More than 90 percent of American companies are family-owned, which means they have a huge impact on the nation’s economy.
Unfortunately, too many of them bring the baggage of family relationships and behavior into business, says Marina del Rey, Calif., management consultant Quentin Fleming, who has worked with family businesses for eight years.
These families commit seven deadly sins that destroy their businesses, says Fleming, who is writing a book on that subject.
The businesses aren’t as successful as they could be, he says. People work harder than they have to. Conflict prevails.
Sometimes, just making families aware of their debilitating behavior leads to a solution, he adds.
“I’m a heretic,” Fleming says. “Most family-business advisers concentrate on how to pass the business on to the next generation. I’m saying, in some cases, why leave the business to the kids?”
Fleming’s seven deadly sins of family businesses:
– Old habits die hard. If Johnny got his way by throwing tantrums as a 6-year-old, he just might bring that into his job in the family business, Fleming says. As an adult, this behavior takes on a sophistication that can look legitimate.
The tantrum child “will create a crisis within the business in order to get his own way,” Fleming says. “If he’s really good at it, it will look like outside forces caused the crisis.”
Such behavior hurts the business by driving away non-family employees who see the disruptive behavior for what it is.
This sin is also reflected in attitudes toward female children in some families. “They’ll say, `Oh, she’s just a girl,’ but often the daughter is the most talented of the children,” he says.
– One big happy family. Most business owners accept disagreements as a natural, even healthy, part of business life. But some will go to any length to avoid conflict in the family, Fleming observes.
“In most families, someone takes on the role of peacekeeper. Often it’s the mother,” he says.
If the peacekeeper works in the family business, she either will refuse to address difficult issues or make decisions for the sole intent of keeping the peace, which may not be the best solution for a business to thrive and grow.
Another example of this sin, Fleming says, is the parent business owner who demonstrates that he loves his children equally by creating a succession plan or will that leaves equal ownership of the company to all the children, even if they don’t deserve it or it’s not in the firm’s best interest.
Some of the inheriting children may have their hearts and souls in the company, but the others have no interest in it and vote for actions that destroy it, he says.
– Always the child. One of the most common occurrences in family businesses is the father-CEO who lets his children work in the company, but never make a decision.
This father rejects his children’s ideas and overturns their decisions.
“They’d never think of doing this to any other employee,” Fleming says.
– Family loyalty vs. best interests. Sometimes, a parent insists that the children take over the family business whether or not they have the desire, skill and motivation.
“I say a child should not join the family business before they’re 30,” Fleming says. “They need to distance themselves from their family roles and figure out what they were truly meant to do.”
However, the child who does step away is sometimes excommunicated. At family gatherings, the relatives who work in the family company talk about business, virtually ignoring the others, he says.
– Absent father. Entrepreneurs tend to have dominating personalities and are consumed by their enterprises, Fleming says. Often their spouses and kids are virtual strangers.
If the children join the family business, the founder can dominate them or not allow them to develop decision-making skills and self-confidence.
– Ignore it; maybe it will go away. Two commonly ignored issues in family businesses are sibling hatred and parents’ mortality.
“Occasional squabbles among siblings are normal. I don’t trust families that tell me their children always get along,” Fleming says, “but some siblings are like J.R. and Bobby Ewing (from the “Dallas” television series). They hate each other and will do anything, including destroy the business, to hurt each other.”
Likewise, families that ignore the inevitability of the parent-president’s retirement or death leave the company vulnerable to its own death.
– Unresolved childhood issues. “We all have disappointments in childhood,” Fleming says. “Kids who don’t distance themselves from the family for a while bring those disappointments into the business.”
The father-CEO and son-vice president of operations may be discussing inventory when all of a sudden the son blows up. Something the father said triggers in the son a reminder that he didn’t get that pony he wanted when he was a child.
“The conflict has nothing to do with the topic being discussed,” Fleming says. “The interaction triggered certain memories buried deep in one person’s subconscious and he reacted or overreacted.”
Families who work together must acknowledge and overcome these sins for the country’s sake as well as their own, Fleming says.
“The family business is like nuclear power,” he says. “It has a powerful role in the economy, but you have to be careful because of its potential problems.”
