Family Business Blind Spots: Uncovering Hidden Challenges
Family businesses often face unique challenges due to the intertwined nature of family and work relationships. In this episode, you will learn how to identify and overcome common blind spots that can hinder the success of family businesses.
Andrea and Michelle dive into the complexities of family dynamics in the workplace, exploring how personal relationships can influence decision-making, communication, and overall company culture.
Focusing on the challenges of managing expectations, addressing conflict, and maintaining fairness among family and non-family employees. Learn how to build a stronger, more harmonious, and successful family business.
LISTEN TO THE EPISODE
Expand Your Leadership Skills.
Family Business Dynamics and Blind Spots
Family businesses are a mix of shared history, intertwined relationships, and the drive to build something lasting. But within that blend of passion and legacy lies a complex web of family business dynamics that can either propel a family business forward or become its demise.
At Revela, we understand the unique challenges family businesses face and the importance of keeping the business environment as peaceful as possible. So, on a recent episode of the Leadership Hustle podcast, featuring Andrea Fredrickson and Michelle Hill, we explored the common "blind spots" that can hinder family business success. We offer strategies for navigating these complexities, ultimately contributing to a stronger family business culture.
The Shifting Sands of Roles
One of the most pervasive challenges in family business is the tendency for members to revert to family roles rather than professional ones. As Fredrickson shared, “Often, maybe not consciously, we shift back to a role that may not be the current role.”
She recounted an experience where a disagreement with her father triggered him to interact with her as his teenage daughter, not his business partner. “I'm pretty sure I just saw a lens go through his eyes, and he was still looking. He was looking at me and talking to me as if I was his 13 year old daughter,” Fredrickson explained.
It’s not just the older generation that can fall into this trap, as Fredrickson would also fall into the cycle of talking to her dad as her father rather than a business partner. Her experience highlights the critical need for awareness and a conscious effort to maintain professional boundaries within the family business.
Common Challenges and Blind Spots in Family Businesses
Several key challenges in family business often go unaddressed, creating significant obstacles to success called “blind spots.” These blind spots can range from how family members interact with each other to how they’re perceived by non-family employees.
Employee Confusion
Non-family employees often struggle to navigate relationships when it comes to family business dynamics. As Fredrickson pointed out, “They don't realize that by bringing in the family, the non-family employees are going to be confused or unclear about how to treat this person.” Ambiguity surrounding reporting structures, lines of authority, and feedback mechanisms can create confusion and uncertainty.
Employees may feel unsure about how to interact with family members without fear of retaliation, impacting family business communication. This confusion can manifest in employees not knowing who to report to, who can give them direction, or even who they can push back against.
Unspoken Issues and the "Elephant in the Room”
Sensitive family dynamics can lead to unspoken issues and suppressed concerns. This can create a culture of avoidance, hindering open communication and impacting family business culture.
As Hill noted, these issues can quickly become the “huge elephant in the room.” Resentment and decreased morale among non-family employees are common consequences. Gossip and behind-the-scenes discussion can poison the work environment and ruin trust.
Unequal Expectations and Accountability
Maintaining consistent performance expectations and accountability across family and non-family employees is a frequent challenge in family businesses. Perceived favoritism or leniency towards family members can create resentment and demotivation. Fredrickson illustrated an example explaining, “...if Junior's not performing, it's like, well, I can adjust my performance to meet Junior's performance. It's like, yeah, but they hold you accountable and you get written up, but Junior doesn't get written up.”
Establishing clear performance metrics and disciplinary procedures for all employees is essential for maintaining fairness and trust. “So I think there's another blind spot. And that is either their super high expectations of family or their lack of expectations or accountability for their family members,” Fredrickson explained. This inconsistency can lead to non-family members feeling undervalued and demotivated.
Succession Planning and Generational Transitions
Family business succession planning presents unique complexities, including identifying and developing future leaders. Conflict and tension among family members regarding leadership roles and responsibilities can easily arise. Open communication and a fair and transparent succession process are crucial for minimizing disruption and ensuring a smooth transition.
As Fredrickson discussed, sometimes the next generation has no interest in taking over the business. This disconnect between the older generation’s expectations and the younger generation’s aspirations can create significant conflict.
Sibling Dynamics and Interpersonal Conflict
When siblings work together in a family business, unique challenges emerge. Rivalry, competition, and unresolved family issues can negatively affect professional relationships.
Developing strong conflict resolution skills and clear communication strategies is vital for navigating these interpersonal dynamics. Hill raised the important point of sibling rivalry: “What might be some assumptions or blind spots…we always have the firstborn versus the last born and then the poor middle child?” These pre-existing family dynamics can play out in the business context, further complicating matters.
Navigating the Challenges
Addressing these multifaceted challenges requires a proactive and structured approach. It's not enough to simply acknowledge the potential pitfalls, so family businesses must actively work to resolve them.
