Should the Business Hire an External Manager or Consultant to Temporarily Manage the Operations During the Separation Process?

 When a couple shares ownership and leadership of a business, the process of divorce or separation can introduce significant disruptions, both emotionally and professionally. One of the key concerns during this period is ensuring that the business continues to operate smoothly, maintain its profitability, and avoid any adverse impacts on employees, customers, and stakeholders. In such cases, hiring an external manager or consultant to temporarily oversee the operations of the business during the separation process can be a strategic solution. But how do you determine whether this is the right decision?

In this blog, we’ll explore the advantages and challenges of bringing in an external manager or consultant to oversee business operations during a divorce or separation. We’ll look at the factors that should be considered, the role an external party can play, and the potential impact on the business’s continuity and success.

1. Understanding the Need for External Management During Separation

The process of divorce or separation can be incredibly taxing, not just on a personal level, but also on a professional one, especially when both parties are involved in running a business together. The emotional stress and potential conflicts may impair the ability to make sound business decisions or perform routine management tasks effectively.

In such situations, the business may experience instability. Leadership and decision-making could become compromised, leading to confusion, disruption, or even financial loss. If both spouses are still involved in the daily operations of the business, disagreements or distractions related to the divorce may further complicate the smooth running of the company.

This is where the option of hiring an external manager or consultant comes in. A temporary external manager or consultant can step in to help bridge the gap while the personal issues between the spouses are addressed. This professional can manage the day-to-day operations, maintain business continuity, and even help navigate some of the challenges that come with the separation process.

2. Advantages of Hiring an External Manager or Consultant

a. Ensuring Business Continuity

The most obvious benefit of hiring an external manager is ensuring that the business continues to run smoothly during a period of personal upheaval. Divorce proceedings or separation often come with a lot of emotional baggage and unresolved issues that may cloud one’s judgment. By bringing in an external party, the business can continue its day-to-day operations without interruption.

An external manager can handle everything from overseeing employees, ensuring that customer service standards are upheld, to managing the financial side of the business. They provide a sense of stability and professionalism when the business might otherwise face leadership disruption.

b. Objective and Unbiased Decision-Making

When two parties are going through a divorce, it’s not uncommon for personal feelings and emotions to interfere with the business decision-making process. Disagreements, anger, or resentment can lead to decisions that are not in the best interest of the business.

An external manager or consultant brings an unbiased perspective, allowing them to make decisions that are grounded in the business’s best interests rather than personal agendas. They can handle negotiations, make tough calls, and steer the company through this transitional period without the emotional entanglements that might otherwise affect those involved in the ownership.

c. Maintaining Employee Morale and Confidence

Employees often look to leadership for guidance, stability, and motivation. When a business is facing internal conflict, such as the separation of its owners, employees may become nervous or uncertain about the future. Bringing in an external manager demonstrates to the team that the business is still being effectively managed, and it assures them that their jobs are secure despite any personal matters between the owners.

By providing a stable presence and offering clear direction, the external manager can help to calm employee fears and ensure morale remains high. This stability can also be important in maintaining strong customer relationships and keeping up with business commitments.

d. Handling Legal and Financial Matters

Divorce proceedings can involve complex financial and legal matters that may distract the owners from managing the business. An external manager with experience in navigating business finances and legal processes can assist in ensuring that the company’s operations are not negatively impacted by these ongoing proceedings.

Additionally, the manager or consultant may have the skills to help protect the business’s assets, manage cash flow, and deal with any legal requirements related to ownership transfer or the division of assets.

e. Providing an Opportunity for the Owners to Focus on Their Personal Matters

Running a business requires time, attention, and energy, especially in the midst of a divorce. For the spouses, it may be beneficial to temporarily step away from daily business management to focus on personal matters, such as finalizing the divorce settlement and addressing any family issues.

Hiring an external manager or consultant allows each spouse to step back from the daily operations without feeling the pressure of business obligations. This can help both individuals focus on their personal well-being and the legal aspects of the divorce without neglecting the business entirely.

3. Potential Challenges of Hiring an External Manager or Consultant

While hiring an external manager or consultant offers several advantages, it’s important to consider some of the potential challenges as well. The decision should not be taken lightly, as it can have a significant impact on the business.

a. Cost of Hiring an External Manager

Bringing in an external manager or consultant can be expensive, especially if the individual has significant experience and expertise in the industry. While this cost may be justified in terms of ensuring business continuity, both spouses must be prepared for the financial outlay associated with hiring such a professional.

In some cases, the spouses may need to split the cost of hiring an external manager as part of the divorce settlement or agreement, which could be another point of negotiation.

b. Loss of Control

One of the most difficult aspects of hiring an external manager is the loss of control over the business. Both spouses may have grown accustomed to managing the company together, and relinquishing some of their authority may feel uncomfortable. However, the business’s stability and long-term success should take precedence over individual control issues.

If both parties are still heavily involved in the business, it’s important to set clear boundaries and expectations for the external manager to ensure that they’re able to make decisions without stepping on the toes of the owners. Clear communication and agreement are essential in these cases.

c. Adjusting to a New Leadership Dynamic

Hiring an external party may introduce a new leadership dynamic, and both spouses may need to adjust to a different style of management. If one spouse is particularly hands-on in the business and has an emotional investment in the company’s operations, accepting the guidance of an external manager can be challenging.

Open dialogue between the spouses and the external manager is critical in order to define roles, boundaries, and expectations. The external manager should work to align their strategies with the business’s vision and goals, ensuring that both owners are comfortable with the direction the company is heading.

d. Potential Conflict with the External Manager

While external managers are hired to bring objectivity, there is a risk that their decisions may not align with the interests or values of the business owners. If there is a disagreement between the manager’s strategies and the owners’ visions for the company, it could lead to further conflict or frustration.

To minimize this risk, it’s important to hire an experienced and well-vetted professional who understands the nature of the business and is skilled at managing sensitive situations. Communication between the external manager and the owners is key to maintaining a harmonious working relationship.

4. Conclusion

Hiring an external manager or consultant to temporarily oversee operations during a divorce or separation can be an effective solution to ensure the business continues to run smoothly during a time of transition. It provides the necessary stability, helps mitigate the impact of emotional or personal conflict, and gives both spouses the time and space to focus on the legal and financial aspects of the separation.

While there are costs and challenges associated with bringing in an external manager, the benefits of maintaining business continuity, ensuring impartial decision-making, and keeping employee morale intact far outweigh the potential drawbacks. When handled correctly, an external manager can guide the business through a difficult period and set the stage for a successful future, whether both spouses remain involved in the company or one chooses to exit.