The Family-Run Business and Its Problems

Most people trapped in dull, unfulfilling careers dream of starting their own business. And the more they loathe their tyrannical boss or exhausting commute, the more they fantasize: if they ran this new business with their partner or children, not only would they be free, they’d get to spend more time with those they love. But, idyllic as this sounds, running a family business can bring problems of its own.

Arguments, Heartbreak and Relationship Breakdowns

Human beings are complicated, inconsistent, unpredictable, and irrational – and so are their relationships. Most families have their bad times; arguments, tears, and sulking are part of family life. Indeed, some could not live without such drama. Now that’s fine around the dinner table on a Sunday afternoon, but a business is different. Business and family life must be kept separate. Unfortunately, many find this impossible and will continue their breakfast row as they open up the shop.

But the world of business and trade is cut-throat and unforgiving. Imagine you supply frozen food to local supermarkets. Your buyer couldn’t care less if you and your brother aren’t speaking to one another, or if you and your wife had an argument about visiting her mother at the weekend. He just wants his frozen pizzas delivered quickly, efficiently, and cheaply! If they aren’t, he’ll go somewhere else. The business world is fast-moving and competitive; people do not have the time to wait for petty squabbles and tensions to be resolved. And they don’t care.

Then there is the wider effect of a death or divorce. Businesses are run by people, and people are often rocked by bereavement, illness, marital breakdown, and so on. In a non-family business, one heartbroken worker can be granted a few days or weeks to recover. In a family-run business, however, almost everyone can be affected by a single tragedy. Imagine a building firm run by a husband, wife, and four children. The three sons work with him on the sites, while his daughter and wife take care of administration. One day the father collapses and dies of a heart attack. Within an ordinary building firm, he’d just be replaced and life would go on. In this example, however, you have an entire work force struggling with bereavement, trauma, and even depression.

And now consider the messy power-struggle that will follow. Which son takes over? And even if that is all decided amicably, there will be a jostling for more subtle forms of power – for influence, for the right to make decisions, and so on; if this isn’t handled delicately, the whole business will implode.

Roles and Boundaries

One of the most effective ways to deal with such problems is through clearly defined boundaries and roles. Everyone needs to know who is in charge and where they stand in the pecking order – and they also need to know exactly what they are, and are not, responsible for. Again, this can be tricky. In an ordinary business, people find it relatively easy to establish and clarify their roles. When it is family, people will hesitate to place loved-ones in subordinate or low-status positions. And when they do, those people will be more likely to argue and protest. To put it bluntly, someone is more likely to tell their father they won’t clean the toilets than a stranger!

If one family member tries to assert authority, he may be met with anger and irritation. And these arguments and disagreements quickly become personal. For example, a younger brother may claim that this is typical, that the eldest sibling has always been favored – and now it’s happening at work. But there is also the danger of ridicule and joking at inappropriate moments, which can be fatal when someone tries to assert authority or take decisive action. And some fear the repercussions once the working day is over. With work colleagues there is no such worry.

Communication Problems

Surprisingly, people often find that communication also proves difficult. When they set such businesses up, they assume that family members will find it easier to address tricky or unpleasant subjects than ordinary co-workers. But this isn’t always true. Soldiers and police officers wear uniforms and address one another by rank because things run more smoothly that way. Personal feeling is removed and tension eased. You do not salute “John” or “Stephen” but “the lieutenant” or “the captain.” And so your feelings about John or Stephen are irrelevant; you aren’t obeying him but the uniform and the rank. The same is true of well-run businesses: you don’t obey a person, but a manager. In other words, “depersonalization” can make it easier to communicate rather than harder.

Obviously, that is almost impossible in a family-run business. And it will be made worse by weak boundaries and poorly-defined roles. Then of course there is the tendency to bring personal problems into the work space, making communication even more fraught and difficult. So a daughter may be sick of her mother’s constant criticism and passive-aggressive manner and have got into the habit of ignoring her, while one brother may be in the habit of patronizing the other. These habits or patterns of behavior usually continue at work, making it hard to get through to one another when it counts.

The Downside of Family Loyalty

Now consider the position of outsiders. As they expand, successful and well-run businesses must employ people from outside the family. And this is where things go wrong. When a business fails, the owner often looks back and says “those new employees just didn’t care. They were lazy and uninterested. If only we could have stuck to family.”

But such complaints may be unfair. New employees often feel ostracized, that the son or uncle is favored while they are ignored. This may be untrue of course, but that is how it often seems, and so the new employees shrug their shoulders and do the bare minimum. Some outsiders become bitter and jealous. They see a thriving business, look at the children destined to inherit, and think “why should I work hard to help you?”

Another obvious problem with family loyalty is that you employ people according to blood rather than skill, ability, or qualifications. People also tend to be blinded by such loyalty, placing a niece or brother in a position to which she or he is unsuited. Plus, families are slower to recognize and act on their mistake, leaving an incompetent loved one in control far too long.

And do not assume that family members will always work hard just because it is a family business. Sometimes this is true, sometimes they feel entitled and slack off. And there isn’t the same need to impress or win over a doting parent or uncle as there is someone who could soon replace you. Finally, bear in mind that the tensions, rivalries, and hurt feelings that arise in any business can be magnified when those involved are related.

Suffocating and Inward-Looking

Businesses stagnate without fresh blood and fresh talent. Indeed, debates about our ageing work force often focus on the problem of “fossilization.” As the lifespan increases, those in positions of power, such as Managing Directors, can be tempted to remain in post for decades. In their defense, they will point to their years of experience and knowledge.

The problem is that businesses, indeed all institutions, need fresh energy and new ways of doing things. In a family-run business, there is often a great matriarch or patriarch: an ageing mother or father (or even grandmother or grandfather) who founded and built the business. As they age, however, such people struggle to adapt to social and technological change. But, whereas an ageing middle manager can be removed, who dares remove the great patriarch? Who wants to seem like a traitor? And yet, if he remains in place, the sons, grandsons, nieces, nephews etc become exasperated by his stubborn refusal to update and embrace change.

Another problem with family-run businesses is that as well as sharing strengths, members tend to share the same weaknesses. They will usually be of the same ethnicity, come from the same city, share the same religious beliefs, and so on. And there will even be similarities in intellect and temperament. This is a particular problem when family businesses move abroad. So, for example, imagine an Italian family decides to open a restaurant in London. The father is in charge, his brother does the cooking, his wife takes care of the accounts, and their children wait on the tables. It sounds idyllic. But London is a very different place to the small Italian village they have left behind. It would be an advantage to have a British employee, someone who can deal with the suppliers, who understands cultural differences and taboos. Family-run businesses are often slow to recognize this.

Of course, family-run businesses have their advantages as well. In general, people will work harder for their family than for a stranger, and you can usually trust loved ones more. But setting up a business is risky and demands careful thought. And remember, you must consider not only whether the business itself will work but what effect it will have on your relationship with those closest to you.

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Mark Goddard, Ph.D.

Mark Goddard, Ph.D. is a licensed psychologist and a consultant specializing in the social-personality psychology. His publications include magazine chapters, articles and self-improvement books on CBT for anxiety, stress and depression. In his spare time, he enjoys reading about political and social history.

*The views expressed by Mr. Goddard in this column are his own, are not made in any official capacity, and do not represent the opinions of his employers.

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