Open Communication and Conflict Resolution
Fostering open and honest communication among family members is paramount. Conflict resolution training for family members and their spouses can equip them with the tools to navigate disagreements constructively.
Utilizing a third-party mediator may even help facilitate difficult conversations and ensure fairness. “So first and foremost, the family and their spouses have to learn how to disagree not hold a grudge,” Fredrickson emphasized. She also stressed the importance of including spouses in these conversations: “Pillow talk is a big saboteur of relationships within businesses.”
Establishing Clear Roles and Responsibilities
Defining clear roles, responsibilities, and reporting structures for all family members in the business is essential. Aligning roles with individual skills and experience, rather than solely based on family ties, promotes efficiency and effectiveness. Forcing a family member into a role they are not suited for can completely change family business dynamics and lead to frustration, decreased productivity, and resentment.
Setting Consistent Expectations and Accountability
Establishing clear performance expectations and accountability standards for all employees, regardless of family status, is vital. Using objective performance evaluations and transparent disciplinary procedures helps maintain fairness and trust.
A clear and consistently applied disciplinary process ensures that all employees are treated fairly and that any performance issues are addressed promptly and effectively. This also protects the business from potential legal challenges related to discrimination or unfair treatment.
Professional Development and Creating a Succession Plan
Providing professional development opportunities for family members enhances their skills and prepares them for leadership roles. Offer training programs, mentorship opportunities, and leadership development courses to equip family members with the necessary skills to succeed in their roles.
Developing a comprehensive succession plan that addresses leadership transitions and ownership transfer is also crucial. This plan should outline the process for identifying and developing future leaders, and the timeline for transitioning leadership responsibilities.
It should also address how ownership will be transferred, whether through gifting, sale, or other means. A well-defined succession plan provides clarity and stability for the business, its employees, and the family itself.
Family Business Governance
Implementing strong family business governance means establishing clear guidelines for decision-making and conflict resolution. This can include creating a family constitution or charter that outlines shared family business values, goals, and expectations.
Regularly review and update the family constitution to ensure it remains relevant and reflects the evolving needs of the family and the business. Strong family business governance promotes transparency, trust, and accountability, which are essential for long-term success.
A Path to Family Business Success
Effectively navigating the complexities of family business dynamics directly relates to long-term success. By proactively addressing potential challenges, fostering open communication, and implementing clear governance structures, family businesses can create a thriving environment where both the family and business prosper.
At Revela, we understand the challenges that come with business ownership and we’re here to help family businesses navigate these intricate dynamics. Check out the rest of our Leadership Hustle podcast for more tips on creating a supportive and positive working environment.
About the Hosts
Andrea Fredrickson
Andrea Fredrickson is a thought leader and consultant at Revela, an organization based in Omaha, Nebraska specializing in the development of leaders, culture alignment, and business strategy for private and family businesses of all sizes. Revela is one of the region's most experienced thought challengers, helping individuals and companies find their greatness. Andrea has built an amazing team by believing that fundamentally people want to be successful and become better versions of themselves.
-
Andrea has degrees in education, management, and business. She is the author of Insight Unseen; How to lead with 20/20 business vision. She helps people see things differently, self-reflect, and never stop looking for ways to improve themselves on a personal and professional level. Andrea has spent more than 30 years researching and developing methods to help people communicate and lead more effectively.
When Andrea isn’t working with clients, you’ll find her spending time with her family & friends and making memories by exploring new cities.
Michelle Hill
Michelle Hill is a master facilitator and coach at Revela, an organization specializing in the development of leaders and aligning the culture of privately held and family businesses of all sizes. Revela is one of the region's most experienced thought challengers, helping individuals and companies find their greatness.
-
An ambitious leader, Michelle has the natural ability to create forward momentum to build teams and get results. She inspires others to look within themselves and to challenge the status quo. She helps create high-performing environments. Michelle brings a diverse background: operations, employee development, and sales in the steel, hospitality, and consulting industries.
Outside of work, you will see her competitive side engaged in her daughter’s sports and ISU athletics. She loves life, her four-legged companions, and captures all the moments through her camera’s lens.
TRANSCRIPT
Andrea Fredrickson: Is the business that you own, a private business or a family business? In this episode of The Leadership Hustle, we're going to discuss the difference between the two and how to make the transition. Hello, and welcome to the Leadership Hustle for executives whose companies are growing fast and need leaders who are ready. So welcome back to this episode of The Leadership Hustle. I'm Andrea Frederickson.
Michelle Hill: And I'm Michelle Hill.
Andrea Fredrickson: And I am so excited about today. When we were preparing for this episode, we were talking about what topics should we talk about? And incidentally, it was just accidentally, but we were both thinking of the same topic. So Michelle, you brought up this idea of family businesses, and there is probably, I don't know if there's a topic that I have more passionate about than family business. It's so it's one of my favorites. So we're gonna have to shut down this early so I don't keep rambling on today. Yes. But family business is probably one of my favorites.