I grew up in a now 3rd generation family business and married into one on its way to generation 5. While most don’t make it past the 2nd generation, no other organization in the world is more prominent than family businesses—and they are on the rise. According to the US Bureau of the Census, about 90% of businesses are family owned or controlled, and they account for 78% of all new jobs. Coupled with this steady resurgence, businesses in today’s times are built on relationships more than ever. This seems to explain why the complicated dynamics of family business have been showing up on my therapy couch more than ever, and an increasingly hot topic nationwide.
What are some tips for those involved in a family business, directly or indirectly? How can families maintain their family bond amidst the often tricky dynamics of running a business? How can family members best deal with emotions that can arise when members feel a threat to their power and place in the family, or their self esteem? There’s an entire field dedicated to guiding families and their family firms. For the scope of this blog, here are 4 proactive ideas to consider gleaned from my experience in organizational development, family counseling, and more personally, from across the kitchen table.
1. CREATE CLEAR BOUNDARIES AND ROLES
Family businesses are best viewed by the systems in which they operate. While families make up their own system—as do marriages, businesses, and bodies of governance—family businesses are typically comprised of multiple and overlapping systems. So the first step in keeping the relationships healthy within the family, and the family business, is to establish clear boundaries between work and family. This requires more deliberate effort than most realize. It’s not typically an organic separation.
We each tend to have a functional and emotional role in the family, whether based on birth order, personality, or the communication/emotional system that governs the family. Family members working in the business also have a task and emotional role, but not necessarily the same as in the family. Family roles must not be confused with work roles. If they are, then festering sibling issues can land smack onto the boardroom table, day in and day out.
For the founder or current leader of the business, it’s essential to select partners and employ family in positions based on objective criteria, not on birth order or the roles they play in the family. Furthermore, you’re never going to attract top people if the top jobs always go to a family member. Look what happened to Falstaff Brewery, a once thriving family business who always gave the top job to a family member. When it comes to business decisions, they must remain separate from the family.
This difficult but essential distinction, and many other sensitive issues that naturally arise, can make balancing multiple roles quite a challenge for the senior members— who are typically not only boss, but Mom, Dad, Aunt or Uncle. I love the story of a business owner who kept 2 hats in her office, one with BOSS written on it, the other with MOM. Depending on the topic of conversation, she would pick the appropriate hat to visually indicate the type of conversation about to ensue, sometimes switching hats in mid stream.
A final aspect of keeping work and family separate is the concept of encouraging the next generation to follow their passion. Incoming members must really find themselves and achieve success outside of the family business environment. It’s important to have a sense of grit for one’s achievement and to make sure the family business is a fit. There are trade offs that must be considered and one’s own true path in life must be honored. I’ve seen many join the family business out of obligation or approval seeking, which only grew into bitterness and depression. The unconditional love within the family, and trust in each person’s ability to choose their path, must be well established to allow each member to make a true choice.
2. COMMUNICATE OPENLY AND HANDLE CONFLICT WITH DIPLOMACY
To create clear boundaries and roles, and to create a healthy emotional environment, families that have good communication skills fare best. Many times, long-standing poor family communication, or lack thereof, naturally bleeds into the business as well. Unfortunately, healthy communication inside families is not necessarily the norm, both in quantity and quality. That is, too many families don’t schedule family meetings, engage in active listening, attack the problem not the person, handle conflict with diplomacy, spend one on one time together, and/or seek counseling.
This tendency for weak communication in a family makes the urgency even greater for family business owners to create a culture that prioritizes building better and more frequent communication. Typically, it’s recommended for family values to form the foundation of the family business culture. If not already in place, healthy communication, and handling conflict with diplomacy, is one family value that should most definitely be added in. See more on communication in my previous blogs Tricky Conversations with Sensitive People and Transforming Anger into Growth in Our Relationships
3. SEEK OUTSIDE COUNCIL
Fostering healthy communication, aka managing painful and perpetual conflict, prompts many successful family business owners to seek outside family council. When I say successful, I don’t just mean just fiscally. True prosperity means having it all: thriving business; positive, creative work environment; safe and respectful family and non family relationships; an element of soul in the business valuing giving and unity, versus taking and every man for himself.
One of the biggest mistakes made in family businesses is trying to navigate all facets internally. When moving away from the one tier mom and pop shop and into the next generation(s), outside advisors and consultants can add great value with issues related to finance and strategy, roles, communication, emotional dynamics, entry requirements, recruiting the next generation, compensation, succession planning, divorce, and more. It can be hard to let others in, but objectively wise— and can ease up the jealousy and tendency for members to take things personally.
4. BUILD EMOTIONAL INTELLIGENCE SKILLS
Family businesses have another system that has great influence on all of the others, and that is they are an emotional system. Emotions are not the problem. In fact, emotions can offer a vital and positive contribution to logic when making decisions best for the long term. But only when a person is self aware. The key is to develop a relationship with our emotions that allows them to be the messengers of our inner truth, rather than in charge of our emotional reactions.
Aggressive, reactive individuals have not developed the pause muscle or learned how to turn inward to sit with and understand what they’re really feeling and why. Rather the tendency is to react outwardly to try and fix a painful emotion instantly. We all have emotionally reactive tendencies and these can certainly become triggered in family business dynamics. All the more reason why investing in greater emotional intelligence, (i.e., greater self-awareness, self-acceptance, self-regulation; empathy with others, listening skills, and emotional diplomacy) should become a top priority, for families and for family business success. True prosperity, especially for a healthy family business, requires working from the inside out.
Hilbert-Davis, Jane and Dyer, W.Gibb, Jr. (2003), Consulting to Family Business. John Wiley & Sons, Inc.