Common issues that can tear the family business apart

“WHEN family members are fighting, it is nearly impossible to set aside personal agenda or to overcome excessive emotionality.”

Every business owner must deal with issues and problems in the course of building and running a successful operation. In many ways though, the challenges—and advantages—in a family business are unique. With the Asean Integration barely a few days away, it pays to reflect on the real causes of an organization’s downfall. More often than not, the failure is caused by internal conflict.

I have listed some of the most common threats that family businesses are facing:

1. Family quarrels

There are many causes of family feuds — anger, envy, money, sibling rivalry, priorities, or even differing lifestyles. Whatever the reason, getting at the root of the matter and bringing back together the family bond, is always a matter of proper communication.

First, if the argument is recent, allow yourself and the other player(s) the time to calm down and be willing to converse with you. Moving too quickly could cause even more animosity and bring the separation to an even greater level.

Someone has to step up and initiate the healing or mending process. Although it may be the toughest thing to do – especially if you feel that you did nothing wrong — you may have to swallow your pride and allow yourself to move forward and forgive. Reach out and take responsibility for your actions. Explain why this feud is not as important as your relationship; reaffirm your love for the other person.

The power of objectivity

As the saying goes: “Nothing personal… it’s just business.” In a family-owned business, emotional responses are to be expected, especially in cases where one family member is charged with supervising or directing another. The key is to be sensitive to complex family dynamics, ensuring that these emotions are carefully managed and not allowed to influence or affect the overall operations of the business.

One of my clients, a family-owned business, came into our program with a strong business and great potential. But as we got further into our monthly coaching meetings, it became apparent that their stated positions in the organization were sorely at odds with the way things really worked. This is not unusual in a family business; often a family member is given a title, but not the true responsibilities of the position.

In this particular situation, the eldest son held the title of general manager of the company; the father was officially retired but still discharged and function as the head of Sales. However, it was understood by everyone (including me) that the father still called the shots and all decisions were made by him. Over time it became equally clear that communication between the family members was not as open and frank as it needed to be.

When we stepped back and looked at the business holistically, when we really investigated how the lack of integrity in these roles was actually hurting the business, the solution became less about fixing personal issues, and more about improving efficiency for the business. So we tackled these issues together, openly and honestly, and agreed on the necessity for functioning within their assigned roles and reporting structure.

When you frame it in the context of creating the best business possible (which is what everyone wants) this re-alignment was logical and dissipated some resentment and confusion that was truly getting in the way of success. Clear structures and protocols, the formation of a council, especially when validated by a third party such as a coach, help. They bring a sense of security that assists the underlying family relationship to proceed.

2. Nepotism

Part of the reason a family business exists is to benefit the family. It’s something all employees should understand. However, non-family employees who perceive a sense of preference and family-only promotions are understandably unmotivated to go above and beyond for a business in which there’s no hope of advancement. Similarly, family members who feel entitled to special privileges and positions become complacent and don’t strive to improve performance. The word nepotism is derived from the Latin word “nepos,” which means nephew or grandchild.

The term originated in the Middle Ages with papal nepotism. Many Catholic popes were unable to have children due to their vows of chastity so their nephews were often appointed to important positions such as cardinals. Pope Alexander V, Pope Callixtus III, and Pope Paul III all appointed several nephews. To curb this practice Pope Innocent XII issued a bull, “Romanum decet Pontificem,” in 1692: only one relative could be made a cardinal. There are also numerous high-profile examples. The most famous accusation of nepotism could be John F. Kennedy’s appointment of his brother Robert Kennedy as attorney general.

(To be continued)

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