How come it’s so difficult for members of the same generation to run the family business?

Business Leader Post, March 21, 2014

Thomas D. Davidow, Ed.D.

On the one hand, family members have equal value. No member of a family ought to be any more important or have more value than any other family member. The family system of fairness and equality suggests than no family member should have any control over their siblings. Only parents have that right.

On the other hand, businesses are designed with levels of hierarchy where the basic model is to have one person in charge. By definition then, the family business has two systems that are at odds with one another. Consequently, the family business is a Petri dish for conflict. That does not mean that siblings cannot work together.  It does mean, however, that the siblings have to address the issues that are sitting below the surface before they become too powerful and too difficult to manage.

I have worked with a number of family businesses where there is more than one sibling at the top. I even found one where five brothers shared the top position, but that is an exception to most situations. Two siblings can usually figure things out when they have different interests and different skill sets that complement each other, consequently reducing the competition for control or power. When there are more than two siblings, or when one sibling has more authority in the system than the other by definition of his or her responsibilities; or, dare I say it, is more competent than their siblings, the situation becomes ripe for conflict.

The one place that the family system can be re-created is through ownership. Many siblings have equal ownership if not equal managerial authority. Consequently, ownership meetings become as important if not more important than management meetings. This is where all the siblings/owners have a voice. The conflict arises between siblings in family businesses when some of them feel that they do not have a voice. Most people's need to be heard and taken seriously is greater than their need to be agreed with.  Examples of ownership meeting agendas might be: to sell or not sell the business, strategic planning, budgets, and compensation for family members. Sometimes it is best to bring in outside advisors to participate in those meetings. Their presence can add to the value of the decision and mitigate the family tension as well.