Beware of the family-business paradox – Family Business; Planning

Craig E. Aronoff

“It seems the greater the business success, the more conscious effort we need to keep the family together.”

This observation by a third-generation member of a family in business sums up the challenge we so frequently see. Business-owning families have such a great advantage, but the advantage can distract the family from seeing what’s most important in the long run. What’s important is a family whose members enjoy one another and do good things together—one that can use the opportunities conferred by business ownership to the greatest advantage for all.

The paradox typically unfolds as follows: A business is founded. Ownership is passed to the next generation. The members of the second generation have the great advantage of a common interest: a business they own and oversee together. They also share a strong common identity–entrepreneurial parents and memoties of sacrifices in the founding years. Because the family members own a business together, they have wonderful opportunities to achieve joint accomplishments, to struggle through common challenges, and to learn together about life and family.

These strong family-business roots, however, can lead to two unfortunate results: (1) taking the family for granted, and (2) expecting the family’s business leaders to lead the family.

In the second and early third generations, a sense of family comes naturally, but when the founding-generation parents pass away or the second generation pursues separate interests, family cohesion naturally begins to wane. While dilution of family cohesion is normal, it often comes as a surprise because, after all, “We own a business together!”

Over time, bonds of love and common interest erode. More and more, the business becomes the only glue. Because the business is there, business-owning families don’t feel the need to work to strengthen family relations. When circumstances arise requiring attention to family relationships, the business’s leadership takes responsibility by default.

In short, owning a family business makes it possible to stay together as a family without much attention to nurturing family relations or to developing leaders who tend those relationships. That’s the paradox. Owning a family business provides a strength, but it also makes it easy to take family relationships and leadership for granted. In our experience, successful families in business consciously work hard to avoid that tendency.

This family-business paradox has another serious consequence. When a family depends on its business relationship to generate time together and to set its agenda, family members may sense insincerity in motivations.

“The only reason we’re attending to family is to assure support for the business ownership,” some in the family may say. In fact, they may feel that family feelings are being manipulated for selfish business reasons.

If such perceptions exist, you’re between a rock and a hard place. The paradox becomes a trap.

To avoid getting into that trap, pay attention to family for its own sake as soon as possible. In the first generation, for example, the family can begin regularly sharing in nonbusiness interests: perhaps taking a regular vacation together or leading a family charitable or civic project. In the second generation, the family might write or record a family (not business) history or bring the cousins together for activities of sheer fun.

Most business-owning families begin family meetings for the practical matter of discussing business-ownership issues and sharing information about the business. That’s OK. Just acknowledge the truth: ‘We’ve bonded together better than most families because we had the business to interest and involve us. But because of the business, in part, we’re fortunate to be reminded how precious extended family is in its own right. We have the special opportunity to see the power of family. We’ve had a good chance to get to know each other well. Now, then, we appreciate the importance of keeping family together for its own sake. Let’s get on with it!”

In that spirit, we make the following suggestions:

* When you have family meetings, be sure that more time is devoted to family than to business.

* When discussing business at such meetings, make it explicit that you’re doing this simply because you’re all together and it’s a practical time to do it.

* But, to be sure the message is clear, hold occasional family functions where there is no business on the agenda and any discussion of business is kept to a minimum.

* Develop a mission or purpose statement for the family that focuses on family goals and values.

* Encourage family members not employed in the business to be active leaders of family meetings and events.

* Consider holding workshops or seminars at family meetings on the importance of family and on how families work.

The blur between family and business is inevitable. The business can be better for family ownership. The whole family can share in the pride of the business. But members of the most successful business families that we know devote primary attention and precious time to simply enjoying one another, getting to know one another, and doing nonbusiness things together.

One family expresses the idea in its family mission statement this way: “We cherish the special opportunity we’ve been given to enjoy each other and to appreciate the importance of family together.”

COPYRIGHT 1994 U.S. Chamber of Commerce

COPYRIGHT 2004 Gale Group

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