For much of history, the bulk of human enterprise stayed within the family – from the farmer’s children helping to plow the fields to princes learning the art of governance. However, while family businesses are still the norm across large parts of the world, most modern industrialized nations have seen family life and professional life gradually separate. The family business on the wane.
That’s not to say that family business is not still an important part of the US economy. The fact is, family business generates over 50% of the US Gross National Product (GNP).
Another fact? Less than one third of family businesses survive the transition from first to second generation ownership. Yet another 50% don’t survive the transition from second to third generation. If you’re a family member within a family business at this point in time, it’s statistically likely that you’re experiencing some friction, in and out of the office.
Some common challenges:
Parent as boss:
We don’t need an in-depth knowledge of psychology to recognize that families often have unresolved issues related to their particular roles. And, unfortunately, a family business provides fertile ground for families to play out these issues without directly acknowledging them.
While children will often seek to individuate and assert their independence as they grow up, many parents struggle to view their offspring as adults. And since pursuing a career is a key step to full independence, working in a business where a parent is also the boss can be a real complication.
In some cases, parents may use the family business as a way of keeping their adult children close – but find themselves unable to treat them as colleagues whose opinions carry similar weight to theirs. And when the parent is the original business founder, this problem is only compounded.
Entrepreneurs tend to be driven, dominant figures who see their business as a reflection of themselves and may have trouble sharing or relinquishing authority – something they will eventually need to do in order to let the company pass to the next generation.
They may attempt to micromanage the child’s decisions or delay their own retirement, claiming that the child has not demonstrated sufficient competence and responsibility, whilst simultaneously refusing them much opportunity to develop these skills.
Another common ground for conflict is the age-old drama of sibling rivalry, which can seriously derail even the steadiest of businesses. Rivalry between siblings tends to stem from either the need for parental approval (“emotion-based rivalry”), or from conflict over business styles or strategies (“strategy-based rivalry”).
The former tends to stem from the sense that a parent was “missing” or emotionally absent in a child’s formative years – this should be classed as a relationship problem between parent and child, rather than a problem between siblings.
Strategy-based rivalry, on the other hand, is a slightly different kettle of fish, and should be approached as a business challenge as well as a family relationship issue. Provided the siblings are emotionally mature and no longer dependent on parental approval, it can also be a more straightforward situation to resolve.
What can be done?
1. Recognize and acknowledge that there are tensions.
It’s best to confront the situation well before your business begins to suffer. There are often conflicts and outright arguments even before a penny is spent. Unfortunately, however, it often takes falling revenue figures before family members are ready to acknowledge that this is a serious matter.
2. Consider the underlying problem(s)
Is it parental control? Is the “founding generation” struggling to delegate and pass on the leadership reins to their offspring? Is it sibling rivalry that’s tearing the business apart – and if so, is it emotion or strategy-based rivalry? Does it seem to be a combination of all of the above?
Even if it seems impossible to disentangle all the unhappy threads that are tying up your family business by yourself, simply reflecting on the root causes of your conflicts and having some open, honest conversations with other family members may help set the scene for resolution.
3. Get outside help
There is a tendency, especially among the older generation, to reject any suggestion of counseling or input from outsiders. And when help does get sought, it has traditionally been from conventional business consultants. However, this approach often falls short. Someone brought in as a business consultant can try to improve management styles and business strategies , but will be powerless to deal with underlying family dynamics, and may find their suggestions overruled.
Today, a few distinct professionals are recognizing the benefits of individual and family therapy approaches for the unique issues that families in business together face. The complicated emotions that cause strife within families can be incredibly potent, and may be even more so within the context of your business. It is vital to have an objective expert in family process and conflict resolution to ensure that you unravel the root cause(s) of the conflict, and begin working together effectively towards resolution.
4. Consider gaining work experience elsewhere
Dr Harry Levinson, a famous American psychologist and consultant in work and organizational issues, strongly recommended that adult children spend a few years gaining work experience elsewhere before committing to the family business.
The benefits are many: in addition to picking up useful new skills and ideas, the time away allows offspring to develop a sense of confidence and autonomy separately from their parents’ supervision, and serves to prove to parents that they are in fact capable of making valuable independent contributions to the business.
In fact, according to research by Kenneth Kaye, “families whose members had other paths on which they could have succeeded are the only ones with the capacity to thrive in business together over generations.”
5. Don’t employ family members who can’t make a real contribution
In a family-run business, it can be tempting to put relatives on the payroll to help them feel “included” in some way. However, this is a classic blunder, and can lead to bitter conflicts.
Make sure that everyone has a role and responsibilities that are spelled out and are very clear, says Jane Hilburt-Davis, president of Cambridge-based Key Resources and co-author of Consulting to Family Businesses. Establish each person’s title, job function, and compensation. And make sure that you have performance reviews for family and non-family employees alike, she adds.
Moreover, think twice about offering a contract to a supplier who is a relative. Award contracts based on merit.
6. Treat family members with sensitivity
Of course, this should apply to any employee, family or not. However, it is worth bearing in mind that family members may react more painfully than regular employees to overly-harsh criticism or impatience. It’s dangerous to assume that family members will react in the “right” way to criticism once in the office. Apologize and explain yourself if necessary. False pride doesn’t work with family members in the office.
Ultimately, it is important to realize that a family and a business are two different kinds of organizations with two different, possibly conflicting purposes. An ideal family provides unconditional support, protects each other from negative consequences, and is held together by bonds that you can’t put a price on.
In a modern business, however, support depends on one’s contribution, consequences must be faced, and value is reflected by revenue. The ability to distinguish between and reconcile these two goals – and the willingness to seek the appropriate kind of help in doing so – is crucial for success.