Family Dynamics Compromise Business

Psychology is the difference maker!


Family-owned businesses possess challenges rarely seen in most corporations. The boundaries around the roles are blurred, channels of communications routinely disregarded, long standing feelings often trumping business logic. Decision making is plagued by emotion, causing procrastination and lost opportunities. Deep rooted familial conflicts often prove the downfall of even the best businesses.

"It's all falling apart." The retired owner of a Training & Development Firm sought assistance with interpersonal conflicts between the siblings entrusted to run the business. The conflicts threatened to destroy the family and place the future of the company in jeopardy. Unless addressed, the conflicts would seriously compromise the company's ability to sustain the retirement of the owners, as well as the standard of living for their heirs.

The goal of the owners: Resolve the issues so that the family could move forward in harmony, with the company remaining profitable.

Initial Assessment | Problem Definition | Proposed Intervention Plans:

Meetings with the retired owners (the company founders, now divorced), their son (company President) and their daughter (Executive Vice President) revealed several points of contention arising from divergent visions for the company including:

  • President's focus on transforming the business into a purely training company, to generate "here and now" profits from existing products; and

  • Executive VP's focus on R & D to develop a new generation of training products, which had been the core driver of company profits.

This clash of visions had its origins in a long-standing family dynamic – the EVP having been delegated the caretaking responsibilities for her younger brother as the owners built the business over several decades.

The owners did not want their retirement nest egg threatened by the day-to-day conflict stemming from their children's sibling rivalry.

My initial recommendation was mediation between all four parties for conflict resolution (Intervention A), followed by Executive Coaching for interpersonal and communication skill development for the current business principals, the President and his sister, the Executive Vice President (Intervention B).

Results of Intervention A (Assessment in Mediation | Consultation):

Mediation session initially clarified each party's perception of the problem as well as their individual proposed solutions.

The joint problem solving session (with all parties) using the SWOT (strengths, weaknesses, opportunities, threats) analysis model, resulted in the generation of a list of business strengths, weaknesses, opportunities, and threats, as well as options for moving the business forward.

Owners maintained their desire that both children remain involved in the business; however, they were unwilling to deal directly with the strongly entrenched family dynamic between their "responsible child" and their "rebellious child".

The owners evaluated the proposed solutions. They quickly made a unilateral decision to bring in a trusted, outside resource to oversee the day-to-day business functioning. He was charged with working with the President and EVP on evaluating the success of their divergent, yet potentially complementary visions.

Results of Intervention B (Executive Coaching):

Executive coaching sessions with the EVP led to an increased clarification of her desire to continue to be actively involved in the business and continue in the same role that she felt was the "best fit" for her skills. She clarified her position that R & D was the solid foundation on which the company was built. She even presented a business case for spinning off this part of the business to maintain the focus.

The President of company, however, refused to participate in any coaching sessions, maintaining his strong position that the training aspect of the business was best for the company overall. He removed himself from making the final decision, telling the owners (his parents) to make the decision. This behavior - rebellion against any decision other than his own – was consistent with his role within the family dynamic, and the cause of much upset over the years.

The two owners intended to "enforce" (offer) a leave of absence for the President. He then could use the time to decide if he would remain with the company or seek other employment.

Lasting Impact:

  • The realization that to move forward profitably, a strategic plan needed to be developed.

  • An action plan was developed, reducing overt day-to-day conflict.

  • Stakeholders realized the need for a re-clarification of the company vision.

  • The owners preserved retirement income.

  • The family dynamic remained unchanged.