Unpacking the Legacy: The Hidden Burdens of Leadership in Family-Owned Businesses

Genette Gregson, CEO of Australia based All States Trailer Spares, was asked to explain how working in a family business differs from working in a non-family company since she had done both.  “A family business is a never-ending journey, one that is continually evolving. Just when you think you’ve got a handle on something, things change, and you have to adapt quickly and efficiently.” Her family developed a successful leadership structure and decision-making process of an outside consultant who could give objective advice. This is not the way it goes for many family-led companies.

Loaded Down with Baggage

Gregson’s scenario is ideal, but not all family-led companies are so fortunate. Their never-ending journey is loaded with baggage that drags down the company’s ability to thrive, and they either refuse to acknowledge or are unable to see the true source of their emotions and reactions at work. Family baggage consists of emotions, interactions, and behavior patterns learned through family relationships and interactions outside the business. Carrying this baggage into the workplace can lead to resentment, inappropriate responses to conflict, anger, poor decision-making, and deepening any rifts.

Everyone has baggage. It is a fact of life, and baggage impacts relationships. In the business world, baggage can also inhibit business growth and success. It is human nature to hide or ignore as much baggage as we can because we fear what others would think, but it eventually expresses itself in some way. In some cases, family leaders are unaware they carry baggage because it is from years of ingrained family interactions.

Shapes and Sizes of Baggage

The Utech Group consultants have worked with numerous family-centric companies over three decades and can describe the shapes and sizes of the proverbial baggage carried on the family business’s journey. The qualities of family baggage may include relationship conflicts and intense emotions that, when left unchecked, can cause family and business rifts.

• Expectations – Carl Jung said, “A child’s greatest burden is the unlived life of the parent.” Some family members see their role in the business as an opportunity to carry on an older generation’s strategies, even if outdated, or to prove personal success instead of leveraging the role as a business team member. In other situations, the older leaders push children or other family members too hard because they are living vicariously through them to accomplish what they could not accomplish, creating a tense situation.
• Communication – Communication in a family-led business can be fraught with issues that make it even more difficult to discuss important business issues. Family baggage dragged around that stifle honest dialogue includes personal family relationships, memories, conflict avoidance behaviors, personal “hot topics,” emotional baggage like jealousy, and so on.
• Nepotism – Nepotism is generally expected in family-owned and led businesses. One type of baggage is when one or more family members resent other family members because they get exceptional preferential treatment, though they are less skilled or qualified. Family members are quickly promoted to leadership positions but are allowed to stay in the position even when unable to handle the responsibilities. Nepotism, in other words, can cause discord among family members and not just between employees when someone is promoted or given career opportunities based on family relationships.

Being unwilling to recognize a family member needs leadership development or demotion is common because we all dislike criticizing people we love and care about, especially when we had a role in their childhood, teen, and young adult years. Recognizing a family member is unqualified to be in a particular position is taken personally, like a personal failure, i.e., “I taught you better than that…” or “I paid for your college degree…”

• Ingrained behaviors—Family members may have developed ingrained behaviors in family circles that they carry into the business. For example, an authoritarian parent is expected to receive deference, even when decisions or ideas are outdated. It can work the opposite way, too. An assertive family member gets the most attention, while meeker family leaders have learned to always defer to the person’s decisions and opinions, right or wrong. Perhaps a family leader avoids conflict at all costs, always keeps the peace in any conversation, or refuses to bring up critical issues, even when it may not be good for the business.
• Purposeful conflict – There are also situations in which personal family feuds are carried into the business. A frequent outward sign of a feud is conflict, sometimes purposefully initiated as an emotional release. It may also be silence, meaning important business decisions are never collaboratively discussed. Internal battles for control are another source of baggage. Some family members may expect more opportunities or more compensation, etc.
• Generational dynamics – The next generation of younger family leaders brings their childhood baggage. They also grew up in a different culture that embraced factors the grandparents and parents who founded and still lead the company did not experience. They include new technologies, principles like work-life balance, out-of-the-box ideas, collaboration, democratic leadership styles, etc. Combining family and cultural dynamics is an ideal setup for conflict. For example, if the dad was autocratic at home while raising children, he likely used an autocratic management style in the business. The younger leaders did not present opposing opinions at home, so they behaved similarly during business meetings. How many creative and innovative ideas are lost as a result?
• Blurred Personal and Professional Lives – Family leaders may feel they are taken advantage of because there are no boundaries between home and work. Family baggage drives the response. For example, some family leaders are frequently contacted at home in the evenings but will not say anything due to relationship issues.

