How can success in a family business be a problem for the family and the business?

Business Leader Post, March 6, 2014

Thomas D. Davidow, Ed.D.

We all know that there is a connection/overlap in a family owned business between the family and the business. Family members frequently see the business as an extension of the family. The problem with that perspective is that it can lead to the expectation that the business has the same obligation/opportunity as the family does to support its family members—support in this case being defined by money, a job and/or a life style that is attached to being a family member versus having a position in the business.

This phenomenon happens only when the business is successful and consequently can afford it (from a financial perspective). But is that true? Can the business really afford it? Can the business afford to create a culture of entitlement for family members? What message does that send to employees, customers and suppliers?

Success in a family business also makes it more difficult for the senior generation owners/parents to say the most important word in the language of parenting: No. We all want our kids to benefit from our hard work, but we have to balance that against denying them the opportunity to work hard for their own rewards.

Parents/owners have to learn to refrain from saying yes because it is easier in the same way that businesses have to set guidelines to establish a strict meritocracy for family members.