5 Things that Can De-Rail a Family Business
It’s been a few months since my last “5 Things” blog, so this might be overdue.
While I usually deal in positives because it’s my nature, this week we’re going to look at some potential pitfalls that many family businesses face.
Let’s get started.
The word “assumptions” that I chose here might surprise some, but I wanted a word that stood on its own, without requiring a negating adjective.
So while I could have said “Poor Communications”, I chose instead to look at what IS there, as opposed to what is NOT.
The reason many families don’t think that they need to talk is because they actually assume that everyone else in the family knows what they are thinking, AND that everyone is in agreement.
That often turns out to be wishful thinking at best, and hides serious misunderstandings at its worst.
- Bad Timing
Another issue that can de-rail things is that family members from different generations will often have different views regarding timing.
I call it “bad timing” but it’s really about poor alignment of timing, different priorities around timing, and just plain waiting too long to get started on things that are important.
The rising generation needs to step into roles with a long runway so that they can learn while the elders are still there.
More often than not, the elders hang on way too long, telling themselves that the “kids aren’t ready yet”.
That usually has much more to do with their own sense of importance than anything else.
- “Us-against-the–World” Attitude
Business families are notorious for keeping things very close to the vest and having great difficulty trusting any outsiders.
They often think that they’re the only ones in the world who have family issues to contend with as they run their businesses.
They wrongly believe that everyone else is “out to get them” and have trouble trusting anyone who happens to have a different last name.
This can be harmful in terms of attracting good employees, qualified advisors, and of course eventually outside independent directors for their board.
- Jealousy and Superiority Complexes
You had to know that I’d eventually get to something in the area of sibling relationships, and here I’ve chosen to label it as jealousy.
When there’s a lack of harmony in sibling relationships, quite often it can be traced to some jealousy issues.
And even when one sibling isn’t really jealous, sparks can come from what I like to call someone’s “superiority complex”.
I’m not sure if that’s even a real term, but I like to use it as the opposite of the more familiar “inferiority complex”.
When a sibling occupies a leadership position in the business vis-à-vis their siblings, it brings about some potential difficulties, like jealousy, for example.
A humble sibling leader will face less issues with this, than one who boasts about his relative place with his generational peers.
Family businesses can become stodgy and complacent with time and not quick enough to innovate. Lack of foresight and getting out in front of industry changes can become a problem.
This often accompanies the bad timing noted above, where the younger family members know that things need to change, but aren’t able to convince the current leaders that changes are needed to be profitable in the future.
Wait, Where’s “Conflict”?
Just guessing here, but I assume that some readers may be surprised that “Conflict” did not make my list.
It certainly isn’t because conflict doesn’t exist in business families, nor because I don’t think conflict needs to be addressed.
Of course conflict is an issue, and it exists in almost every family business. But, in and of itself, conflict won’t de-rail a family business.
Unresolvable conflict, due to an unwillingness to work on resolving it, can certainly be a huge risk.
Likewise, unexpressed conflict that lays beneath the surface for years or decades has certainly sunk more than one family business.
Manage the Conflicts, Look Out for the Other Five
Conflict can be healthy (see: Embracing Conflict in Family Business), so I suggest concentrating on the other five areas.
No. 3, only trusting insiders, can be the biggest one.
Regular, honest, open communication is the best antidote to all of these.
Recognizing everyone’s interdependence is probably the “magic bullet”, if there is one.
What keeps you up at night?