Baggage drives wedges between leaders. Family members may be owners or non-owners, which can cause problems. A family founder discusses the future of the company with two family leaders who are not owners but are his children. The discussion concerns future ownership and leadership. Though everyone agrees they want the business to succeed, the conversation gets personal. The children believe they are being treated unfairly by the founder’s proposals but have trouble communicating their concerns because of who he is – founder and father. Instead, the discussion is wrought with unproductive emotions.

Unpacking the Baggage

One of the most challenging things in a family-led company is getting the leaders to acknowledge their personal baggage and then connect their thoughts and behaviors driven by family issues to their leadership styles. It is a primary reason a business brings in objective consultants when they recognize the business is negatively impacted. Family differences and resentments can lead to low employee morale, failure to consider valid new ideas for business growth, failure to update strategies, and even a toxic work environment.

In most cases, people do not recognize what is working and what is not because they see people and events through a biased lens of family dynamics. The solutions implemented concerning business issues do not deal with the causes of the issues, which are how family members are or are not interacting. Instead, family leaders try to implement solutions to business problems without addressing the family dynamics contributing to the problems. The problems either continue or repeatedly pop up because of not dealing with the right issues in family relationships that are impacting leadership decision-making.

In this situation, problem-solving begins on a more personal level because family dynamics are involved. Family members must first unpack their family baggage brought into the workplace to understand how those dynamics show up in the businesses. When Utech is asked to help fix family matters holding up business success, consultants first seek to understand how a family-led company’s business owner or CEO interacted with family outside the business. Remember, your organization’s culture starts at the top. Other leaders are also included in the assessment. This approach applies to any family leader in the business who is impacted by family baggage.

Turning Inward

Family members’ roles in the organization reflect their roles in their families. When leaders focus on unproductive family concerns that have little to do with managing the business, the attention cannot be entirely on the business. Family members have dual roles as an employee of the company and as a family member. When one or more family members are in conflict, the performance of non-family leaders and employees is pulled down.

Utech digs in and explores with clients the type of issues the family system of leadership is experiencing and pursues why they have occurred to identify whether they are due to family difficulties or other reasons. If family baggage is the issue, an essential next step is discussing how to overcome the baggage. Learning to communicate and engage in a way that is productive rather than embroiled in non-business-based emotions is crucial to business success and longevity.

Utech’s approach to addressing family baggage starts with uncovering reasons underlying the family tension, meaning the business leaders need to have a willingness to acknowledge and accept issues exist and are impacting the business. Without that, people cannot understand the impact that family dynamics have on the family and on the business. Helping family leaders learn to navigate difficult conversations and negotiate solutions through objective assessments can break down the barriers holding people and the company back from fulfilling their potential.

What is Said and Not Said

Peter Drucker said, “The most important thing in communication is hearing what isn’t said.” He could have been talking about family dynamics. On the other hand, Dr. Laurence J. Peter made the point, “Speak when you are angry, and you’ll make the best speech you’ll ever regret.” Conflict can be silent or loud.  These quotes speak to the importance of both listening and observing, as well as being assertive to speak up, when working to raise and resolve family conflicts.

The Utech Group helps family leaders in family-centric companies understand the unique dynamics of family relationships that prevent companies from moving forward. Contact the Utech Group today to learn more about our consultants and services.