Unresolved family issues can hobble closely held businesses

Unresolved family issues can hobble closely held businesses

Studying how families function has anchored my career.

It’s led me to learn about families as living systems, from clinical and scientific perspectives, and to understand the many emotional forces (love, fear, anxiety, etc.) that govern interactions between and among family members across generations.

I’ve shared my thinking at hundreds of conferences for family business owners and their advisers, in numerous countries and cultures.

Most importantly, my direct relationship coaching with family firms and their members for more than 30 years has given me a close-up view of the “inside” opportunities and challenges of working alongside family members.

From that cumulative exposure, patterns have emerged. The biggest pattern is a predictably strong bias: When family members work together in the same business, they create wealth and opportunity.

Ample data backs this up: Businesses owned by families comprise the backbone of the American economy.

Family Enterprise USA estimates there are 5.5 million family businesses in the United States, contributing 57 percent of the GDP and employing 98 million people. That’s about 63 percent of the total workforce.

It’s clear that family businesses are economically effective, but is working in a family business good for family members? That’s more of a mixed bag.

The shadow side of closeness

While being close as a family can provide emotional support, financial backing, and a strong sense of belonging, closeness can also smother honesty and thwart respectful connection.

When individual family members sacrifice their genuine self—who they really are—in order to maintain family togetherness, their closeness becomes destructive.

This process happens to some extent in all families. However, families who cannot manage their intense emotional attachments while working side-by-side can both imperil the family business and harm the family unit.

Here are four signals of destructive closeness that I frequently see in my relationship consulting with family firms:

  1. Excessive approval-seeking: Jeremy and his parents operate high-end jewelry stores in two different cities. Jeremy gauges his communication with his mom based on how she will respond, instead of on the relevance and urgency of his message. If he senses she might become angry or frustrated, he backs off. When he senses her “good mood,” he presses forward with his points.


Jeremy’s mother plays a role in this drama by operating more as a controlling parent than as a mature business owner. Her reminders, reprimands, and reactions reinforce Jeremy’s sensitivity to her approval. Theirs has become a chronic dance —an emotional two-step—that takes the focus away from important business issues. What’s more, Jeremy’s growth is stunted, and the business loses out on his potential contributions.


  1. Culture of agreement and avoidance: The third-generation owner of a kitchenware importing company told me that her father and grandfather rarely disagreed. She said: “My father told me it’s not that they always agreed, it’s that my grandfather hated conflict, so my dad went to great lengths to talk only about positive news and pleasant topics.”


Family members easily fall into the trap of avoiding disagreement and conflict to preserve family harmony. That’s a problem because honest disagreements are essential for teasing out innovative ideas and producing the best business and leadership decisions. The ability to disagree respectfully is an important dimension of trusting, open relationships.


  1. Unhealthy conflict: Two siblings operate a large funeral home business. Both want to be in charge, and neither listens well to the other. Chronic conflict has gotten to the point where, as one said, “We talk only when we have to.”


Emotional fusion can produce a hyper-focus on others, including a tendency to monitor and control others, wishing others would change, and harboring unreasonable expectations of others. These habits are more likely to produce chronic conflict, that is, conflict that does not lead to reasonable, direct conversation and negotiated outcomes that serve the best interests of the business.


  1. Family exceptionalism: The leader of a commercial real estate firm whose three siblings also work in the business said, “My youngest brother is not very competent, even though he’s a vice president here. Everyone knows it. Even he knows it. But we can’t fire a family member, so we work around him and give him basic tasks he can handle.”

The notions that family members should make more money than competent non-family members, have higher positions than those who are more qualified, and that they should be exempt from performance reviews, developmental coaching, and termination is almost an unwritten rule in many family enterprises. This builds resentment among other employees and usually disadvantages the under-performing family member.

The four tendencies described above are outgrowths of destructive closeness: intense, feeling-driven reactivity to other family members.

These same dynamics—minus family ties—can be observed among longtime partners in professional firms.

An unfortunate but common consequence of destructive closeness is the emotional distance it produces. Ironically, it’s a brand of “closeness” that tears people apart.

Emotional regulation

To counteract destructive closeness, firm leaders must focus on their own emotional regulation with family members.

What is emotional regulation?

It’s the ability to turn down the volume on one’s intense focus on others. This means giving less attention to what the other is or isn’t doing, reducing one’s emotional neediness and expectations, and focusing instead on clarity about one’s own beliefs, needs and positions.

A big part of emotional regulation is permitting other family members or partners the freedom to be who they are without trying to “get them to change.”

Calmer, more reasonable family interactions can increase dramatically when the leader becomes less prone to overreacting and over-functioning.

Such a leader can choose to stay connected and light-hearted without clinging or becoming over-involved.

That’s not easy, and it takes ongoing attention. There is no fail-safe technique or magic formula. Learning how to become more emotionally regulated usually requires high-caliber coaching from an astute, neutral coach who can help clarify behavior patterns, examine family dynamics and guide change efforts.

The family and the business are better served when the intense need for closeness can be moderated by reasonableness and self-regulation.

John Engels is an international leadership thought leader, speaker and writer. He is president of Leadership Coaching Inc., a science-based consulting firm serving top-level leaders and partners in family businesses and professional firms. He can be reached at [email protected].