was not ideal in terms of the work environment, it was strangely searching for "perfect" employees, which is what caught my attention.

Why Strangely Perfect Employees!

• They excel at manipulating others and using tricks to achieve their personal interests, showing loyalty and dedication outwardly while working in secret to achieve their own goals—much like the demon who swore to Adam and Eve that he was a sincere advisor.
• They demand the best from any newcomer to the company.
• They always seek to raise the ceiling of expectations and requirements for any new employee joining the firm, making it difficult for newcomers to adapt and succeed. Through this behavior, they aim to keep themselves in a position of advantage and monopolize skills and knowledge within the company.
• Information Manipulation
• They falsify and analyze information to convey an unrealistic picture of the company's current status, which prevents making sound decisions based on factual data. They constantly strive to conceal facts to achieve their goals.
• They maintain a low-intensity conflict environment
• They ensure that the level of conflict remains low so that they always stay in control. They work on creating an environment that guarantees the continuation of superficial problems while avoiding radical solutions, making themselves indispensable within the company.

I wondered: Who brought this strange image to family businesses? And to the company's management? Is it even necessary for a family business to succeed to hire an executive team accustomed to corporate giants? This is an incorrect assumption, especially in the stage of managerial immaturity. Do these companies not need top-tier managers in an unorganized work environment? Indeed, my suspicion was well-founded, but I did not want to rush. I asked the brothers, Khaled and Abdullah, for permission to share their story and the story of their family business for the benefit of others, and to send special messages to anyone who lives or might live a similar experience through this story.

• Trust Manipulation
• They gain the trust of others in the beginning and then use this trust to control situations and individuals for their personal interests. They seek to use trust as a means to achieve their goals.
• Providing Temporary Solutions
• They suggest temporary solutions to problems without addressing the root causes, which leads to the recurrence and persistence of issues. They always seek to provide solutions that merely sedate the problem without solving it.

Abdullah began avoiding coming to the company due to immense psychological pressure, and he started viewing these employees as the only friends he could rely on. They had successfully conveyed that message to him skillfully: utilizing the company's resources to achieve personal gains, relying on outward loyalty and dedication. Their actions created a toxic environment where the cunning, deceitful, and manipulative were rewarded, while competence and true integrity were marginalized.

Who is Abdullah!

• Mastering the pretense of dedication and loyalty.
• They excel at pretending full loyalty and dedication to the company, which wins them the trust of management and other individuals. They use this pretense as a tool to strengthen their position and evade accountability for their actions.

Abdullah, Khaled's older brother, had been working deeply in the company's management since their father's days. However, three years after the father's death, some employees, who presented themselves as loyal and devoted, began executing a tight plan to control the company. It might not have been a calculated plan in the beginning, but it became so over time. They did not reveal their true intentions, making the phase even more difficult. They skillfully manipulated situations and decisions for their own interests while pretending to be loyal. This undermined Abdullah's ability to focus outside the company, creating a mix of internal problems and external challenges that piled up on his desk every day.

Proposed Solutions

1. Knowing the problem; "Diagnosing the problem is half the cure."
2. The first step toward solving any problem is knowing it exists. From a psychological standpoint, this step is not as easy as it seems; people tend to ignore problems or downplay them rather than face them. This denial can be a way to protect oneself from facing painful facts, but it prevents real progress. You must have the courage to admit that there is a problem that needs a solution, and be ready to face the truth regardless of how difficult it is.
3. Acknowledging the existence of the problem; "Acknowledging the problem is the beginning of the solution." Knowing the problem is the first step, but acknowledging that this problem directly affects you is the second step. There is a huge difference between knowing the problem and acknowledging it. Knowing the problem means you realize its existence, but acknowledging it means you evaluate its impact and accept that you need to do something about it. This acknowledgment requires inner courage and honesty with oneself.
4. Not involving the perpetrators in the solution; "You cannot solve a problem with the same mindset that created it." Do not involve those who caused the problem in the solution process, no matter the reasons. The greatest challenge lies in the psychological aspect, as it is difficult to make firm decisions against individuals who show great loyalty to the company. These people may have built strong relationships with the company and, in many cases, with the family, making it difficult to question their intentions without causing personal and professional rifts.
5. Adopting change irreversibly; "Change requires courage and determination." Change requires making bold decisions and being prepared to face your psychological barriers, in addition to managing the frustration you will face from the team due to the incentives they will lose. You must have the courage to terminate these individuals despite their apparent loyalty, because they harm the long-term health of the company. This decision is painful today, but it prioritizes the company's welfare over personal relationships, which is crucial for sustainability.
6. Committing to a strategy and approving a budget for it; "Planning is the key to achieving goals." I emphasize the importance of preparing a strategy—even if it is general at this stage—and having a comprehensive financial budget formally approved for the change process. This plan must be designed in a way that ensures there is no turning back under any economic circumstances.
7. Appointing an external legal counsel; "The law is the secure fortress against crises." Appoint a legal counsel from outside the company and review all internal and external legal matters, as well as contracts belonging to the company and employees. Close all potential loopholes; these individuals are the ones who best know the areas of risk through which the company can be compromised. They may have relationships with suppliers, customers, and all parties dealing with the company, and they could turn against you at any moment. Ensure control over legal risks in the first phase.
8. Separating management from ownership; "Good management depends on independence." It is essential to separate management from ownership to ensure the existence of an independent management team that has no ties to this group and is not accustomed to their psychological pressure. We always recommend establishing a strong and effective Board of Directors. This board must oversee the executive management, its performance, and the implementation of good governance practices, ensuring the company is managed professionally and transparently. Appointments based on competence; "Putting the right person in the right place." Appointments within the company must be based on competence, not personal loyalty, as a merit-based assessment. Individuals should be chosen based on their skills and capabilities rather than their personal relationships with the family or their long standing in the company. Activating a strong financial and administrative oversight system; "Transparency fosters trust." We always recommend activating an excellent financial and administrative oversight system. This system will ensure transparency and accountability, and quickly expose any violations or contradictions being dealt with.
9. Activating and monitoring performance indicators (KPIs); "What cannot be measured, cannot be improved." It is necessary to regularly activate and monitor performance indicators to evaluate the team and management objectively. These indicators must be clear, specific, and cover all aspects of the company's operations, providing an accurate picture of strengths and areas that need improvement.

In Conclusion

(A Fictional Story)

Dear Khaled and Abdullah (and to whom it may concern), your family business faces major challenges that require strict managerial measures. By implementing these solutions, you will be able to ensure the sustainability and future success of the company, God willing, while preserving your family's legacy and securing a prosperous future for generations to come.

mohammed bin saleh