When people feel betrayed, or unfairly treated, by people they believed they could trust – frustration, resentment, anger, and a strong desire for revenge, are common consequences. Conflicts brew, and eventually spill over.
Despite the fond wish to believe that every family business is a haven of peace, integrity and high trust, the reality is that they are often very low trust environments where, consciously or otherwise, promises made are frequently not promises kept.
Even when there’s a genuine intention to keep a promise such as: “One day, my child, this will all be yours”, delivery is often delayed to a point where the promise becomes almost meaningless. Family relations sour, self-belief suffers and increasingly, panic sets in.
In a surprisingly large number of family businesses, cheap labour is obtained and maintained using promises their givers know will never be enforced – if they even bother to consciously think about such things.
Back on the ranch, the spouses of the next generation family members to whom these promises have been made go from anxious, to angry, to demanding. Parents-in-law get characterised as devil spawned exploiters, and the next-generation home environment becomes an uncomfortable place to be.
In extreme cases, conflict breaks out between partners, in-laws, and parents / parents-in-law, as well as between the spouses themselves. Consequences include banning grandparents from seeing their grandchildren, and having adult children afraid to maintain any social interaction with their aging parents – because doing so generates such trouble for them back at home. This makes things incredibly difficult when conflicted family members have to keep working together.
Massive friction also develops between the family’s matriarch and patriarch, typically as a direct consequence of Poppa going macho and insisting on taking a tough, rational, competitive, commercial approach to the problem, while Nanna grieves the disintegration of her family, and especially being barred from seeing her grandchildren, possibly forever.
Strong adult children with other career options go into battle with their parents on an “old bull vs. young bull” basis. If both players are equally stubborn this invariably results in the family’s best candidate for future business leadership deciding to leave the family business to make their own way in the outside world. Some of them are even driven to go into direct competition with the family business, by way of payback.
Occasionally, some of these superstars come back into the family business, but most don’t. Pride, rather than logic, drives them. That leaves the business with less than optimal choices for family leader, if they have any options at all.
This sort of conflict often leads to the formation of family cliques, and the placing of intolerable pressure on senior employees to back one family group, over another.
Then family members, employees and professional advisers get caught in the fray. Who do they serve? To whom do they really owe their loyalty? Should they put their own careers and families first?
Unmet expectations also arise when family members have entirely unrealistic understandings of who and what they are, and what they contribute to the family business (if anything).
Also, otherwise high-performing individuals can be driven by emotional needs for parental approval that completely overwhelm their ability to self-assess and self-actualise. In a protective family business environment such delusions can develop into serious psychological conditions.
Solution
Business families should maintain a “Little Red Book” (or whatever works for them) to record the benefits (financial and other), that individual family members receive over the years (eg: funded holidays, first cars, rent help, home deposits etc). The red book can at least help to resolve questions about whether one child has received more (or less) benefits than their siblings, or anything at all. It’s not unusual for children to conveniently forget some of the gifts bestowed upon them, over the years!
- Important promises should be documented, with sufficient detail to facilitate their implementation, and monitor their performance. This is especially important in leadership succession, where it should include target retirement dates for current leaders, and a handover date for a leadership baton change.
All such dates should be reflected in the family’s and the business’s, written long-term plans, and regularly referred to at family and business meetings – to ensure these important dates remain in the forefront of everyone’s thinking.
- Families with significant business interests or assets should meet regularly, preferably as a Family Council, or at least at annual Family Forums, to discuss the key elements of the family’s long-term plans, including its stewardship responsibilities and preservation of the family’s legacy. Important promises made should be aired at these meetings to embed them in the family’s plans.
- Family employees should have their own detailed job descriptions and KPIs, and be independently and objectively performance assessed, at least annually. Nobody is doing anybody any favours by suppressing or avoiding reality.