Tensions in Family Businesses

All family businesses need to balance out the tensions between what I call the “3 forces” that effect family businesses – The force from family business itself, the force from the family ownership and the force from the family system.

Having a common mission, high-trust relationships and effective decision-making structures can help to bolster family business performance, especially in today’s uncertain business climate. I see many issues which hinder family business on a daily basis, some of them are very basic yet complex within themselves. Some of these are:-

  • Lack of trust: Research shows that lack of trust and proper communication skills are responsible for overall majority of failures in family businesses.
  • Lack of a common purpose: While family members in different generations may have different values, a clearly identified common purpose can help align both family members and employees to support a common mission.
  • Not putting the interests of the family business FIRST: Family businesses can go under for  many reasons, including conflicts over money, poor management and fighting about the succession of power from one generation to the next. Whatever the reason, none of such infighting should ever be done to the detriment of the business. Everyone must keep in mind that if the family business goes down, everyone will suffer.
  • Lack of courage: Family members too often avoid facing reality and discuss tough issues with other family members. Over time such issues, whilst remaining unaddressed, create further tensions and foster distrust in families and obstruct performance in the family business.

I feel that many believe, that while much of the above is true, none of it is a priority, as what matters most is that family businesses attract enough work and business and all the rest will just take care of itself. It is definitely not the case. Family businesses must continually strive to build trust in concrete ways, inculcate the shared purpose of the family business, establish effective decision making structures (corporate governance) and effective ways of communication. None of this is easy and it is very hard that family businesses will manage to achieve all this on their own without external help…..but achieve it they must if they are to survive.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s