Healthy Family Business | The Family Business Institute
By Dr. Michael C Lyons and Wayne Rivers.
The issue we’re putting on the psychologist’s couch is what constitutes a healthy family business? Our blog readers may have already gotten too large a dose of our contrarian natures, and we’re afraid we’re going to offer even more today.
To diagnose a family business, we have to pull it apart before we put it together, and we find out assessing health is as much art as science. We know the characteristics of a healthy business. That is an entity that consistently creates, satisfies, and retains customers. From the insider’s perspective, it is an organization where creating happy customers yields employees and owners who are likewise satisfied. There are great products, responsive customer service processes, excellent performance management, sound strategic planning, getting the right people in the right seats on the bus, accountability and reward systems, etc.
We also know what a healthy family is. It’s one in which children grow into responsible adults. There is open communication, a respect of individuality, and deep satisfaction of the human needs for intimacy and belonging. Roles and responsibilities are clearly, though flexibly, defined, and, at their essence, they’re focused on a one for all and all for one culture. Even in healthy families, people argue, disappoint one another, and pursue their individual needs, but, because they love and trust each other, they come back again and again to bask in family togetherness.
Now, how do businesses and families come together? Well, sometimes they don’t, and the reasons why make perfect sense. Business is about customers and results, and families are about intimacy, enjoyment, and growth. So what does a business potentially bring to a family? It provides a chance for growth and excitement, a setting where one can have a positive impact on others, the opportunity to provide for children and grandchildren, and, potentially, for wealth that enable and sustain a family’s values in future generations. In turn, the family can bring to the business a strong base of trust, a willingness to work above and beyond the call of duty for the common good, and a selflessness that makes things happen for all, not just one.
Do all successful family businesses have healthy families? Absolutely not! We have observed businesses which create happy customers and deliver outstanding financial results but which rob family members of their individuality, destroy trust, and cause family members to lose respect for each other; a business can do well even while a family harms its own members. They somehow deliver sales and profits in spite of family dysfunctions which they, sometimes desperately, try to keep hidden from employees and customers. They tend to be exhausting places to live and work.
Do all poorly performing family businesses have unhealthy families? Again the answer is no. Families can love, respect, and support each other, but they may offer poor products or services or suffer from inadequate business processes. The question in a circumstance like this is whether a healthy family can retain its vitality over time while the business that may bear its name implodes all around it. A poorly performing business is tough, tough, tough on the family which seeks to sustain it. An unstable business creates stress that begins to damage family dynamics, which, in turn, corrode customer and employee relationships and creates a negative downward spiral. Unhealthy families can and often do wreck an otherwise salvageable business.
How does this help our readers? You’re trying to find out about healthy businesses and healthy families and how to make them both work, and we’re saying that it may not be possible, in a given instance, to successfully meld family and business together. A key to unlocking this door is answering the question: when is family health a key success factor for the business? Another question: when will unhealthy family processes threaten to kill an otherwise healthy enterprise?
The first danger zone is at the point when the business begins to transition leadership and management. Healthy family processes facilitate positive leadership transitions; unhealthy family processes inhibit succession. For a family owned business to call itself genuinely successful, it must be strong enough to pass from the senior to the junior generation while retaining enough of both the business and family ingredients to sustain its success. Senior generations who hold on too long, junior generations that obsequiously wait, wait, wait, until mom and dad are good and damn ready to let them take the reins, and non-family key managers who see their livelihoods endangered by poor or non-existent succession planning all share the blame. Successful transition starts with leadership and intentionality.
The second most dangerous time is when the business experiences troubles. Whether losing a major account, enduring a recession, or struggling with a project suddenly out of control, healthy family dynamics help buy time for troubles to be resolved by good business planning and intelligent action. But the longer business troubles last, the more dangerous they become to the family.
In summary, we have to ask intelligent questions to assess overall health:
The answers to these questions are the keys to assessing the health of the business organization and the family system and putting both on the path of harmony and prosperity.
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