Family relationships: in good hands?

While family businesses can be the best of all possible worlds and provide many rewards, they also present inherent risks. Those rewards and risks are rooted in the quality of the relationships between family members. Emotions attached to the meaning of family are so powerful that unless attention is paid to critical issues, relationships in family businesses can spin out of control and endanger both the family and the business.

A survey about family business relationships conducted by Campden FB yielded important information regarding these critical issues.

At first glance, the outlook looks positive. In answer to the opening question "Overall, how would you describe the relationships you have with other family members who work in the family business?" a majority of 53% described their relationships as "very close/close". Only 8% said "cool/distant or very cool/distant", while 39% described their relationships as "satisfactory".

At the same time, 56% said that the communication between family members in the business is either "mixed" or "very poor". These responses suggest a distinction between the quality of the relationships (care, affection) and the quality of communication.

However, the most startling results came when the different responses given by the junior (26–30 year olds) and senior (over 60 years old) generations were compared (other generations surveyed included under 25s and 31–59 year olds). In particular, the responses they gave regarding appropriate boundaries and positive communication merit more detailed discussion.

In the family business context, the definition of maintaining boundaries is the ability to separate business issues from family issues, or stated differently, to separate business relationships from family relationships.

The overall results of the Campden FB survey show that 33% believe the boundaries to be "well defined", 47% describe them as being "adequately defined", while the remaining 20% say they are "poorly defined".    

However, the two generations mentioned earlier perceive the boundaries between them differently: In the 26–39 age group surveyed, only 28% stated that the boundaries were well defined, compared to 42% of those over 60. Here's a dramatic example of how problematic that difference can be.

Two colleagues of mine asked me to help them figure out what to do with a family – let's call them the Browns – in the process of litigation. My traditional response to that question/problem is "not much". Litigation destroys trust; it represents the ultimate deterioration of family relationships and a complete break down in communication. The initial drivers of the family system – harmony, love and respect – have been replaced by discord, disappointment and rage.

The son wanted to come into the family business right out of graduate school. His father wanted him to have outside experience – to get exposed to the world of business and to learn a few things before returning to the family business, where, the father promised, a job would be waiting for him. The mother disagreed with her husband. She thought that since the son was both a good boy and a bright one, his father should give him a job right out of graduate school.

Mr Brown agreed to give his son a job – a big mistake. Why? He and his wife made a family decision rather than a business decision. That pattern of not separating family decisions from business decisions continued over the next few decades, culminating with a recent threat by the father to his son that if he did not apologise to his mother (over an incident involving the son's wife and children) the father would fire him.

When was the last time you heard about someone who works for General Electric losing his job because of an argument with his mother?

The difference between how parents and children perceive boundaries is rooted in the natural instincts of parents who enjoy closeness and contact with their children. However, when parents absorb their children into the family business, they place both conscious and unconscious expectations onto them as children/employees. The children, who are trying to establish their own nuclear families, want the freedom to choose how to stay connected to their family of origin. That desire for freedom can conflict with fulfilling their parents' expectations.

All children are dependent on their parents when they are young. When they grow up, separate, and develop their own lives/families, the cycle repeats itself. When parents bring their children into the family business, no matter how business-like their behavior may be, they have extended the psychological and financial connection/dependency. That is not a necessarily a bad thing. On the contrary, it can be wonderful to have a strong, close, supportive family; it can create a strong sense of security. However, while some degree of dependency is always present within a family business, overlapping boundaries between family and business relationships create a lack of separation/autonomy.

In the Brown family, the parents and the son unconsciously conspired to blur the boundaries between their family and business relationships, thereby rendering the parent/child relationship co-dependent. Dependency creates hostility. Neither party in a co-dependent relationship is ever happy with the arrangement. They resent each other.

For the Brown family, poor communication was a core problem and this is congruent with the responses to the Campden FB survey question, "How would you describe the relationship between family members working in the family business?" Overall, 43.5% said "very open," 48% said "mixed", while 8.5% said "limited/very limited". However, the difference between our selected age groups is again clear. Only 32% of the 26–39 group said "very open," while 68% of the over 60 groups answered, "very open".

What does this mean? Is the younger generation withholding their thoughts and/or feelings, or is the senior generation not listening? The difference in openness between the two generations most likely indicates the senior generation's willingness to talk versus the younger generation's experience that their messages never get through.

Family businesses that have both working and non-working stockholders face an additional challenge. When asked to describe the relationship between family members who work in the business and those who do not, only 27% of respondents said that the communication was "very open" while 73% answered "mixed" or "very limited". Inadequate communication can have a profound effect on the family and the business. In the Brown family, non-working family members "stirred the pot" and added significant tension to an already difficult situation. Communication among all stockholders about family business issues is important, especially during difficult times.

Consider a third question from the survey: "Are you able to discuss difficult problems with family members?" Only 21% of the 26-35 groups said "yes", compared to 53% of the over 60 participants – the percentage for the entire survey was 40%. Clearly the younger generation isn't comfortable expressing what they are thinking or feeling, while the senior generation perceives either that the issues are a lot more settled than they are, or that their children have fully expressed themselves about them. Regardless of the reason, both generations have to take responsibility for the problem. Other wise, the consequences of the difference in perception can threaten both the business and the family.

The discrepancy between how the senior and junior generations perceive key issues adds to the problems that normally accompany the succession process, the most challenging issue in the family business. For the Browns, the problem became so acute that succession was no longer a possibility. Things came to a head when the stress of family life so infiltrated the business that the son realised he had very little control over his world.

That sense of having no control was exacerbated by his inability to talk to his father in a way that might lead to resolution and relief. The son's fear eventually overcame the healthy part of him until he believed that the only way to escape his horrible state and take control over his life was to stand up for himself, separate from his parents and break his overwhelmingly suffocating feeling of dependency. The ensuing law suit is a symptom of how desperate the situation had become, and of the son's inability to express his sense of desperation any other way.

While I support a young person's need to achieve autonomy and applaud the son's wish to become independent, I find it terribly sad when family members become so hostile and unable to communicate with each other that they have to use lawyers and the courts to settle their differences. If it weren't so painful to witness, I would call the situation silly and unnecessary.

The results of this survey ought to be taken seriously. The danger is real: The absence of clear boundaries, along with how differently the two generations perceive their ability to communicate with each other can, in extreme cases, destroy both a family and its business. Don't fool yourself into thinking that it could never happen to you and your family.

It can be a long, slippery slope and can take a long time for troublesome issues to demand attention but when they finally do, they can explode. Litigation is one form of explosion. To avoid that unfortunate consequence, pay attention now.