December 4, 2019

Six Challenging Areas Of A Family- Owned Business

fambness fightWhich comes first: dysfunctional family or dysfunctional business?

Kit Hill, Ed.D. Director, The New Life Group, Pleasant Hill Founding Partner & Exec. Coach- The John Maxwell Team

The odds are very tough. The head of an FOB faces a daunting array of dicey challenges, many of which are never faced by the head of a public company. So, besides all the common competitive marketplace barriers and obstacles that confront all business leaders, the head of a family business must also contend with a parallel set of near radioactive, family-based issues that inevitably arise in family businesses. Consider the import–for real people in real families–of the situations and questions below:

  1. Most families prefer to create some version of an egalitarian family culture. However, in their business the family head must operate based more on meritocratic principles, which often demand that children in the business end up with different-sized roles. How does the founder or current head resolve this family vs. business paradox?
  2. Founders generally grow more conservative as they age and approach that time when they need to pass the baton to G-2 (i.e., the second generation), which is perhaps the most supercharged process of all family business transitions. How does G-2 handle this sensitive and supercharged issue and how do founders get out of their own way for the greater good of succeeding generations? How does the founder let go of his/her ”baby”? How does the founder confront mortality (a.k.a. retirement) under this stark set of circumstances? (By the way, are we talking ”family dynamics” here, or would it be more apt to say ”family dynamite”?)
  3. Family ”dynamics” (to put it politely) typically heighten and exacerbate problems and conflicts at work. In the business, how do the family head and involved family members handle such family dynamics as rivalries, feuds, jealousy, selfishness, rebelliousness, passive-aggressive behavior, playing of one family member off another, and so forth?
  4. Not infrequently, a fundamental charge for the founder and the founder’s spouse is to rear their children into mature adults and into mature business people, as well. A tall order, to be sure. How does the founding couple navigate these waters? (Jack Welch didn’t have to do that!)
  5. How does the head of the family business balance and manage the needs–and, too often, quite subjective needs–of the family members in the business and the ”outsiders” (i.e., the non-family members) who play key roles within the company? How does the family even go about making sufficient ”room” for the outsiders?
  6. How does the founder or current family head realistically, practically, and proactively deal with The Future and make all the hard decisions–succession, retirement, ownership, wealth distribution, lines of authority–involved in ensuring that the FOB does not wilt on the vine. Can the head/patriarch/matriarch let a family member find an identity outside the family business?

Despite all the downsides, a family business can run well. Understanding relationships and good communication can do much to create a harmonious atmosphere. While you might need coaching AND family therapy, the results can be excellent for the business AND the family.